WESTERN ALLIANCE BANCORP.
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As filed with the Securities and Exchange Commission on June 17, 2005
Registration No. 333-124406
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Amendment No. 2
to
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
WESTERN ALLIANCE BANCORPORATION
(Exact name of registrant as specified in its charter)
 
         
Nevada
  6022   88-0365922
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)
2700 West Sahara Avenue
Las Vegas, Nevada 89102
Telephone: (702) 248-4200
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
 
Robert Sarver
President, Chief Executive Officer
2700 West Sahara Avenue
Las Vegas, Nevada 89102
Telephone: (702) 248-4200
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
     
Stuart G. Stein, Esq.
Hogan & Hartson L.L.P.
555 13th Street, N.W.
Washington, DC 20004
Telephone: (202) 637-8575
Facsimile: (202) 637-5910
  Gregg A. Noel, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, CA 90071
Telephone: (213) 687-5000
Facsimile: (213) 687-5600
      Approximate date of commencement of proposed sale to the public: As soon as practicable on or after the effective date of this Registration Statement.
      If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.     o
      If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o
      If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o
      If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o
      If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.     o
      The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.



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The information contained in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 17, 2005
PRELIMINARY PROSPECTUS
3,750,000 Shares
(WESTERN ALLIANCE LOGO)
Common Stock
        We are a bank holding company based in Las Vegas, Nevada. We are offering 3,750,000 shares of our common stock in this firm commitment public underwritten offering. We anticipate that the public offering price will be between $19.00 and $21.00 per share.
      There is currently no public market for our shares. We have applied to list our common stock on the New York Stock Exchange under the trading symbol “WAL.”
       See “Risk Factors” beginning on page 8 for a discussion of factors that you should consider before you make your investment decision.
                 
    Per Share   Total
         
Price to public
  $       $    
Underwriting discounts and commissions
  $       $    
Proceeds to us(1)
  $       $    
 
(1)  This amount is the total before deducting legal, accounting, printing, and other offering expenses payable by us, which are estimated at $1,240,000.
      The underwriters also may purchase up to 500,000 additional shares from us at the public offering price, less the underwriting discount, within 30 days of the date of this prospectus to cover over-allotments.
      Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
      These securities are not savings accounts or obligations of any bank and are not insured by the Federal Deposit Insurance Corporation or any other government agency.
      The underwriters expect to deliver the shares against payment in New York, New York on or about                     , 2005, subject to customary closing conditions.
 
Sandler O’Neill & Partners, L.P. Keefe, Bruyette & Woods
 
The date of this prospectus is                     , 2005


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 EX-1.1: FORM OF UNDERWRITING AGREEMENT
 EX-9.1: VOTING AGREEMENT
 EX-23.1: CONSENT OF MCGLADREY & PULLEN, LLP.
 
      You should rely only on the information contained in this prospectus. We and the underwriters have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.
      Until                     , 2005, 25 days after the date of this prospectus, all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to unsold allotments or subscriptions.

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SUMMARY
      This summary provides an overview of selected information contained elsewhere in this prospectus. This is only a summary and does not contain all of the information that you should consider before investing in our common stock. You should read this entire prospectus, including the “Risk Factors” section beginning on page 8 and our financial statements and related notes appearing elsewhere in this prospectus, before deciding to invest in our common stock. In this prospectus, unless the context suggests otherwise, references to “Western Alliance,” “our company,” “we,” “us,” and “our” mean the combined business of Western Alliance Bancorporation and all of its consolidated subsidiaries; and references to “Banks” means our banking subsidiaries, BankWest of Nevada, Alliance Bank of Arizona and Torrey Pines Bank. Unless indicated otherwise, the information included in this prospectus assumes no exercise by the underwriters of the over-allotment option to purchase up to an additional 500,000 shares of common stock and that the common stock to be sold in this offering is sold at $20.00 per share, which is the midpoint of the range set forth on the front cover of this prospectus.
Western Alliance Bancorporation
      We are a bank holding company headquartered in Las Vegas, Nevada. We provide a full range of 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 our subsidiary banks and financial services companies located in Nevada, Arizona and California. On a consolidated basis, as of March 31, 2005, we had approximately $2.3 billion in assets, $1.3 billion in total loans, $2.0 billion in deposits and $137.1 million in stockholders’ equity. We have focused our lending activities primarily on commercial loans, which comprised 88.0% of our total loan portfolio at March 31, 2005. In addition to traditional lending and deposit gathering capabilities, we also offer a broad array of financial products and services aimed at satisfying the needs of small to mid-sized businesses and their proprietors, including cash management, trust administration and estate planning, custody and investment management and equipment leasing.
      BankWest of Nevada was founded in 1994 by a group of individuals with extensive community banking experience in the Las Vegas market. We believe our success has been built on the strength of our management team, our conservative credit culture, the attractive growth characteristics of the markets in which we operate and our ability to expand our franchise by attracting seasoned bankers with long-standing relationships in their communities.
      In 2003, with the support of local banking veterans, we opened Alliance Bank of Arizona in Phoenix, Arizona and Torrey Pines Bank in San Diego, California. Over the past two years we have successfully leveraged the expertise and strengths of Western Alliance and BankWest of Nevada to build and expand these new banks in a rapid and efficient manner. Our success is evidenced by the fact that, of the 230 banks founded in the United States since January 1, 2003, Alliance Bank of Arizona and Torrey Pines Bank both rank among the top ten in terms of total assets, loans and deposits as of December 31, 2004.
      We have achieved significant growth. Specifically, from December 31, 2000 to March 31, 2005, we increased:
  •  total assets from $443.7 million to $2.3 billion;
 
  •  total net loans from $319.6 million to $1.3 billion;
 
  •  total deposits from $410.2 million to $2.0 billion; and
 
  •  core deposits (all deposits other than certificates of deposit greater than $100,000) from $355.8 million to $1.8 billion.
      Our operations are conducted through the following wholly owned subsidiaries:
  •  BankWest of Nevada. BankWest of Nevada is a Nevada-chartered commercial bank headquartered in Las Vegas, Nevada. BankWest of Nevada is one of the largest banks headquartered in Nevada, with $1.7 billion in assets, $875.1 million in loans and $1.4 billion in deposits as of March 31, 2005.

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  BankWest of Nevada has three full-service offices in Las Vegas and two in Henderson. In addition, BankWest of Nevada expects to open five full-service offices and a 36,000 square foot service center facility in the Las Vegas metropolitan area in the next 18 months.
 
  •  Alliance Bank of Arizona. Alliance Bank of Arizona is an Arizona-chartered commercial bank headquartered in Phoenix, Arizona. As of March 31, 2005, the bank had $381.7 million in assets, $264.4 million in loans and $341.6 million in deposits. Alliance Bank has two full-service offices in Phoenix, two in Tucson and one in Scottsdale. In addition, Alliance Bank expects to open two full-service offices in the Phoenix metropolitan area and one in Tucson in the next 18 months.
 
  •  Torrey Pines Bank. Torrey Pines Bank is a California-chartered commercial bank headquartered in San Diego, California. As of March 31, 2005, the bank had $294.3 million in assets, $192.3 million in loans and $263.8 million in deposits. Torrey Pines has two full-service offices in San Diego and one in La Mesa. In addition, Torrey Pines expects to open three additional full-service offices in the San Diego metropolitan area in the next 18 months.
 
  •  Miller/Russell & Associates, Inc. Miller/Russell & Associates, Inc., a Phoenix-based investment advisor registered with the Securities and Exchange Commission, offers investment advisory services to businesses, individuals and non-profit entities. As of March 31, 2005, Miller/Russell had $891.8 million in assets under management. Miller/Russell has offices in Phoenix, Tucson, San Diego and Las Vegas.
 
  •  Premier Trust, Inc. Premier Trust, Inc., a Nevada-chartered trust company, offers clients wealth management services, including trust administration of personal and retirement accounts, estate and financial planning, custody services and investments. As of March 31, 2005, Premier Trust had $196.7 million in trust assets and $103.6 million in assets under management. Premier Trust has offices in Las Vegas and Phoenix.
Our Strategy
      Since 1994, we believe that we have been successful in building and developing our operations by adhering to a business strategy focused on understanding and serving the needs of our local clients and pursuing growth markets and opportunities while emphasizing a strong credit culture. Our objective is to provide our shareholders with superior returns. The critical components of our strategy include:
  •  Leveraging our knowledge and expertise. Over the past decade we have assembled an experienced management team and built a culture committed to credit quality and operational efficiency. We have also successfully centralized at our holding company level a significant portion of our operations, processing, compliance, Community Reinvestment Act administration and specialty functions. We intend to grow our franchise and improve our operating efficiencies by continuing to leverage our managerial expertise and the functions we have centralized at Western Alliance.
 
  •  Maintaining a strong credit culture. We adhere to a specific set of credit standards across our bank subsidiaries that ensure the proper management of credit risk. Western Alliance’s management team plays an active role in monitoring compliance with our Banks’ credit standards. Western Alliance also continually monitors each of our subsidiary banks’ loan portfolios, which enables us to identify and take prompt corrective action on potentially problematic loans. As of March 31, 2005, non-performing assets represented approximately 0.03% of total assets. The average for similarly sized publicly traded banks in the United States was 0.45% as of March 31, 2005.
 
  •  Attracting seasoned relationship bankers and leveraging our local market knowledge. We believe our success has been the result, in part, of our ability to attract and retain experienced relationship bankers that have strong relationships in their communities. These professionals bring with them valuable customer relationships, and have been an integral part of our ability to expand rapidly in our market areas. These professionals allow us to be responsive to the needs of our customers and provide a high level of service to local businesses. We intend to continue to hire experienced relationship bankers as we expand our franchise.

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  •  Offering a broader array of personal financial products and services. Part of our strategy for growth is to offer a broader array of personal financial products and services to high net worth individuals and to senior managers at commercial enterprises with which we have established relationships. To this end, we acquired Miller/Russell & Associates, Inc. in May 2004, and Premier Trust, Inc. in December 2003.
 
  •  Focusing on markets with attractive growth prospects. We operate in what we believe to be highly attractive markets with superior growth prospects. Our metropolitan areas have high per capita income and are expected to experience some of the fastest population growth in the country. We continuously evaluate new markets in the Western United States with similar growth characteristics as targets for expansion. Our long term strategy is to have four to six subsidiary banks each with assets between $500.0 million and $3.0 billion. We intend to implement this strategy through the formation of additional de novo banks or acquiring other commercial banks in new market areas with attractive growth prospects. As of March 31, 2005, we maintained 13 bank branch offices located throughout our market areas. To accommodate our growth and enhance efficiency, we intend to expand over the next 18 months to an aggregate of 24 offices, and to open a service center facility that will provide centralized back-office services and call center support for all our subsidiary banks.
 
  •  Attracting low cost deposits. We believe we have been able to attract a stable base of low-cost deposits from customers who are attracted to our personalized level of service and local knowledge. As of March 31, 2005, our deposit base was comprised of 42.8% non-interest bearing deposits, of which 38.1% consisted of title company deposits, 56.1% consisted of other business deposits and 5.8% consisted of consumer deposits. Given our current relatively low loan-to-deposit ratio of 66.0%, we expect to obtain additional value in the future by leveraging our deposit base to increase quality credit relationships.
Our Market Areas
      We believe that there is a significant market segment of small to mid-sized businesses that are looking for a locally based commercial bank capable of providing a high degree of flexibility and responsiveness, in addition to offering a broad range of financial products and services. We believe that the local community banks that compete in our markets do not offer the same breadth of products and services that our customers require to meet their growing needs, while the large, national banks lack the flexibility and personalized service that our customers desire in their banking relationships. By offering flexibility and responsiveness to our customers and providing a full range of financial products and services, we believe that we can better serve our markets.
      We currently operate in what we believe to be several of the most attractive markets in the Western United States:
  •  Nevada. In Nevada, we operate in Las Vegas and Henderson.
 
  •  Arizona. In Arizona, we operate in Phoenix, Scottsdale and Tucson.
 
  •  California. In California, we operate in San Diego and La Mesa.
These markets have high per capita income and are expected to experience some of the fastest population growth in the country. Claritas, Inc., a leading provider of demographic data, has projected that the population in the Las Vegas, San Diego, Phoenix and Tuscon metropolitan areas will grow by 18.9%, 6.5%, 13.8% and 9.6%, respectively, between 2004 and 2009. Between 2000 and 2004, population in the Las Vegas, San Diego, Phoenix and Tucson metropolitan areas grew by 18.0%, 5.6%, 12.4% and 8.3%, respectively.
      We believe that the rapid economic and population growth of our markets will provide us with significant opportunities in the future. The growth in the Las Vegas metropolitan area, our primary market, has been driven by a variety of factors, including a service economy associated with the hospitality and gaming industries, affordable housing, the lack of a state income tax, and a growing base of senior or retirement communities. Increased economic activity by individuals and accelerated infrastructure investments by

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businesses should generate additional demand for our products and services. For example, economic growth should produce additional commercial and residential development, providing us with greater lending opportunities. In addition, as per capita income continues to rise, there should be greater opportunities to provide financial products and services, such as checking accounts and wealth and asset management services.
Our Management Team
      We seek to attract and retain experienced and relationship-oriented employees. We have structured incentive programs that are intended to reward both superior production as well as adherence to our business philosophy and strategy. Our management team is focused on creating a positive work environment for all employees and fostering a productive culture. Our management team is currently led by Robert Sarver, our Chairman of the Board and Chief Executive Officer.
 
      Our principal executive offices are located at 2700 West Sahara Avenue, Las Vegas, Nevada 89102, and our telephone number is (702) 248-4200.

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The Offering
Common stock offered 3,750,000 shares(1)
 
Common stock to be outstanding immediately after this offering 22,122,211 shares(2)
 
Use of proceeds We estimate that our net proceeds from this offering will be approximately $68.9 million, or $78.2 million if the over-allotment is exercised in full by the underwriters, assuming an initial public offering price of $20.00 per share (which is the midpoint of the range set forth on the cover page of this prospectus). We expect that we will retain approximately $40.0 million of the net proceeds, and contribute the remainder to the Banks. By increasing the Banks’ capital, the Banks will be permitted to expand their deposit and lending portfolios. Western Alliance will use the proceeds it retains for general corporate purposes, including but not limited to the formation of additional de novo banks in new market areas with attractive growth prospects, the acquisition of other commercial banks or financial services companies and the development of additional products or services. We have no present understanding or agreement or definitive plans concerning any specific markets or acquisitions. See “Use of Proceeds.”
 
Dividend policy We have never declared nor paid cash dividends on our common stock. The board of directors intends to follow a policy of retaining earnings for the purpose of increasing our capital for the foreseeable future.
 
Proposed New York Stock Exchange symbol “WAL”
 
(1)  The number of shares offered assumes that the underwriters’ over-allotment option is not exercised. If the over-allotment option is exercised in full, we will issue and sell an additional 500,000 shares.
 
(2)  Based on shares of common stock outstanding as of March 31, 2005. Unless otherwise indicated, information contained in this prospectus regarding the number of shares of our common stock outstanding after this offering does not include an aggregate of up to 4,199,519 shares comprised of: up to 500,000 shares issuable by us upon exercise of the underwriters’ over-allotment option; 1,444,019 shares issuable upon the exercise of outstanding warrants with an expiration date of June 12, 2010 at an exercise price of $7.62 per share; 2,248,550 shares issuable upon the exercise of outstanding stock options with a weighted average exercise price of $9.32 per share; and an aggregate of 6,950 shares reserved for future issuance under our stock option plan. In addition, subsequent to March 31, 2005, our stockholders approved the 2005 Stock Incentive Plan, which increased the number of shares available for issuance under the plan by 1,000,000 shares.
Risk Factors
      See “Risk Factors” beginning on page 8 for a description of material risks related to an investment in our common stock.

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Summary Consolidated Financial Data
      The following table sets forth certain of our historical consolidated financial data. We have derived the summary consolidated financial data information as of and for the years ended December 31, 2004, 2003, 2002, 2001 and 2000 from our audited financial statements contained elsewhere in this prospectus. The selected historical financial data at and for the three months ended March 31, 2005 and 2004 is derived from our unaudited interim financial statements and includes, in the opinion of management, all adjustments necessary to present fairly the data for such period. The results of operations for the three-month period ended March 31, 2005 do not necessarily indicate the results that may be expected for any future period or for the full year 2005.
      You should read the information below together with all of the financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.
                                                           
    At or for the Three                    
    Months Ended    
    March 31,   At or for the Years Ended December 31,
         
    2005   2004   2004   2003   2002   2001   2000
                             
    ($ in thousands, except per share data)
Selected Balance Sheet Data:
                                                       
Total assets
  $ 2,338,856     $ 1,816,028     $ 2,176,849     $ 1,576,773     $ 872,074     $ 602,703     $ 443,665  
Loans receivable (net)
    1,314,687       819,929       1,173,264       721,700       457,906       400,647       319,604  
Securities available for sale
    597,747       625,605       659,073       583,684       227,238       73,399        
Securities held to maturity
    131,397       127,012       129,549       132,294       5,610       6,055       7,604  
Federal funds sold
    109,495       61,493       23,115       4,015       113,789       73,099       62,100  
Deposits
    2,018,689       1,377,025       1,756,036       1,094,646       720,304       549,354       410,177  
Short-term borrowings and long-term debt
    142,817       295,770       249,194       338,661       50,000              
Junior subordinated debt
    30,928       30,928       30,928       30,928       30,928       15,464        
Stockholders’ equity
    137,082       105,161       133,571       97,451       67,442       35,862       32,297  
 
Selected Income Statement Data:
                                                       
Interest income
  $ 28,423     $ 18,877     $ 90,855     $ 53,823     $ 39,117     $ 35,713     $ 34,032  
Interest expense
    6,409       4,178       19,720       12,798       9,771       9,140       8,633  
                                           
Net interest income
    22,014       14,699       71,135       41,025       29,346       26,573       25,399  
Provision for loan losses
    1,747       1,492       3,914       5,145       1,587       2,800       4,299  
                                           
Net interest income after provision for loan losses
    20,267       13,207       67,221       35,880       27,759       23,773       21,100  
Noninterest income
    2,584       1,564       8,726       4,270       3,935       3,437       2,948  
Noninterest operating expenses
    14,573       9,692       44,929       27,290       19,050       18,256       16,323  
                                           
Income before income taxes
    8,278       5,079       31,018       12,860       12,644       8,954       7,725  
Income taxes
    2,957       1,650       10,961       4,171       4,235       3,001       2,664  
                                           
Net income
  $ 5,321     $ 3,429     $ 20,057     $ 8,689     $ 8,409     $ 5,953     $ 5,061  
                                           
Common Share Data:
                                                       
Net income per share:
                                                       
 
Basic
  $ 0.29     $ 0.21     $ 1.17     $ 0.61     $ 0.79     $ 0.55     $ 0.47  
 
Diluted
    0.27       0.19       1.09       0.59       0.78       0.54       0.46  
Book value per share
    7.46       6.29       7.32       5.84       4.98       3.42       3.00  
Average shares outstanding:
                                                       
 
Basic
    18,294,233       16,689,158       17,189,687       14,313,611       10,677,736       10,730,738       10,765,985  
 
Diluted
    20,021,146       17,695,250       18,405,120       14,613,173       10,715,448       11,038,275       11,023,491  
Common shares outstanding
    18,372,211       16,698,773       18,249,554       16,681,273       13,908,279       10,850,787       10,779,381  

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    At or for the Three                    
    Months Ended    
    March 31,   At or for the Years Ended December 31,
         
    2005   2004   2004   2003   2002   2001   2000
                             
Selected Performance Ratios:
                                                       
Return on average assets(1)
    0.98 %     0.86 %     1.05 %     0.76 %     1.22 %     1.11 %     1.21 %
Return on average stockholders’ equity(1)
    15.28       13.54       17.48       12.19       19.39       15.04       16.95  
Net interest margin(1)
    4.35       3.94       4.00       3.83       4.57       5.50       7.93  
Net interest spread(1)
    3.64       3.46       3.43       3.27       3.72       4.39       5.53  
Efficiency ratio
    59.24       59.60       56.26       60.25       57.24       60.83       57.58  
 
Selected Liquidity and Capital Ratios:
                                                       
Loan to deposit ratio
    65.97 %     60.48 %     67.68 %     66.97 %     64.47 %     74.13 %     79.08 %
Average earning assets to interest-bearing liabilities
    155.72       142.75       151.29       147.37       155.98       163.14       156.73  
Risk based capital:
                                                       
 
Leverage capital
    7.7       8.2       7.7       8.9       11.2       8.5       7.2  
 
Tier 1
    10.4       12.1       10.9       13.3       15.4       10.4       9.1  
 
Total
    11.4       13.3       12.0       14.4       18.1       12.3       10.4  
 
Asset Quality Ratios:
                                                       
Net charge-offs (recoveries) to average loans outstanding
    (0.01 )%     %     %     0.17 %     0.19 %     0.27 %     1.24 %
Non-performing loans to gross loans
    0.05       0.13       0.13       0.04       0.76       0.23       1.37  
Non-performing assets to total assets
    0.03       0.06       0.07       0.02       0.41       0.17       1.00  
Allowance for loan losses to gross loans
    1.29       1.55       1.28       1.55       1.39       1.61       1.46  
Allowance for loan losses to non- performing loans
    2,707.91       808.16       958.63       4,137.45       181.71       711.82       106.96  
 
Growth Ratios and Other Data:(2)
                                                       
Percentage change in net income
    55.2 %     107.7 %     130.8 %     3.3 %     41.3 %     17.6 %     15.5 %
Percentage change in diluted net income per share
    42.1       58.3       84.7       (24.4 )     44.4       17.4       4.5  
Percentage change in assets
    28.8       84.1       38.1       81.0       44.7       35.7       20.4  
Percentage change in gross loans, including deferred fees
    59.9       66.2       62.1       57.9       14.0       25.5       22.1  
Percentage change in deposits
    46.6       77.0       60.4       52.0       31.1       33.9       20.7  
Percentage change in equity
    30.4       40.5       37.1       44.5       88.1       11.0       18.8  
Number of branches
    13       10       13       10       5       5       4  
 
(1)  Annualized for the three-month periods ended March 31, 2005 and 2004.
 
(2)  Ratios of changes in income are computed based upon the growth over the comparable prior period. Ratios of changes in balance sheet data compare period-end data against the same data from the comparable period-end for the prior year.

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RISK FACTORS
      You should carefully consider all information included in this prospectus. In particular, you should carefully consider the risks described below before purchasing shares of our common stock in this offering. Investing in our common stock involves a high degree of risk. Any of the following factors could harm our business and future results of operations and could result in a partial or complete loss of your investment. These risks are not the only ones that we may face. Other risks of which we are not aware, which relate to the banking and financial services industries in general, or which we do not currently believe are material, may cause our earnings to be lower, or hurt our future financial condition.
Risks Related to Our Market and Business
Our current primary market area is substantially dependent on gaming and tourism revenue, and a downturn in gaming or tourism could 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. Any event that negatively impacts the gaming or tourism industry will adversely impact the Las Vegas economy.
      Gaming and tourism revenue (whether or not such tourism is directly related to gaming) is vulnerable to fluctuations in the national economy. A prolonged downturn in the national economy could have a significant adverse effect on the economy of the Las Vegas area. Virtually any development or event that could dissuade travel or spending related to gaming and tourism, whether inside or outside of Las Vegas, could adversely affect the Las Vegas economy. In this regard, the Las Vegas economy is more susceptible than the economies of other cities to issues such 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. A terrorist act, or the mere threat of a terrorist act, may adversely affect gaming and tourism and the Las Vegas economy and may cause substantial harm to our business.
      In addition, Las Vegas competes with other areas of the country for gaming revenue, and it is possible that the expansion of gaming operations in other states, such as California, as a result of changes in laws or otherwise, could significantly reduce gaming revenue in the Las Vegas area.
      Although we have no substantial customer relationships in the gaming and tourism industries, a downturn in the Las Vegas economy, generally, could have an adverse effect on our customers and result in an increase in loan delinquencies and foreclosures, a reduction in the demand for our products and services and a reduction of the value of our collateral for loans which could result in the reduction of a customer’s borrowing power, any of which could adversely affect our business, financial condition, results of operations and prospects.
We may not be able to continue our growth at the rate we have in the past several years.
      We have grown substantially, from having one chartered bank with $443.7 million in total assets and $410.2 million in total deposits as of December 31, 2000, to three chartered banks with $2.3 billion in total assets and $2.0 billion in total deposits as of March 31, 2005. If we are unable to effectively execute on our strategy, we may not be able to continue to grow at our historical rates. In particular, Alliance Bank of Arizona and Torrey Pines Bank have achieved unusually high annual rates of growth as compared to other recently opened de novo banks. We do not expect this high level of growth at Alliance Bank of Arizona and Torrey Pines Bank to continue in the future.
Our growth and expansion strategy may not prove to be successful and our market value and profitability may suffer.
      Growth through acquisitions of banks or the organization of new banks in high-growth markets, especially in markets outside of our current markets, represents an important component of our business strategy.

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      At this time, we have no agreements or understandings to acquire any financial institutions or financial services providers. Any future acquisitions will be accompanied by the risks commonly encountered in acquisitions. These risks include, among other things:
  •  difficulty of integrating the operations and personnel;
 
  •  potential disruption of our ongoing business; and
 
  •  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.
      We expect 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. We 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, we may consider the organization of new banks in new market areas. We do not have any current plan to organize a new bank. Any acquisition or organization of a new bank carries with it numerous risks, including the following:
  •  the inability to obtain all required regulatory approvals;
 
  •  significant costs and anticipated operating losses during the application and organizational phases, and the first years of operation of the new bank;
 
  •  the inability to secure the services of qualified senior management;
 
  •  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;
 
  •  the inability to obtain attractive locations within a new market at a reasonable cost; and
 
  •  the additional strain on management resources and internal systems and controls.
      We cannot assure you that we will be successful in overcoming these risks or any other problems encountered in connection with acquisitions and the organization of new banks. Our inability to overcome these risks could have an adverse effect on our ability to achieve our business strategy and maintain our market value and profitability growth.
If we continue to grow rapidly as planned, we may not be able to control costs and maintain our asset quality.
      We expect to continue to grow our assets and deposits, the products and services which we offer and the scale of our operations, generally, both internally and through acquisitions. Our ability to manage our growth successfully will depend on our ability to maintain cost controls and asset quality while attracting additional loans and deposits on favorable terms. If we grow too quickly and are not able to control costs and maintain asset quality, this rapid growth could materially adversely affect our financial performance.
We may have difficulty managing our growth, which may divert resources and limit our ability to successfully expand our operations.
      Our rapid growth has placed, and it may continue to place, significant demands on our operations and management. Our future success will depend on the ability of our officers and other key employees to continue to implement and improve our operational, credit, financial, management and other internal risk controls and processes and our reporting systems and procedures, and to manage a growing number of client relationships. We may not successfully implement improvements to our management information and control systems and control procedures and processes in an efficient or timely manner and may discover deficiencies in existing systems and controls. In particular, our controls and procedures must be able to accommodate an increase in expected loan volume and the infrastructure that comes with new branches and banks. Thus, our growth

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strategy may divert management from our existing businesses and may require us to incur additional expenditures to expand our administrative and operational infrastructure. If we are unable to manage future expansion in our operations, we may experience compliance and operational problems, have to slow the pace of growth, or have to incur additional expenditures beyond current projections to support such growth, any one of which could adversely affect our business.
Our future growth is dependent upon our ability to recruit additional, qualified employees, especially seasoned relationship bankers.
      Our market areas are experiencing a period of rapid growth, placing a premium on highly qualified employees in a number of industries, including the financial services industry. Our business plan includes, and is dependent upon, hiring and retaining highly qualified and motivated executives and employees at every level. In particular, our success 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 rapidly in our market areas. We expect to experience substantial competition in our endeavor to identify, hire and retain the top-quality employees that we believe are key to our future success. If we are unable to hire and retain qualified employees, we may not be able to grow our franchise and successfully execute our business strategy.
We are highly dependent on real estate and events that negatively impact the real estate market could hurt our business.
      A significant portion of our loan portfolio is dependent on real estate. As of March 31, 2005, real estate related loans accounted for approximately 78.5% of total loans. Our financial condition may be adversely affected by a decline in the value of the real estate securing our loans. In addition, acts of nature, including earthquakes, fires and floods, which may cause uninsured damage and other loss of value to real estate that secures these loans, may also negatively impact our financial condition.
      In addition, title company deposits comprised 17.0% of our total deposits as of March 31, 2005. A slowdown in real estate activity in the markets we serve may cause a decline in our deposit growth and may negatively impact our financial condition.
Our high concentration of commercial real estate, construction and land development and commercial, industrial loans expose us to increased lending risks.
      As of March 31, 2005, the composition of our loan portfolio was as follows:
  •  commercial real estate loans of $544.2 million, or 40.8% of total loans,
 
  •  construction and land development loans of $362.9 million, or 27.2% of total loans,
 
  •  commercial and industrial loans of $266.7 million, or 20.0% of total loans,
 
  •  residential real estate loans of $140.2 million, or 10.5% of total loans, and
 
  •  consumer loans of $20.0 million, or 1.5% of total loans.
      Commercial real estate, construction and land development and commercial and industrial loans, which comprised 88.0% of our total loan portfolio as of March 31, 2005, expose us to a greater risk of loss than our residential real estate and consumer loans, which comprised 12.0% of our total loan portfolio as of March 31, 2005. 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 may expose us to a significantly greater risk of loss compared to an adverse development with respect to one residential mortgage loan.

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If we lost a significant portion of our low-cost deposits, it would negatively impact our profitability.
      Our profitability depends in part on our success in attracting and retaining a stable base of low-cost deposits. As of March 31, 2005, our deposit base was comprised of 42.8% non-interest bearing deposits, of which 38.1% consisted of title company deposits, which consist primarily of deposits held in escrow pending the closing of commercial and residential real estate transactions, and to a lesser extent, operating accounts for title companies; 56.1% consisted of other business deposits, which consist primarily of operating accounts for businesses; and 5.8% consisted of consumer deposits. We consider these deposits to be core deposits. While we generally do not believe these deposits are sensitive to interest rate fluctuations, the competition for these deposits in our markets is strong and if we lost a significant portion of these low-cost deposits, it would negatively impact our profitability.
Many of our loans have been made recently, and in certain circumstances there is limited repayment history against which we can fully assess the adequacy of our allowance for loan losses. If our allowance for loan losses is not adequate to cover actual loan losses, our earnings will decrease.
      The risk of nonpayment of loans is inherent in all lending activities, and nonpayment, if it occurs, may negatively impact our earnings and overall financial condition, as well as the value of our common stock. Also, many of our loans have been made over the last three years and in certain circumstances there is limited repayment history against which we can fully assess the adequacy of our allowance for loan losses. We make various assumptions and judgments about the collectibility of our loan portfolio and provide an allowance for probable losses based on several factors. If our assumptions are wrong, our allowance for loan losses may not be sufficient to cover our losses, which would have an adverse effect on our operating results. Additions to our allowance for loan losses decrease our net income. While we have not experienced any significant charge-offs or had large numbers of nonperforming loans, due to the significant increase in loans originated during this period, we cannot assure you that we will not experience an increase in delinquencies and losses as these loans continue to mature. The actual amount of future provisions for loan losses cannot be determined at this time and may exceed the amounts of past provisions.
Our future success will depend on our ability to compete effectively in a highly competitive market.
      We face 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 earnings 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 financial institutions. As a result, these nonbank 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 profitability. For more information on the competition we have in our markets, see “Business — Competition.”
Our business would be harmed if we lost the services of any of our 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 and Chief Executive Officer of Torrey Pines Bank, Dale Gibbons, our Chief Financial Officer, Larry Woodrum, President and

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Chief Executive Officer of BankWest of Nevada and James Lundy, President and Chief Executive Officer of Alliance Bank of Arizona, 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 can’t replace them with equally qualified persons who are also familiar with our market areas.
Mr. Sarver’s involvement in outside business interests requires substantial time and attention and may adversely affect our ability to achieve our strategic plan and maintain our current growth.
      Mr. Sarver joined us in December of 2002 and has been an integral part of our recent growth. He has substantial business interests that are unrelated to us, including his ownership interest in the Phoenix Suns NBA 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 and maintain our current growth.
The circumstances surrounding the acquittal of our Chief Financial Officer on felony charges and his related civil rights claims could generate negative publicity for us, cause reputational harm and cause our stock price to decline.
      In June 2001, Dale Gibbons was arrested and subsequently charged in a criminal information prepared by the District Attorney for Salt Lake County with three felonies: possession of a controlled substance, dealing in harmful material to a minor and endangerment of a child. Mr. Gibbons maintained his innocence and, after a jury trial in June 2002, he was acquitted of all charges. There was extensive media coverage in both the local Utah media and the national financial press of Mr. Gibbons’ arrest, the assertion of the felony charges against him, and his subsequent resignation as the Chief Financial Officer of his then employer, Zions Bancorporation.
      In June 2002, Mr. Gibbons filed a civil rights lawsuit in a Utah state court, which was removed to the United States District Court, District of Utah, Central Division in November 2002. The civil rights action was brought against various officers of the office of the Salt Lake County Sheriff, attorneys in the Salt Lake County prosecutor’s office, and a number of unnamed defendants alleging, among other things, defamation of character, wrongful arrest and malicious prosecution. The U.S. District Court recently issued an opinion granting summary judgment to the defendants on substantially all of Mr. Gibbons’ claims. All parties have resolved the lawsuit and an order of dismissal has been entered by the U.S. District Court.
      Public disclosures and deposition testimony in connection with the legal proceedings involving Mr. Gibbons have included extensive discussion of certain aspects of Mr. Gibbons’ personal life including allegations about his use of controlled substances. Before hiring Mr. Gibbons as our Chief Financial Officer, our Audit Committee engaged special legal counsel and an investigator to assist in considering Mr. Gibbons’ prospective employment with Western Alliance. We evaluated Mr. Gibbons’ extensive banking background, reviewed the legal and investigatory descriptions of the facts and circumstances surrounding his arrest, and consulted with the Federal Deposit Insurance Corporation and the Federal Reserve Bank of San Francisco. Our Board of Directors determined that Mr. Gibbons was suitable to serve as our Chief Financial Officer. Subsequent to his hiring, as Mr. Gibbons pursued his civil rights lawsuit, our Board has been updated on the claims and information alleged against Mr. Gibbons in that action. Our Board continues to believe Mr. Gibbons is suitable to serve as our Chief Financial Officer.
      Additional publicity, however, could materially damage the public’s perception of us, impair the reputations of Mr. Gibbons and Western Alliance, and adverse public sentiment could affect the market price of our common stock and our financial results.

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A prolonged low interest rate environment could have a negative impact on our profitability.
      We believe that we are moderately asset sensitive, which means that our net interest income will generally rise in higher interest rate environments and decline during lower interest rate environments. Because our total income depends substantially (approximately 90% for the year ended December 31, 2004) on our net interest income, a reduction in our net interest income could have a material adverse impact on our net income. If we were to experience a prolonged low interest environment, our financial performance would likely suffer. We cannot assure you that we will be able to minimize this risk.
A deterioration in economic conditions generally could adversely affect our business, financial condition, results of operations and prospects.
      A deterioration in economic conditions generally could adversely affect our business, financial condition, results of operations and prospects. Such a deterioration could result in a variety of adverse consequences to us, including a reduction in net income and the following:
  •  Loan delinquencies, non-performing assets and foreclosures may increase, which could result in higher operating costs, as well as increases in our loan loss provisions;
 
  •  Demand for our products and services may decline, including the demand for loans, which would adversely affect our revenues; and
 
  •  Collateral for loans made by us may decline in value, reducing a customer’s borrowing power, and reducing the value of assets and collateral associated with our loans which would cause decreases in net interest income and increasing loan loss provisions.
Economic conditions either nationally or locally in areas in which our operations are concentrated may be less favorable than expected.
      Deterioration in local, regional, national or global economic conditions could result in, among other things, an increase in loan delinquencies, a decrease in property values, a change in housing turnover rate or a reduction in the level of bank deposits. Particularly, a weakening of the real estate or employment market in our primary market areas of Las Vegas, San Diego, Tucson and Phoenix could result in an increase in the number of borrowers who default on their loans and a reduction in the value of the collateral securing their loans, which in turn could have an adverse effect on our profitability and asset quality.
We have limited rights to use the “BankWest of Nevada” mark.
      Pursuant to a previous settlement agreement, we have agreed to use the word “BankWest” only within the name and service mark “BankWest of Nevada.” The settlement agreement covers our use of the mark only in Clark and Nye counties, Nevada. Our use of the mark “BankWest of Nevada” outside of Clark or Nye counties could result in:
  •  further claims of infringement, including costly litigation;
 
  •  an injunction prohibiting our proposed use of the mark; and
 
  •  the need to enter into licensing agreements, which may not be available on terms acceptable to us, if at all.
      Because of our limited rights to use the “BankWest of Nevada” name, if we expand our Nevada franchise beyond Clark and Nye counties, we may have to either change BankWest of Nevada’s name or operate under two separate names in Nevada.

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Risks Related to this Offering
“Anti-takeover” provisions and the regulations to which we are subject may make it more difficult for a third party to acquire control of us, even if the change in control would be beneficial to stockholders.
      We are a bank holding company incorporated in the State of Nevada. Anti-takeover provisions in Nevada law and our articles of incorporation and bylaws, as well as regulatory approvals that would be required under federal law, could make it more difficult for a third party to acquire control of us and may prevent stockholders from receiving a premium for their shares of our common stock. These provisions could adversely affect the market price of our common stock and could reduce the amount that stockholders might receive if we are sold.
      Our proposed articles of incorporation will provide that our board of directors may issue up to 20 million shares of preferred stock, in one or more series, without stockholder approval and with such terms, conditions, rights, privileges and preferences as the board of directors may deem appropriate. In addition, our proposed articles of incorporation will provide for a staggered board of directors and limitations on persons authorized to call a special meeting of stockholders.
      In addition, certain provisions of Nevada law may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of those shares, including:
  •  “business combination moratorium” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our voting stock) for three years following the date on which the shareholder becomes an interested shareholder; and
 
  •  “control share” provisions that provide that a person who acquires a “controlling interest” (which, under the definition in the statue, can be as small as 20% of the voting power in the election of directors) in our company will obtain voting rights in the “control shares” only to the extent such rights are conferred by a vote of the disinterested shareholders.
      Further, the acquisition of specified amounts of our common stock (in some cases, the acquisition of more than 5% of our common stock) may require certain regulatory approvals, including the approval of the FRB and one or more of our state banking regulatory agencies. The filing of applications with these agencies and the accompanying review process can take several months. Additionally, any corporation, partnership or other company that becomes a bank holding company as a result of acquiring control of us would become subject to regulation as a bank holding company under the Bank Holding Company Act of 1956, as amended.
      Additionally, upon completion of the offering, our executive officers, directors, and other five percent or greater stockholders and entities affiliated with them, will own approximately 53.35% of our outstanding common stock. These stockholders, acting together, will be able to influence matters requiring approval by our stockholders, including the election of directors. For example, our articles of incorporation provide that directors may be removed only by the affirmative vote of at least 80% of our outstanding common stock.
      The factors described above may hinder or even prevent a change in control of us, even if a change in control would be beneficial to our stockholders.
We do not anticipate paying any dividends on our common stock. As a result, capital appreciation, if any, of our common stock may be your sole source of gains in the future.
      We have never paid a cash dividend, and do not anticipate paying a cash dividend in the foreseeable future. As a result, you may only receive a return on your investment in the common stock if the market price of the common stock increases.

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Our Banks’ ability to pay dividends or lend funds to us is subject to regulatory limitations, which, to the extent we are not able to access those funds, may impair our ability to accomplish our growth strategy and pay our operating expenses.
      We expect to use our earnings as capital for operations and expansion of our business. Western Alliance is a legal entity separate and distinct from the Banks and our other non-Bank subsidiaries. Since we are a holding company with no significant assets other than the capital stock of our subsidiaries, we depend upon dividends from our subsidiaries for a substantial part of our revenue. Accordingly, our 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 earnings, financial condition and need for funds, as well as federal and state governmental policies and regulations applicable to us and each of those subsidiaries, which limit the amount that may be paid as dividends without prior approval. In addition, if any required payments on outstanding trust preferred securities are not made, we will be prohibited from paying dividends on our common stock.
A substantial number of shares of our common stock will be eligible for sale in the near future, which could adversely affect our stock price and could impair our ability to raise capital through the sale of equity securities.
      If our stockholders sell, or the market perceives that our stockholders intend to sell, substantial amounts of our common stock in the public market following this offering, the market price of our common stock could decline significantly. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price we deem appropriate. Upon completion of this offering, we will have outstanding approximately 22,122,211 shares of common stock. All of the shares sold in this offering will be freely tradable, except for any shares purchased by our “affiliates,” as that term is defined by Rule 144 under the Securities Act of 1933, as amended. Approximately 11,656,591 million shares of common stock, as well as 1,489,696 shares of common stock underlying our outstanding options and warrants, will be available for sale in the public 180 days after the date of this prospectus following the expiration of lock-up agreements between our management and directors, on the one hand, and the underwriters, on the other hand. As restrictions on resale end, the market price of our common stock could drop significantly if the holders of restricted shares sell them or are perceived by the market as intending to sell them.
We will retain broad discretion in using the net proceeds from this offering, and may not use the proceeds effectively.
      Although we expect to use our earnings as capital for operations and expansion of our business, we have not designated the amount of net proceeds we will use for any particular purpose. Accordingly, our management will retain broad discretion to allocate the net proceeds of this offering. The net proceeds may be applied in ways with which you and other investors in the offering may not agree. Moreover, our management may use the proceeds for corporate purposes that may not increase our market value or make us profitable. In addition, given our current liquidity position, it may take us some time to effectively deploy the proceeds from this offering. Until the proceeds are effectively deployed, our return on equity and earnings per share may be negatively impacted. Management’s failure to spend the proceeds effectively could have an adverse effect on our business, financial condition and results of operations.
There is no prior public market for our common stock, and our share price could be volatile and could decline following this offering, resulting in a substantial or complete loss on your investment.
      Prior to this offering, there has not been a public market for any class of our shares. An active trading market for our common stock may never develop or be sustained, which could affect your ability to sell your shares and could depress the market price of your shares. In addition, the initial public offering price will be determined through negotiations between us and the underwriters and may bear no relationship to the price at which the common stock will trade upon completion of this offering.

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      At times the stock markets, including the New York Stock Exchange, on which we intend to apply to list our common stock, experience significant price and volume fluctuations. As a result, the market price of our common stock is likely to be similarly volatile, and investors in our common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. In addition, we estimate that following this offering, approximately 53.35% of our outstanding common stock will be owned by our executive officers and directors. This substantial amount of common stock that is owned by our executive officers and directors may adversely affect the development of an active and liquid trading market.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
      Some of the statements contained in “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this prospectus constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward looking statements by terms such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or the negative of these terms or other comparable terminology.
      The forward-looking statements contained in this prospectus reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement, including those risks discussed under the heading “Risk Factors” in this prospectus. Some factors that could cause actual results to differ materially from historical or expected results include:
  •  changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business;
 
  •  inflation, interest rate, market and monetary fluctuations;
 
  •  changes in gaming or tourism in our primary market area;
 
  •  risks associated with our growth and expansion strategy and related costs;
 
  •  increased lending risks associated with our high concentration of commercial real estate, construction and land development and commercial, industrial loans;
 
  •  increases in competitive pressures among financial institutions and businesses offering similar products and services;
 
  •  higher defaults on our loan portfolio than we expect;
 
  •  changes in management’s estimate of the adequacy of the allowance for loan losses;
 
  •  legislative or regulatory changes or changes in accounting principles, policies or guidelines;
 
  •  management’s estimates and projections of interest rates and interest rate policy;
 
  •  the execution of our business plan; and
 
  •  other factors affecting the financial services industry generally or the banking industry in particular.
      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 8. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements set forth in this prospectus to reflect new information, future events or otherwise, except as may be required by the securities laws.

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USE OF PROCEEDS
      We estimate that the net proceeds from the sale of our common stock in the offering will be approximately $68.9 million, or approximately $78.2 million if the underwriters’ over-allotment option is exercised in full, assuming an initial public offering price of $20.00 per share (the midpoint of the range set forth on the cover page of this prospectus). In each case, this assumes the deduction of estimated offering expenses of $1.2 million in addition to underwriting discounts and commissions. We expect that we will retain approximately $40.0 million of the net proceeds at Western Alliance and contribute the remaining proceeds to the Banks. By increasing the Banks’ capital, the Banks will be permitted to expand their deposit and lending portfolios. See “Capitalization” for additional information regarding offering expenses and underwriting commissions and discounts.
      The proceeds retained by Western Alliance will be used for general corporate purposes, including but not limited to, the formation of additional de novo banks in new market areas with attractive growth prospects, the acquisition of other commercial banks or financial services companies and the development of additional products or services for new and existing customers. We have no present understandings or agreements or definitive plans concerning any specific acquisitions.
TRADING HISTORY AND DIVIDEND POLICY
      Prior to this offering there has been no public market for our common stock.
      We have never paid a cash dividend on our common stock and we do not anticipate paying any cash dividends in the foreseeable future. We intend to retain any earnings to help fund our growth. We anticipate continuing the policy of retaining earnings to fund growth for the foreseeable future.
      Western Alliance is a legal entity separate and distinct from the Banks and our other non-Bank subsidiaries. Since we are a holding company with no significant assets other than the capital stock of our subsidiaries, we depend upon dividends from our subsidiaries for a substantial part of our revenue. Accordingly, our 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 earnings, financial condition and need for funds, as well as federal and state governmental policies and regulations applicable to us and each of those subsidiaries, which limit the amount that may be paid as dividends without prior approval. See “Supervision and Regulation” for information regarding our ability to pay cash dividends. In addition, if any required payments on outstanding trust preferred securities are not made, we will be prohibited from paying dividends on our common stock.

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CAPITALIZATION
      The following table sets forth our capitalization and regulatory capital ratios as of March 31, 2005. Our capitalization is presented on an actual basis and on an as adjusted basis as if the offering had been completed as of March 31, 2005 and assuming:
  •  the net proceeds to us in this offering, at an assumed initial public offering price of $20.00 per share (the midpoint of the range set forth on the cover page of this prospectus) after deducting underwriting discounts and commissions and estimated offering expenses payable by us in this offering of $6.1 million; and
 
  •  the underwriters’ over-allotment option is not exercised.
      The following should be read in conjunction with our financial statements and related notes that are included in this prospectus.
                       
    March 31, 2005
     
    Actual   As adjusted
         
    ($ in thousands)
Junior Subordinated Debt
  $ 30,928     $ 30,928  
             
Stockholders’ Equity:
               
 
Common stock, $.0001 par value; 50,000,000 shares authorized; 18,372,211 issued and outstanding; 22,122,211 on an as adjusted basis(1)
    2       2  
 
Additional paid-in capital
    81,457       150,342  
 
Retained earnings
    63,537       63,537  
 
Deferred compensation — restricted stock
    (431 )     (431 )
 
Accumulated other comprehensive loss
    (7,483 )     (7,483 )
             
   
Total Stockholders’ Equity
    137,082       205,967  
             
     
Total Capitalization
  $ 168,010     $ 236,895  
             
Regulatory Capital Ratios:(2)
               
 
Leverage capital
    7.7 %     10.5 %
 
Tier 1 capital
    10.4       14.4  
 
Total capital
    11.4       15.5  
 
(1)  The above-table excludes the following: (a) 1,444,019 shares of common stock issuable upon the exercise of outstanding warrants at an exercise price of $7.62 per share; (b) 2,248,550 shares of common stock issuable upon the exercise of outstanding stock options at a weighted average exercise price of $9.32 per share; and (c) 6,950 shares of common stock available for future issuance under our equity compensation plans. In addition, subsequent to March 31, 2005, our stockholders approved (i) the 2005 Stock Incentive Plan, which increased the number of shares available for issuance under the plan by 1,000,000 shares; and (ii) amended and restated articles of incorporation, which provide for the issuance of up to 20,000,000 shares of serial preferred stock, and an increase in the authorized common stock by 50,000,000 shares to 100,000,000 shares.
 
(2)  The net proceeds from our sale of common stock in this offering are presumed to be invested in securities which carry a 20% risk weighting for purposes of as adjusted risk-based capital ratios. If the over-allotment option is exercised in full, net proceeds would be $78.2 million, our leverage capital ratio, Tier 1 capital ratio, and our total capital ratio would have been 10.9%, 15.0%, and 16.1%, respectively.

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DILUTION
      Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers of our common stock in this offering and the net tangible book value per share of common stock immediately after this offering. Net tangible book value per share represents the amount of total tangible assets less total liabilities, divided by the number of outstanding shares of common stock. Our net tangible book value as of March 31, 2005 was $131.8 million, or $7.17 per share, based on the number of shares of common stock outstanding as of March 31, 2005.
      After giving effect to the sale of the 3,750,000 shares of our common stock to be sold by us in this offering at an assumed initial public offering price of $20.00 per share, and after deducting underwriting discounts and commissions and estimated offering expenses, our pro forma as adjusted net tangible book value at March, 2005 would have been approximately $200.6 million, or $9.07 per share. This amount represents an immediate increase in pro forma net tangible book value of $1.90 per share to existing shareholders and an immediate dilution of $10.93 per share to new investors. The dilution to investors in this offering is illustrated in the following table:
                   
Initial public offering price per share
          $ 20.00  
 
Net tangible book value per share prior to offering
  $ 7.17          
 
Increase in net tangible book value per share attributable to new investors
    1.90          
 
Pro forma net tangible book value per share after offering
            9.07  
             
Dilution per share to new investors
          $ 10.93  
             
      The following table sets forth, as of March 31, 2005, on an adjusted basis as described above, the difference between the number of shares of common stock purchased from us by our existing stockholders and to be purchased from us by new investors in this offering, the aggregate cash consideration paid by our existing stockholders and to be paid by new investors in this offering and the average price per share paid by existing stockholders and to be paid by new investors in this offering. The table below is based upon an initial public offering price of $20.00 per share (the midpoint of the price range set forth on the cover page of this prospectus) before deducting estimated underwriting discounts and commissions and our estimated offering expenses.
                                           
    Shares Purchased   Total Consideration    
            Average Price
    Number   Percent   Amount   Percent   per Share
                     
    ($ in thousands)
Existing shareholders
    18,372,211       83.0 %   $ 82,363       52.3 %   $ 4.48  
New investors
    3,750,000       17.0       75,000       47.7       20.00  
                               
 
Total
    22,122,211       100.0 %   $ 157,363       100.0 %   $ 7.11  
                               
      If the underwriters exercise their over-allotment option in full, our existing stockholders would own approximately 81.2% and our new investors would own approximately 18.8% of the total number of shares of our common stock outstanding after this offering.
      The foregoing discussion and tables assume no exercise of stock options outstanding immediately following this offering. As of March 31, 2005, there were (a) 1,444,019 shares of common stock issuable upon the exercise of outstanding warrants at an exercise price of $7.62 per share and (b) 2,248,550 shares of common stock issuable upon the exercise of outstanding stock options at a weighted average exercise price of $9.32 per share. To the extent that any of these warrants and options are exercised there may be further dilution to new investors. In addition, you will incur additional dilution if we grant options, warrants, restricted stock or other rights to purchase our common stock in the future with exercise prices below the initial public offering price.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
      The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Selected Consolidated Financial Data” and our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Certain risks, uncertainties and other factors, including but not limited to those set forth under “Forward Looking Statements,” “Risk Factors” and elsewhere in this prospectus, may cause actual results to differ materially from those projected in the forward-looking statements.
Overview and History
      We are a bank holding company headquartered in Las Vegas, Nevada. We provide a full range of banking and related services to locally owned businesses, professional firms, real estate developers and investors, local nonprofit organizations, high net worth individuals and consumers through our subsidiary banks and financial services companies located in Nevada, Arizona and California. In addition to traditional lending and deposit gathering capabilities, we also offer a broad array of financial products and services aimed at satisfying the needs of small to mid-sized businesses and their proprietors, including cash management, trust administration and estate planning, custody and investments and equipment leasing.
      We generate the majority of our revenue from interest on loans, service charges on customer accounts and income from investment securities. This revenue is offset by interest expense paid on deposits and other borrowings and non-interest expense such as administrative and occupancy expenses. Net interest income is the difference between interest income on interest-earning assets such as loans and securities and interest expense on interest-bearing liabilities such as customer deposits and other borrowings which are used to fund those assets. Net interest income is our largest source of net income. Interest rate fluctuations, as well as changes in the amount and type of earning assets and liabilities, combine to affect net interest income.
      We provide a variety of loans to our customers, including commercial and residential real estate loans, construction and land development loans, commercial and industrial loans, and to a lesser extent, consumer loans. We rely primarily on locally generated deposits to provide us with funds for making loans. We intend to continue expanding our lending activities and have recently begun offering Small Business Administration, or SBA, loans.
      In addition to these traditional commercial banking capabilities, we also provide our customers with cash management, trust administration and estate planning, equipment leasing, and custody and investment services, resulting in revenue generated from non-interest income. We receive fees from our deposit customers in the form of service fees, checking fees and other fees. Other services such as safe deposit and wire transfers provide additional fee income. We may also generate income from time to time from the sale of investment securities. The fees collected by us and any gains on sales of securities are found in our Consolidated Statements of Income under “non-interest income.” Offsetting these earnings are operating expenses referred to as “non-interest expense.” Because banking is a very people intensive industry, our largest operating expense is employee compensation and related expenses.

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    Key Financial Measures
     
    At or for the Three Months    
    Ended March 31,   At or for the Years Ended December 31,
         
    2005   2004   2004   2003   2002
                     
    ($ in thousands, except per share data)
Net Income
  $ 5,321     $ 3,429     $ 20,057     $ 8,689     $ 8,409  
Basic earnings per share
    0.29       0.21       1.17       0.61       0.79  
Diluted earnings per share
    0.27       0.19       1.09       0.59       0.78  
Total Assets
    2,338,856       1,816,028       2,176,849       1,576,773       872,074  
Gross Loans
    1,331,801       832,803       1,188,535       733,078       464,355  
Total Deposits
    2,018,689       1,377,025       1,756,036       1,094,646       720,304  
Net interest margin(1)
    4.35 %     3.94 %     4.00 %     3.83 %     4.57 %
Efficiency Ratio
    59.24       59.60       56.26       60.25       57.24  
Return on average assets(1)
    0.98       0.86       1.05       0.76       1.22  
Return on average equity(1)
    15.28       13.54       17.48       12.19       19.39  
 
(1)  Annualized for the three-month periods ended March 31, 2005 and 2004.
Primary Factors in Evaluating Financial Condition and Results of Operations
      As a bank holding company, we focus on several factors in evaluating our financial condition and results of operations, including:
  •  Return on Average Equity, or ROE;
 
  •  Return on Average Assets, or ROA;
 
  •  Asset Quality;
 
  •  Asset and Deposit Growth; and
 
  •  Operating Efficiency.
      Return on Average Equity. Our net income for the three months ended March 31, 2005 increased 55.2% to $5.3 million compared to $3.4 million for the three months ended March 31, 2004. The increase in net income was due primarily to an increase in net interest income of $7.3 million and an increase in non-interest income of $1.0 million, offset by an increase of $255,000 to the provision for loan losses, the amount required to maintain the allowance for loan losses at an adequate level to absorb probable loan losses, and an increase of $4.9 million in other expenses. Basic earnings per share increased to $0.29 per share for the three months ended March 31, 2005 compared to $0.21 per share for the same period in 2004. Diluted earnings per share increased to $0.27 per share for the three months ended March 31, 2005 compared to $0.19 per share for the same period last year. The increase in net income resulted in an ROE of 15.3% for the three months ended March 31, 2005 compared to 13.5% for the three months ended March 31, 2004.
      Our net income for the year ended December 31, 2004 increased 130.8% to $20.1 million compared to $8.7 million for the year ended December 31, 2003. The increase in net income was due primarily to an increase in net interest income of $30.1 million and a decrease of $1.2 million to the provision for loan losses, partially offset by an increase of $17.6 million in other expenses. Basic earnings per share increased to $1.17 per share for the year ended December 31, 2004, compared to $0.61 per share for the same period in 2003. Diluted earnings per share increased to $1.09 per share for the year ended December 31, 2004, compared to $0.59 per share for the same period last year. The increase in net income resulted in an ROE of 17.5% for the year ended December 31, 2004, compared to 12.2% for the year ended December 31, 2003.
      Return on Average Assets. Our ROA for the three months ended March 31, 2005 increased to 0.98% compared to 0.86% for the same period in 2004. Our ROA for the year ended December 31, 2004 increased to

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1.05% compared to 0.76% for the same period in 2003. The increases in ROA are primarily due to the increases in net income discussed above.
      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. We measure asset quality in terms of nonperforming loans and assets as a percentage of gross loans and assets, and net charge-offs as a percentage of average loans. Nonperforming loans include loans past due 90 days or more and still accruing, non-accrual loans and restructured loans. Net charge-offs are calculated as the difference between charged-off loans and recovery payments received on previously charged-off loans. As of March 31, 2005, nonperforming loans were $632,000 compared to $1.6 million at December 31, 2004 and $275,000 at December 31, 2003. Nonperforming loans as a percentage of gross loans were 0.05% as of March 31, 2005, compared to 0.13% as of December 31, 2004 and 0.04% as of December 31, 2003. At March 31, 2005 and December 31, 2004 and 2003, our nonperforming assets were exclusively comprised of nonperforming loans. For the three months ended March 31, 2005, net recoveries as a percentage of average loans were 0.01%, compared to net charge-offs of less than 0.01% and 0.17% for the years ended December 31, 2004 and 2003.
      Asset Growth. The ability to produce loans and generate deposits is fundamental to our asset growth. Our assets and liabilities are comprised primarily of loans and deposits, respectively. Total assets increased 7.4% to $2.3 billion as of March 31, 2005 from $2.2 billion as of December 31, 2004 and $1.6 billion as of December 31, 2003. Gross loans grew 12.1% to $1.3 billion as of March 31, 2005 from $1.2 billion as of December 31, 2004 and $733.1 million as of December 31, 2003. Total deposits increased 15.0% to $2.0 billion as of March 31, 2005 from $1.8 billion as of December 31, 2004 and $1.1 billion as of December 31, 2003.
      Operating Efficiency. Operating efficiency is measured in terms of how efficiently income before income taxes is generated as a percentage of revenue. Our efficiency ratio (non-interest expenses divided by the sum of net interest income and non interest income) improved to 59.24% for the three months ended March 31, 2005 from 59.60% for the same period in 2004. Our efficiency ratios for the years ended December 31, 2004 and 2003 were 56.26% and 60.25%, respectively.
Critical Accounting Policies
      The Notes to Consolidated Financial Statements contain a summary of our significant accounting policies, including discussions on recently issued accounting pronouncements, our adoption of them and the related impact of their adoption. We believe that certain of these policies, along with various estimates that we are required to make in recording our financial transactions, are important to have a complete picture of our financial position. In addition, these estimates require us to make complex and subjective judgments, many of which include matters with a high degree of uncertainty. The following is a discussion of these critical accounting policies and significant estimates. Additional information about these policies can be found in Note 1 of the Consolidated Financial Statements.
      Allowance for Loan Losses. The allowance for loan losses is a valuation allowance for probable losses incurred in the loan portfolio. Our allowance for loan loss methodology incorporates a variety of risk considerations in establishing an allowance for loan loss that we believe is adequate to absorb losses in the existing portfolio. Such analysis addresses our historical loss experience, delinquency and charge-off trends, collateral values, changes in nonperforming loans, economic conditions, peer group experience and other considerations. This information is then analyzed to determine “estimated loss factors” which, in turn, is assigned to each loan category. These factors also incorporate known information about individual loans, including the borrowers’ sensitivity to interest rate movements. Changes in the factors themselves are driven by perceived risk in pools of homogenous loans classified by collateral type, purpose and term. Management monitors local trends to anticipate future delinquency potential on a quarterly basis. In addition to ongoing internal loan reviews and risk assessment, management utilizes an independent loan review firm to provide advice on the appropriateness of the allowance for loan losses.
      The allowance for loan losses is increased by the provision for loan losses charged to expense and reduced by loans charged off, net of recoveries. Provisions for loan losses are provided on both a specific and general basis. Specific allowances are provided for watch, criticized, and impaired credits for which the

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expected/anticipated loss may be measurable. General valuation allowances are based on a portfolio segmentation based on collateral type, purpose and risk grading, with a further evaluation of various factors noted above.
      We incorporate our internal loss history to establish potential risk based on collateral type securing each loan. As an additional comparison, we examine peer group banks to determine the nature and scope of their losses. Finally, we closely examine each credit graded “Watch List/ Special Mention” and below to individually assess the appropriate specific loan loss reserve for such credit.
      At least annually, we review the assumptions and formulae by which additions are made to the specific and general valuation allowances for loan losses in an effort to refine such allowance in light of the current status of the factors described above. The total loan portfolio is thoroughly reviewed at least quarterly for satisfactory levels of general and specific reserves together with impaired loans to determine if write downs are necessary.
      Although we believe the levels of the allowance as of March 31, 2005 and December 31, 2004 and 2003 were adequate to absorb probable losses in the loan portfolio, a decline in local economic or other factors could result in increasing losses that cannot be reasonably estimated at this time.
      Available-for-Sale Securities. Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities, requires that available-for-sale securities be carried at fair value. Management utilizes the services of a third party vendor to assist with the determination of estimated fair values. Adjustments to the available-for-sale securities fair value impact the consolidated financial statements by increasing or decreasing assets and stockholders’ equity.
      Stock Based Compensation. We account for stock-based employee compensation arrangements in accordance with provision of Accounting Principles Board, or APB, Opinion No. 25, “Accounting for Stock Issued to Employees” and comply with the disclosure provisions of Statement of Financial Accounting Standards, or SFAS, No. 123 “Accounting for Stock-Based Compensation.” Therefore, we do not record any compensation expense for stock options we grant to our employees where the exercise price equals the fair market value of the stock on the date of grant and the exercise price, number of shares eligible for issuance under the options and vesting period are fixed. We comply with the disclosure requirements of SFAS No. 123 and SFAS No. 148, which require that we disclose our pro forma net income or loss and net income or loss per common share as if we had expensed the fair value of the options.
      In December 2004, the Financial Accounting Standards Board published FASB Statement No. 123 (revised 2004), Share-Based Payment, or FAS 123(R). FAS 123(R) requires that the compensation cost relating to share-based payment transactions, including grants of employee stock options, be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. FAS 123(R) permits entities to use any option-pricing model that meets the fair value objective in the Statement. Modifications of share-based payments will be treated as replacement awards with the cost of the incremental value recorded in the financial statements.
      The Statement will be effective at the beginning of the first quarter of 2006. As of the effective date, we will apply the Statement using a modified version of prospective application. Under that transition method, compensation cost will be recognized for (1) all awards granted after the required effective date and to awards modified, cancelled, or repurchased after that date and (2) the portion of awards granted subsequent to completion of an IPO and prior to the effective date for which the requisite service has not yet been rendered, based on the grant-date fair value of those awards calculated for pro forma disclosures under SFAS 123. The impact of this statement on the Company in 2006 and beyond will depend on various factors, including our compensation strategy.
Trends and Developments Impacting Our Recent Results
      Certain trends emerged and developments have occurred that are important in understanding our recent results and that are potentially significant in assessing future performance.

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      Growth in our market areas. Our growth has been fueled in particular by the significant population and economic growth of the greater Las Vegas area where we conduct the majority of our operations. The growth in this area has coincided with significant investments in the gaming and tourism industry. The significant population increase has resulted in an increase in the acquisition of raw land for residential and commercial development, the construction of residential communities, shopping centers and office buildings, and the development and expansion of the businesses and professions that provide essential goods and services to this expanded population. Similarly, growth in the Phoenix, Tucson and San Diego markets has contributed to our growth.
      Asset sensitivity. Management uses various modeling strategies to manage the repricing characteristics of our assets and liabilities. These models contain a number of assumptions and can not take into account all the various factors that influence the sensitivities of our assets and liabilities. Despite these limitations, most of our models at March 31, 2005 indicated that our balance sheet was asset sensitive. A company is considered to be asset sensitive if the amount of its interest earning assets maturing or repricing within a certain time period exceed the amount of its interest-bearing liabilities also maturing or repricing within the same period. Being asset sensitive means generally that in times of rising interest rates, a company’s net interest income will increase, and in times of falling interest rates, net interest income will decrease.
      Because many of our assets are floating rate loans, which are funded by our relatively large non-interest bearing deposit base, we are asset sensitive. During 2003 and 2004, we mitigated this asset sensitivity and increased earnings by investing in mortgage-backed securities funded by short-term FHLB borrowings. This strategy had the effect of leveraging our excess capital to produce incremental returns without incurring additional credit risk. In light of the rising interest rate environment, beginning in the third quarter of 2004, we discontinued this strategy.
      We expect that if market interest rates continue to rise, our net interest margin and our net interest income will be favorably impacted. See “Quantitative and Qualitative Disclosure about Market Risk.”
      Impact of expansion on non-interest expense. We plan to open 11 additional branches in our existing markets over the next 18 months. We anticipate that the expansion will result in a significant increase in occupancy and equipment expense. The cost to construct and furnish a new branch is approximately $2.5 million, excluding the cost to lease or purchase the land on which the branch is located. Consistent with our historical growth strategy, as we open new offices and expand both within and outside our current markets, we plan to recruit seasoned relationship bankers, thereby increasing our salary expenses. Initially, this increase in salary expense is expected to be higher than the revenues to be received from the customer relationships brought to us by the new relationship bankers.
      Other non-interest expense items, including professional expenses and other costs related to compliance with the reporting requirements of the United States securities laws and compliance with the Sarbanes-Oxley Act of 2002, will increase significantly after we become a publicly traded company.
      Prior to 2005, Robert Sarver’s management company received an annual fee of $60,000 pursuant to a consulting agreement. The consulting agreement was terminated in 2005 and Mr. Sarver now receives an annual salary of $500,000. In addition, Mr. Sarver is eligible to receive a discretionary bonus in such amount as our Compensation Committee may determine, which amount is currently targeted to be 100% of his 2005 base salary.
      Impact of service center on non-interest income. We have a service center facility currently under development in the Las Vegas metropolitan area, which we anticipate will become operational in the third quarter of 2006. The anticipated cost to construct and furnish our service center will be between $13.0 and $15.0 million. We expect that this facility, once completed, will increase our capacity to provide courier, cash management and other business services. We anticipate this will have a favorable impact on our non-interest income.

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Results of Operations
      Our results of operations depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of loans receivable, securities and other short-term investments, and interest expense on interest-bearing liabilities, consisting primarily of deposits and borrowings. Our results of operations are also dependent upon our generation of non-interest income, consisting of income from trust and investment advisory services and banking service fees. Other factors contributing to our results of operations include our provisions for loan losses, gains or losses on sales of securities and income taxes, as well as the level of our non-interest expenses, such as compensation and benefits, occupancy and equipment and other miscellaneous operating expenses.
Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004
      The following table sets forth a summary financial overview for the three months ended March 31, 2005 and 2004.
                         
    Three Months Ended    
    March 31,    
         
    2005   2004   Increase
             
    ($ in thousands, except per share
    data)
Consolidated Statement of Earnings Data:
                       
Interest income
  $ 28,423     $ 18,877     $ 9,546  
Interest expense
    6,409       4,178       2,231  
                   
Net interest income
    22,014       14,699       7,315  
Provision for loan losses
    1,747       1,492       255  
                   
Net interest income after provision for loan losses
    20,267       13,207       7,060  
Other income
    2,584       1,564       1,020  
Other expense
    14,573       9,692       4,881  
                   
Net income before income taxes
    8,278       5,079       3,199  
Income tax expense
    2,957       1,650       1,307  
                   
Net income
  $ 5,321     $ 3,429     $ 1,892  
                   
Earnings per share — basic
  $ 0.29     $ 0.21     $ 0.08  
                   
Earnings per share — diluted
  $ 0.27     $ 0.19     $ 0.08  
                   
      The 55.2% increase in net income in the three months ended March 31, 2005 compared to the same period in 2004 was attributable primarily to an increase in net interest income of $7.3 million and an increase in non-interest income of $1.0 million, offset by an increase of $255,000 to the provision for loan losses and an increase of $4.9 million in other expenses. The increase in net interest income was the result of an increase in the volume of and yield earned on interest-earning assets, primarily loans.
      Net Interest Income and Net Interest Margin. The 49.8% increase in net interest income for the three months ended March 31, 2005 compared to the same period in 2004 was due to an increase in interest income of $9.5 million, reflecting the effect of an increase of $551.9 million in average interest-bearing assets which was funded with an increase of $634.2 million in average deposits, of which $273.8 million were non-interest bearing.
      The average yield on our interest-earning assets was 5.61% for the three months ended March 31, 2005, compared to 5.06% for the same period in 2004, an increase of 10.9%. The increase in the yield on our interest-earning assets is a result of an increase in market rates, repricing on our adjustable rate loans, and new loans originated at higher interest rates due to the higher interest rate environment for the three months ended March 31, 2005 versus the same period in 2004. Also, loans, which typically yield more than our other

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interest-bearing assets, increased as a percent of total interest-bearing assets from 50.4% for the three months ended March 31, 2004 to 60.1% for the same period in 2005.
      The cost of our average interest-bearing liabilities increased to 1.97% in the three months ended March 31, 2005, from 1.60% in the three months ended March 31, 2004, which is a result of higher rates paid on deposit accounts, borrowings and junior subordinated debt. The increase in the cost of our interest-bearing liabilities was partially offset by lower average balances on our borrowings, which typically carry higher rates than our deposits.
      Our average rate on our interest-bearing deposits increased 27.4% from 1.35% for the three months ended March 31, 2004, to 1.72% for the same period in 2005, reflecting increases in general market rates. Our average rate on total deposits (including non-interest bearing deposits) increased 24.1% from 0.83% for the three months ended March 31, 2004, to 1.03% for the same period in 2005.
      Our interest margin of 4.35% for the three months ended March 31, 2005 was higher than our margin for the same period in the previous year of 3.94% due to an increase in our yield on interest-bearing assets which exceeded the increase in our overall cost of funds.

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      Average Balances and Average Interest Rates. The table below sets forth balance sheet items on a daily average basis for the three months ended March 31, 2005 and 2004 and presents the daily average interest rates earned on assets and the daily average interest rates paid on liabilities for such periods. Non-accrual loans have been included in the average loan balances. Securities include securities available for sale and securities held to maturity. Securities available for sale are carried at amortized cost for purposes of calculating the average rate received on taxable securities above. Yields on tax-exempt securities and loans are not computed on a tax equivalent basis.
                                                   
    Three Months Ended March 31,
     
    2005   2004
         
    Average       Average   Average       Average
    Balance   Interest   Yield/Cost(6)   Balance   Interest   Yield/Cost(6)
                         
    ($ in thousands)
Earning Assets
                                               
Securities:
                                               
 
Taxable
  $ 763,554     $ 7,669       4.07 %   $ 700,066     $ 7,086       4.07 %
 
Tax-exempt(1)
    7,070       85       4.88       7,274       84       4.64  
                                     
 
Total securities
    770,624       7,754       4.08       707,340       7,170       4.08  
Federal funds sold
    35,498       213       2.43       22,127       51       0.93  
Loans(1)(2)(3)
    1,233,903       20,334       6.68       757,972       11,559       6.13  
Federal Home Loan Bank stock
    13,561       122       3.65       14,246       97       2.74  
                                     
 
Total earnings assets
    2,053,586       28,423       5.61       1,501,685       18,877       5.06  
Non-earning Assets
                                               
Cash and due from banks
    71,321                       62,335                  
Allowance for loan losses
    (15,595 )                     (11,658 )                
Bank-owned life insurance
    26,276                       25,089                  
Other assets
    58,838                       34,539                  
                                     
 
Total assets
  $ 2,194,426                     $ 1,611,990                  
                                     
Interest Bearing Liabilities
                                               
Interest-bearing deposits:
                                               
 
Interest checking
  $ 99,382     $ 97       0.40 %   $ 62,624     $ 23       0.15 %
 
Savings and money market
    714,193       3,015       1.71       449,611       1,407       1.26  
 
Time deposits
    249,830       1,407       2.28       190,781       937       1.98  
                                     
 
Total interest-bearing deposits
    1,063,405       4,519       1.72       703,016       2,367       1.35  
Short-term borrowings
    160,766       1,026       2.59       214,490       729       1.37  
Long-term debt
    63,700       398       2.53       103,507       732       2.84  
Junior subordinated debt
    30,928       466       6.11       30,928       350       4.55  
                                     
 
Total interest-bearing liabilities
    1,318,799       6,409       1.97       1,051,941       4,178       1.60  
                                     
Non-interest Bearing Liabilities
                                               
Noninterest-bearing deposits
    722,561                       448,757                  
Other liabilities
    11,813                       9,462                  
Stockholders’ equity
    141,253                       101,830                  
                                     
Total liabilities and stockholders’ equity
  $ 2,194,426                     $ 1,611,990                  
                                     
Net interest income and margin(4)
          $ 22,014       4.35 %           $ 14,699       3.94 %
                                     
Net interest spread(5)
                    3.64 %                     3.46 %
                                     
 
(1)  Yields on loans and securities have not been adjusted to a tax equivalent basis.
 
(2)  Net loan fees of $297,000 and $176,000 are included in the yield computation for March 31, 2005 and 2004, respectively.
 
(3)  Includes average non-accrual loans of $896,000 in 2005 and $842,000 in 2004.
 
(4)  Net interest margin is computed by dividing net interest income by total average earning assets.

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(5)  Net interest spread represents average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities.
 
(6)  Annualized.
     Net Interest Income. The table below demonstrates 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, non-accrual loans have been included in the average loan balances.
                           
    Three Months Ended March 31,
    2005 v. 2004
    Increase (Decrease)
    Due to Changes in (1)
     
    Volume   Rate   Total
             
    (In thousands)
Interest on securities:
                       
 
Taxable
  $ 638     $ (55 )   $ 583  
 
Tax-exempt
    (2 )     3       1  
 
Federal funds sold
    80       82       162  
Loans
    7,844       931       8,775  
Other investment
    (6 )     31       25  
                   
Total interest income
    8,554       992       9,546  
Interest expense:
                       
 
Interest checking
    36       38       74  
 
Savings and Money market
    1,117       491       1,608  
 
Time deposits
    334       136       470  
 
Short-term borrowings
    (343 )     640       297  
 
Long-term debt
    (249 )     (85 )     (334 )
 
Junior subordinated debt
          116       116  
                   
Total interest expense
    895       1,336       2,231  
                   
Net increase (decrease)
  $ 7,659     $ (344 )   $ 7,315  
                   
 
(1)  Changes due to both volume and rate have been allocated to volume changes.
      Provision for Loan Losses. The provision for loan losses in each period is reflected as a charge against earnings in that period. The provision is equal to the amount required to maintain the allowance for loan losses at a level that, in our judgment, is adequate to absorb probable loan losses inherent in the loan portfolio.
      Our provision for loan losses was $1.7 million for the three months ended March 31, 2005, compared to $1.5 million for the same period in 2004. The provision increased primarily due to the growth of the loan portfolio. Loan growth for the three months ended March 31, 2005 was $143.3 million, compared to $99.7 million for the three months ended March 31, 2004, an increase of $43.6 million. Both periods experienced net recoveries, although those for the period ended March 31, 2005 were $92,000 higher than for the period ended March 31, 2004.
      Non-Interest Income. We earn non-interest income primarily through fees related to:
  •  Trust and investment advisory services,
 
  •  Services provided to deposit customers, and
 
  •  Services provided to current and potential loan customers.

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      The following tables present, for the periods indicated, the major categories of non-interest income:
                           
    Three Months Ended    
    March 31,    
        Increase
    2005   2004   (Decrease)
             
    (In thousands)
Trust and investment advisory services
  $ 1,313     $ 146     $ 1,167  
Service charges
    555       609       (54 )
Income from bank owned life insurance
    289       322       (33 )
Mortgage loan pre-underwriting fees
    16       101       (85 )
Investment securities gains, net
    69             69  
Other
    342       386       (44 )
                   
 
Total non-interest income
  $ 2,584     $ 1,564     $ 1,020  
                   
      The $1.0 million, or 65.2%, increase in non-interest income was influenced by several factors. Miller/ Russell & Associates, Inc. was purchased on May 17, 2004, which produced $1.0 million in investment advisory fees in the three months ended March 31, 2005. We had no such income in the three month period ended March 31, 2004. Mortgage loan pre-underwriting fees decreased $85,000 due to a lower volume of refinance activity in the three months ended March 31, 2005 as compared to the same period in 2004, and a shift in strategy whereby we began originating mortgages for our own benefit rather than acting as a broker.
      Non-Interest Expense. The following table presents, for the periods indicated, the major categories of non-interest expense:
                           
    Three Months Ended    
    March 31,    
        Increase
    2005   2004   (Decrease)
             
    (In thousands)
Salaries and employee benefits
  $ 8,493     $ 5,414     $ 3,079  
Occupancy
    2,245       1,604       641  
Customer service
    708       471       237  
Advertising, public relations and business development
    549       460       89  
Legal, professional and director fees
    484       288       196  
Correspondent banking service charges and wire transfer costs
    396       235       161  
Audits and exams
    400       209       191  
Supplies
    261       185       76  
Data processing
    181       117       64  
Telephone
    167       129       38  
Insurance
    148       110       38  
Travel and automobile
    125       51       74  
Other
    416       419       (3 )
                   
 
Total non-interest expense
  $ 14,573     $ 9,692     $ 4,881  
                   
      Non-interest expense grew $4.9 million, or 50.4%. This growth is attributable to our overall growth, and specifically to the opening of new branches and hiring of new relationship officers and other employees. At March 31, 2005, we had 476 full-time equivalent employees compared to 322 at March 31, 2004. Miller/Russell was acquired in May 2004, Premier Trust was acquired on December 30, 2003, and three banking branches were opened during calendar year 2004. The increase in salaries and occupancy expenses related to the above totaled $3.7 million, which is 76% of the total increase in non-interest expenses. Other non-interest expense increased, in general, as a result of the growth in assets and operations of the two de novo banks and overall growth of BankWest of Nevada.

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      Provision for Income Taxes. We recorded tax provisions of $3.0 million and $1.7 million for the three months ended March 31, 2005 and 2004, respectively. Our effective tax rates were 35.7% and 32.5% for the periods ended March 31, 2005 and 2004, respectively. The increase of the effective tax rates from 2004 to 2005 was primarily due to state income taxes, as Alliance Bank of Arizona and Torrey Pines, on a combined basis, did not become profitable until after March 31, 2004.
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
      The following table sets forth a summary financial overview for the years ended December 31, 2004 and 2003.
                         
    Years Ended    
    December 31,    
        Increase
    2004   2003   (Decrease)
             
    ($ in thousands, except per share
    data)
Consolidated Statement of Earnings Data:
                       
Interest income
  $ 90,855     $ 53,823     $ 37,032  
Interest expense
    19,720       12,798       6,922  
                   
Net interest income
    71,135       41,025       30,110  
Provision for loan losses
    3,914       5,145       (1,231 )
                   
Net interest income after provision for loan losses
    67,221       35,880       31,341  
Other income
    8,726       4,270       4,456  
Other expense
    44,929       27,290       17,639  
                   
Net income before income taxes
    31,018       12,860       18,158  
Income tax expense
    10,961       4,171       6,790  
                   
Net income
  $ 20,057     $ 8,689     $ 11,368  
                   
Earnings per share — basic
  $ 1.17     $ 0.61     $ 0.56  
                   
Earnings per share — diluted
  $ 1.09     $ 0.59     $ 0.50  
                   
      The 130.8% increase in net income in the year ended December 31, 2004 compared to the year ended December 31, 2003 was attributable primarily to an increase in net interest income of $30.1 million and a $1.2 million decrease to the provision for loan losses, partially offset by a $17.6 million increase to other expenses. The increase in net interest income was the result of an increase in the volume of interest-earning assets, primarily loans, and a decrease in our cost of funds, due principally to an increase in non-interest bearing deposits.
      Net Interest Income and Net Interest Margin. The 73.4% increase in net interest income for the year ended December 31, 2004 compared to the year ended December 31, 2003 was due to an increase in interest income of $37.0 million, reflecting the effect of an increase of $706.4 million in average interest-bearing assets which was funded with an increase of $558.7 million in average deposits, of which $255.5 million were non-interest bearing.
      The average yield on our interest-earning assets was 5.11% for the year ended December 31, 2004, compared to 5.03% for the year ended December 31, 2003, an increase of 1.6%. The slight increase in the yield on our interest-earning assets is a result of an increase in the yield earned on our securities portfolio and a shift of federal funds sold into higher-yielding securities, offset by a decline in the yield on our loan portfolio as fixed rate loans repriced at lower interest rate levels. The increase in the yield on our securities portfolio from 3.70% in 2003 to 3.89% in 2004 was due to two factors: (1) most of the growth of our securities portfolio was in mortgage-backed securities, which typically yield more than our other securities classes; and (2) premium amortization on our mortgage-backed securities portfolio decreased from 2003 to 2004 due to less prepayment activity on the underlying mortgages.

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      The cost of our average interest-bearing liabilities decreased to 1.68% in the year ended December 31, 2004, from 1.76% in the year ended December 31, 2003, which is a result of lower rates paid on deposit accounts, offset by higher average balances and rates paid on borrowings.
      Our average rate on our interest-bearing deposits decreased 4.0% from 1.49% for the year ended December 31, 2003, to 1.43% for the year ended December 31, 2004, reflecting reductions in general market rates. Our average rate on total deposits (including non-interest bearing deposits) decreased 8.7% from 0.92% for the year ended December 31, 2003, to 0.84% for the year ended December 31, 2004.
      Our interest margin of 4.00% for the year ended December 31, 2004 was higher than our margin for the previous year of 3.83% due to an increase in our yield on interest-bearing assets and a decrease in our overall cost of funds. Both of which are primarily attributable to an increase in the volume of interest earning assets and interest bearing liabilities as opposed to a change in rates.

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      Average Balances and Average Interest Rates. The table below sets forth balance sheet items on a daily average basis for the years ended December 31, 2004 and 2003 and presents the daily average interest rates earned on assets and the daily average interest rates paid on liabilities for such periods. Non-accrual loans have been included in the average loan balances. Securities include securities available for sale and securities held to maturity. Securities available for sale are carried at amortized cost for purposes of calculating the average rate received on taxable securities below.
                                                   
    Years Ended December 31,
     
    2004   2003
         
    Average       Average   Average       Average
    Balance   Interest   Yield/Cost   Balance   Interest   Yield/Cost
                         
    ($ in thousands)
Earning Assets
                                               
Securities:
                                               
 
Taxable
  $ 781,407     $ 30,373       3.89 %   $ 432,425     $ 15,938       3.69 %
 
Tax-exempt(1)
    7,198       341       4.74       7,266       346       4.76  
                                     
 
Total securities
    788,605       30,714       3.89       439,691       16,284       3.70  
Federal funds sold
    25,589       293       1.15       52,735       578       1.10  
Loans(1)(2)(3)
    947,848       59,311       6.26       571,501       36,792       6.44  
Federal Home Loan Bank stock
    14,320       537       3.75       6,063       169       2.79  
                                     
 
Total earnings assets
    1,776,362       90,855       5.11       1,069,990       53,823       5.03  
Non-earning Assets
                                               
Cash and due from banks
    67,334                       41,415                  
Allowance for loan losses
    (13,370 )                     (8,783 )                
Bank-owned life insurance
    25,544                       17,934                  
Other assets
    47,077                       28,264                  
                                     
 
Total assets
  $ 1,902,947                     $ 1,148,820                  
                                     
Interest Bearing Liabilities
                                               
Interest-bearing deposits:
                                               
 
Interest checking
  $ 73,029     $ 142       0.19 %   $ 51,723     $ 93       0.18 %
 
Savings and money market
    561,744       7,585       1.35       336,012       4,358       1.30  
 
Time deposits
    214,515       4,396       2.05       158,418       3,707       2.34  
                                     
 
Total interest-bearing deposits
    849,288       12,123       1.43       546,153       8,158       1.49  
Short-term borrowings
    239,175       4,472       1.87       111,258       1,671       1.50  
Long-term debt
    54,733       1,586       2.90       37,701       1,475       3.91  
Junior subordinated debt
    30,928       1,539       4.98       30,928       1,494       4.83  
                                     
 
Total interest-bearing liabilities
    1,174,124       19,720       1.68       726,040       12,798       1.76  
                                     
Non-interest Bearing Liabilities
                                               
Noninterest-bearing deposits
    600,790                       345,274                  
Other liabilities
    13,268                       6,230                  
Stockholders’ equity
    114,765                       71,276                  
                                     
Total liabilities and stockholders’ equity
  $ 1,902,947                     $ 1,148,820                  
                                     
Net interest income and margin(4)
          $ 71,135       4.00 %           $ 41,025       3.83 %
                                     
Net interest spread(5)
                    3.43 %                     3.27 %
                                     
 
(1)  Yields on loans and securities have not been adjusted to a tax equivalent basis.
 
(2)  Net loan fees of $872,000 and $810,000 are included in the yield computation for 2004 and 2003, respectively.
 
(3)  Includes average non-accrual loans of $426,000 in 2004 and $393,000 in 2003.
 
(4)  Net interest margin is computed by dividing net interest income by total average earning assets.
 
(5)  Net interest spread represents average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities.

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     Net Interest Income. 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, non-accrual loans have been included in the average loan balances.
                           
    Years Ended December 31,
     
    2004 v. 2003
    Increase (Decrease)
    Due to Changes in(1)
     
    Volume   Rate   Total
             
    (In thousands)
Interest on securities:
                       
 
Taxable
  $ 13,565     $ 870     $ 14,435  
 
Tax-exempt
    (3 )     (2 )     (5 )
 
Federal funds sold
    (311 )     26       (285 )
Loans
    23,550       (1,031 )     22,519  
Other investment
    310       58       368  
                   
Total interest income
    37,111       (79 )     37,032  
Interest expense:
                       
 
Interest checking
    41       8       49  
 
Savings and Money market
    3,048       179       3,227  
 
Time deposits
    1,150       (461 )     689  
 
Short-term borrowings
    2,392       409       2,801  
 
Long-term debt
    494       (383 )     111  
 
Junior subordinated debt
          45       45  
                   
Total interest expense
    7,125       (203 )     6,922  
                   
Net increase (decrease)
  $ 29,986     $ 124     $ 30,110  
                   
 
(1)  Changes due to both volume and rate have been allocated to volume changes.
      Provision for Loan Losses. The provision for loan losses in each period is reflected as a charge against earnings in that period. The provision is equal to the amount required to maintain the allowance for loan losses at a level that, in our judgment, is adequate to absorb probable loan losses inherent in the loan portfolio.
      Our provision for loan losses declined to $3.9 million for the year ended December 31, 2004, from $5.1 million for the year ended December 31, 2003. The provision declined because (1) net charge-offs decreased from $953,000 in 2003 to $21,000 in 2004; (2) our asset quality has remained high, with nonperforming loans as a percentage of total loans at 0.13% at December 31, 2004 and 0.04% at December 31, 2003; and (3) we have maintained a relatively low level of charge-offs over the last five years, which yielded lower loss experience factors in our required reserve calculations. These factors are adjusted periodically to reflect this historical experience and were most recently adjusted in December 2004.
      Non-Interest Income. We earn non-interest income primarily through fees related to:
  •  Trust and investment advisory services,
 
  •  Services provided to deposit customers, and
 
  •  Services provided to current and potential loan customers.

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      The following tables present, for the periods indicated, the major categories of non-interest income:
                           
    Years Ended    
    December 31,    
        Increase
    2004   2003   (Decrease)
             
    (In thousands)
Trust and investment advisory services
  $ 2,896     $     $ 2,896  
Service charges
    2,333       1,998       335  
Income from bank owned life insurance
    1,203       967       236  
Mortgage loan pre-underwriting fees
    435       792       (357 )
Investment securities gains (losses), net
    19       (265 )     284  
Other
    1,840       778       1,062  
                   
 
Total non-interest income
  $ 8,726     $ 4,270     $ 4,456  
                   
      The $4.5 million, or 104.4%, increase in non-interest income was influenced by several factors. Premier Trust, Inc. was purchased on December 30, 2003, and Miller/ Russell & Associates, Inc. was purchased on May 17, 2004. Collectively, these subsidiaries produced $2.9 million in trust and investment advisory fees in the year ended December 31, 2004. We had no such income in 2003.
      Service charges increased $335,000 from 2003 to 2004 due to higher deposit balances and the growth in our customer base.
      Income from bank owned life insurance, or BOLI, increased $236,000. We purchased the BOLI products in 2003 to help offset employee benefit costs. The first year for which we earned twelve months’ income from BOLI was 2004.
      Mortgage loan pre-underwriting fees decreased $357,000 due to a lower volume of refinance activity in 2004 as compared to 2003, and a shift in strategy whereby we began originating certain mortgages for our own portfolio rather than acting as a broker for mortgages.
      Other income increased $1.1 million, due in part, to the sale and servicing of SBA loans by Alliance Bank of Arizona, which resulted in other income of $341,000, and the increase in ATM fees, income from wire transfer activity and debit card income.
      Non-Interest Expense. The following table presents, for the periods indicated, the major categories of non-interest expense:
                           
    Years Ended    
    December 31,    
        Increase
    2004   2003   (Decrease)
             
    (In thousands)
Salaries and employee benefits
  $ 25,590     $ 15,615     $ 9,975  
Occupancy
    7,309       4,820       2,489  
Customer service
    1,998       752       1,246  
Advertising, public relations and business development
    1,672       989       683  
Legal, professional and director fees
    1,405       1,111       294  
Correspondent banking service charges and wire transfer costs
    1,260       512       748  
Audits and exams
    935       435       500  
Supplies
    838       619       219  
Data processing
    641       466       175  
Telephone
    578       424       154  
Insurance
    540       305       235  
Travel and automobile
    467       261       206  
Organizational costs
          604       (604 )
Other
    1,696       377       1,319  
                   
 
Total non-interest expense
  $ 44,929     $ 27,290     $ 17,639  
                   

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      Non-interest expense grew $17.6 million, or 64.6%. This growth is attributable to our overall growth, and specifically to the opening of new branches and the hiring of new relationship officers and other employees, particularly at Alliance Bank of Arizona and Torrey Pines Bank, both of which opened during the year ended December 31, 2003. At December 31, 2004, we had 454 full-time equivalent employees compared to 317 at December 31, 2003. Miller/ Russell was acquired in 2004, Premier Trust was acquired on December 30, 2003, and three banking branches were opened during 2004. Two bank branches were opened at the end of 2003, causing a minimal impact on 2003 expenses. The increase in salaries and occupancy expenses related to the above totaled $12.5 million, which is 71% of the total increase in non-interest expenses.
      Also affecting non-interest expenses was the increase in our customer service costs. This line item grew $1.2 million, or 166%, due primarily to an increase in analysis earnings credits paid to certain title company depositors of $606,000, due to higher balances maintained by the title companies and higher earnings credit rates at the end of 2004. We provide an analysis earnings credit for certain title company depositors, which is calculated by applying a variable crediting rate to such customers’ average monthly deposit balances, less any deposit service charges incurred. We then purchase external services on their behalf based on the amount of the earnings credit. These external services, which are commonly offered in the banking industry, include courier, bookkeeping and data processing services. The costs associated with these earnings credits will increase or decrease based on movements in crediting rates and fluctuations in the average monthly deposit balances. The remaining increase is attributable to growth in our customer base and branch locations.
      Our correspondent banking service charges and wire transfer costs increased $748,000, or 146.1%. At the end of 2003, we converted to a new wire transfer system which allowed for a much more efficient wire transfer process. This effectively allowed us to handle a much higher volume of wire transfers at current staffing levels, although we incurred additional software and data processing costs in 2004 that are reflected in this line item.
      We incurred $604,000 of organizational costs in 2003 related to the opening of Alliance Bank of Arizona and Torrey Pines Bank the same year. No new banks were opened in 2004, and thus no organizational costs were incurred.
      Other non-interest expense increased $1.3 million from December 31, 2003 to December 31, 2004. Other non-interest expense increased, in general, as a result of the growth in assets and operations of the two de novo banks and overall growth of BankWest of Nevada. The first full year of operations for the two de novo banks was 2004.
      Provision for Income Taxes. We recorded tax provisions of $11.0 million and $4.2 million for the years ended December 31, 2004 and 2003, respectively. Our effective tax rates were 35.3% and 32.4% for 2004 and 2003, respectively. The increase of the effective tax rates from 2003 to 2004 was primarily due to state income taxes, as 2004 was the first full year of operations in Arizona and California.

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Year Ended December 31, 2003 Compared to Year Ended December 31, 2002
      The following table sets forth a summary financial overview for the years ended December 31, 2003 and 2002.
                         
    Years Ended    
    December 31,    
        Increase
    2003   2002   (Decrease)
             
    ($ in thousands, except per share
    data)
Consolidated Statement of Earnings Data:
                       
Interest income
  $ 53,823     $ 39,117     $ 14,706  
Interest expense
    12,798       9,771       3,027  
                   
Net interest income
    41,025       29,346       11,679  
Provision for loan losses
    5,145       1,587       3,558  
                   
Net interest income after provision for loan losses
    35,880       27,759       8,121  
Other income
    4,270       3,935       335  
Other expense
    27,290       19,050       8,240  
                   
Net income before income taxes
    12,860       12,644       216  
Income tax expense
    4,171       4,235       (64 )
                   
Net income
  $ 8,689     $ 8,409     $ 280  
                   
Earnings per share — basic
  $ 0.61     $ 0.79     $ (0.18 )
                   
Earnings per share — diluted
  $ 0.59     $ 0.78     $ (0.19 )
                   
      Our net income grew by 3.3% to $8.7 million for the year ended December 31, 2003, as compared to $8.4 million for the year ended December 31, 2002. The increase is attributable to an increase of net interest income of $11.7 million, offset by an increased provision for loan losses of $3.6 million and an increase in non-interest expenses of $8.2 million. The increase in net interest income was a result of an increase in the volume of interest-earning assets, both investments and loans, and a decrease in our cost of funds due principally to lower rates paid on deposit accounts.
      Net Interest Income and Net Interest Margin. The 39.8% increase in net interest income for the year was due to an increase in interest income of $14.7 million, reflecting the effect of an increase of $427.3 million in average interest-earning assets, funded by an increase of $307.1 million in average deposits and an increase of $122.9 million in average borrowings.
      The average yield on our interest-earning assets was 5.03% for the year ended December 31, 2003, compared to 6.09% for the year ended December 31, 2002, a decrease of 17.4%. The decrease in our yield on interest-earning assets is a result of a general decline in interest rates. Thus, interest-bearing assets acquired in 2003 yielded lower rates than the respective portfolios earned in 2002. Further, certain variable rate instruments that were on the books in 2002 re-priced in 2003 at lower rates.
      The cost of our average interest-bearing liabilities decreased to 1.76% in the year ended December 31, 2003, compared to 2.37% in 2002, which is a result of lower rates paid on deposits and borrowings.
      The average rate on our interest-bearing deposits decreased 28.7% from 2.09% for the year ended December 31, 2002, to 1.49% for the year ended December 31, 2003, reflecting reductions in general market rates. However, the reduction in general market rates was offset by higher interest-bearing deposit rates at Alliance Bank of Arizona.
      Our interest margin of 3.83% for the year ended December 31, 2003 was lower than our margin for the previous year of 4.57% due to a decrease in our yield on interest-bearing assets. We also experienced a decrease in our cost of funding, but, due partially to the higher rates paid at Alliance Bank of Arizona, it was not enough to offset the decrease in asset yield.

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      Average Balances and Average Interest Rates. The table below sets forth balance sheet items on a daily average basis for the years ended December 31, 2003 and 2002, and presents the daily average interest rates earned on assets and the daily average interest rates paid on liabilities for such periods. Non-accrual loans have been included in the average loan balances. Securities include securities available for sale and securities held to maturity. Securities available for sale are carried at amortized cost for purposes of calculating the average rate received on taxable securities above. Yields on tax-exempt securities and loans are not computed on a tax equivalent basis.
                                                   
    Years Ended December 31,
     
    2003   2002
         
        Average   Average       Average
    Average Balance   Interest   Yield/Cost   Balance   Interest   Yield/Cost
                         
    ($ in thousands)
Earning Assets
                                               
Securities:
                                               
 
Taxable
  $ 432,425     $ 15,938       3.69 %   $ 143,202     $ 6,616       4.62 %
 
Tax-exempt(1)
    7,266       346       4.76       7,419       354       4.77  
                                     
 
Total securities
    439,691       16,284       3.70       150,621       6,970       4.63  
Federal funds sold
    52,735       578       1.10       51,358       794       1.55  
Loans(1)(2)(3)
    571,501       36,792       6.44       439,391       31,290       7.12  
Federal Home Loan Bank stock
    6,063       169       2.79       1,364       63       4.62  
                                     
 
Total earnings assets
    1,069,990       53,823       5.03       642,734       39,117       6.09  
Non-earning Assets
                                               
Cash and due from banks
    41,415                       33,324                  
Allowance for loan losses
    (8,783 )                     (7,110 )                
Bank-owned life insurance
    17,934                                        
Other assets
    28,264                       18,979                  
                                     
 
Total assets
  $ 1,148,820                     $ 687,927                  
                                     
Interest Bearing Liabilities
                                               
Interest-bearing deposits:
                                               
 
Interest checking
  $ 51,723     $ 93       0.18 %   $ 43,139     $ 102       0.24 %
 
Savings and money market
    336,012       4,358       1.30       198,613       3,823       1.92  
 
Time deposits
    158,418       3,707       2.34       112,782       3,469       3.08  
                                     
 
Total interest-bearing deposits
    546,153       8,158       1.49       354,534       7,394       2.09  
Short-term borrowings
    111,258       1,671       1.50       14,332       354       2.47  
Long-term debt
    37,701       1,475       3.91       27,098       1,085       4.00  
Junior subordinated debt
    30,928       1,494       4.83       16,108       938       5.82  
                                     
 
Total interest-bearing liabilities
    726,040       12,798       1.76       412,072       9,771       2.37  
Non-interest Bearing Liabilities
                                               
Noninterest-bearing demand deposits
    345,274                       229,843                  
Other liabilities
    6,230                       2,642                  
Stockholders’ equity
    71,276                       43,370                  
                                     
Total liabilities and stockholders’ equity
  $ 1,148,820                     $ 687,927                  
                                     
Net interest income and margin(4)
          $ 41,025       3.83 %           $ 29,346       4.57 %
                                     
Net interest spread(5)
                    3.27 %                     3.72 %
                                     
 
(1)  Yields on loans and securities have not been adjusted to a tax equivalent basis.
 
(2)  Net loan fees of $810,000 and $674,000 are included in the yield computation for 2003 and 2002, respectively.
 
(3)  Includes average non-accrual loans of $393,000 in 2003 and $1.3 million in 2002.

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(4)  Net interest margin is computed by dividing net interest income by total average earning assets.
 
(5)  Net interest spread represents average yield earned on interest earning assets less the average rate paid on interest bearing liabilities.
      Net Interest Income. The table below demonstrates 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, non-accrual loans have been included in the average loan balances.
                           
    Years Ended December 31,
     
    2003 v. 2002
    Increase (Decrease)
    Due to Changes in (1)
     
    Volume   Rate   Total
             
    (In thousands)
Interest on securities:
                       
 
Taxable
  $ 10,660     $ (1,338 )   $ 9,322  
 
Tax-exempt
    (7 )     (1 )     (8 )
 
Federal funds sold
    15       (231 )     (216 )
Loans
    8,505       (3,003 )     5,502  
Other investment
    131       (25 )     106  
                   
Total interest income
    19,304       (4,598 )     14,706  
Interest expense:
                       
 
Interest checking
    15       (24 )     (9 )
 
Savings and Money market
    1,782       (1,247 )     535  
 
Time deposits
    1,068       (830 )     238  
 
Short-term borrowings
    1,532       (215 )     1,317  
 
Long-term debt
    217       173       390  
 
Junior subordinated debt
    716       (160 )     556  
                   
Total interest expense
    5,330       (2,303 )     3,027  
                   
Net increase (decrease)
  $ 13,974     $ (2,295 )   $ 11,679  
                   
 
(1)  Changes due to both volume and rate have been allocated to volume changes.
      Provision for Loan Losses. The provision for loan losses in each period is reflected as a charge against earnings in that period. The provision is equal to the amount required to maintain the allowance for loan losses at a level that, in our judgment, is adequate to absorb probable loan losses inherent in the loan portfolio.
      Our provision for loan losses increased $3.6 million for the year ended December 31, 2003, compared to December 31, 2002. The provision increased primarily because of a growth in loans of $268.7 million in 2004, as compared to the previous year’s loan growth of $57.1 million. Our provision also increased due to the significant growth seen at our two de novo banks in 2003.

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      Non-Interest Income. The following table presents, for the periods indicated, the major categories of non-interest income.
                           
    Years Ended    
    December 31,    
        Increase
    2003   2002   (Decrease)
             
    (In thousands)
Service charges
  $ 1,998     $ 1,644     $ 354  
Income from bank owned life insurance
    967             967  
Mortgage loan pre-underwriting fees
    792       719       73  
Investment securities gains (losses), net
    (265 )     609       (874 )
Other
    778       963       (185 )
                   
 
Total non-interest income
  $ 4,270     $ 3,935     $ 335  
                   
      The $354,000, or 21.5%, increase in service charges was due to higher deposit balances and the growth in our customer base.
      BOLI was purchased in March 2003, and thus there was no income from bank owned life insurance in the year ended December 31, 2002. We purchased BOLI to help offset employee benefit costs.
      Mortgage loan pre-underwriting fees increased $73,000, or 10.2%, due to an increase in mortgage activity in the year ended December 31, 2003 over the year ended December 31, 2002, caused by lower interest rates and a strong real estate market.
      Non-Interest Expense. The following table presents, for the periods indicated, the major categories of non-interest expense.
                           
    Years Ended    
    December 31,    
        Increase
    2003   2002   (Decrease)
             
    (In thousands)
Salaries and employee benefits
  $ 15,615     $ 9,921     $ 5,694  
Occupancy
    4,820       3,794       1,026  
Legal, professional and director fees
    1,111       775       336  
Advertising, public relations and business development
    989       687       302  
Customer service
    752       831       (79 )
Supplies
    619       350       269  
Organizational costs
    604       461       143  
Correspondent banking service charges and wire transfer costs
    512       291       221  
Data processing
    466       324       142  
Audits and exams
    435       330       105  
Telephone
    424       191       233  
Insurance
    305       209       96  
Travel and automobile
    261       131       130  
Other
    377       755       (378 )
                   
 
Total non-interest expense
  $ 27,290     $ 19,050     $ 8,240  
                   
      The $8.2 million, or 43.3%, increase in total non-interest expense was principally the result of the opening of two de novo banks in the year ended December 31, 2003, and to a lesser extent the overall growth of BankWest of Nevada. The salaries and employee benefits expense increased $5.7 million, or 57.4%, which is directly attributable to the opening of two new banks and the hiring of additional staff at BankWest of Nevada to service the growing customer base. We had 317 full-time equivalent employees at December 31, 2003, as compared to 207 at December 31, 2002.

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      The $1.0 million, or 27.0%, growth in occupancy expense is also a result of the opening of the de novo banks. Alliance Bank of Arizona and Torrey Pines Bank opened a total of five branch locations in Phoenix and Tucson, Arizona and San Diego, California, respectively, during the year ended December 31, 2003.
      The increases in salaries and employee benefits and occupancy expenses noted above totaled $6.7 million, or 81.6% of the total increase in non-interest expenses.
      Most other individual line items comprising total non-interest expenses were also affected by the opening of Alliance Bank of Arizona and Torrey Pines Bank, including advertising, supplies, correspondent banking service charges, data processing, audits and exams, telephone, insurance and travel and automobile. Accordingly, each of these line items increased in 2003 as compared to 2002.
      Customer service is one of the few non-interest expense items to experience a decrease from the year ended December 31, 2002 to the year ended December 31, 2003. Customer service expense decreased $79,000, or 9.5%. This is primarily due to a decrease in the analysis earnings credit paid to certain title company depositors of $230,000, due to lower balances maintained by the title companies and a lower earnings credit rate during the year ended December 31, 2003. This decrease was offset by an increase to other components of this expense line-item, due to growth in our customer base and the new banking institutions.
      We incurred $604,000 and $461,000 in organizational costs in the years ended December 31, 2003 and 2002, respectively, related to the organization and opening of Alliance Bank of Arizona and Torrey Pines Bank.
      Provision for Income Taxes. We recorded tax provisions of $4.2 million in 2003 and 2002. Our effective tax rates for 2003 and 2002 were comparable at 32.4% and 33.5%, respectively.
Financial Condition
Total Assets
      On a consolidated basis, our total assets as of March 31, 2005, December 31, 2004 and December 31, 2003 were $2.3 billion, $2.2 billion and $1.6 billion, respectively. The overall increase from December 31, 2004 to March 31, 2005 was primarily due to a $143.3 million, or 12.1%, increase in gross loans and a $81.1 million, or 70.3% increase in cash and cash equivalents. Likewise, the growth in assets from December 31, 2003 to December 31, 2004 was primarily due to a $455.5 million, or 62.1%, increase in gross loans and a $49.5 million, or 75.1% increase in cash and cash equivalents.
Loans
      Our gross loans, including deferred loan fees, on a consolidated basis as of March 31, 2005, December 31, 2004, and December 31, 2003 were $1.3 billion, $1.2 billion and $733.1 million, respectively. Since December 31, 2000, construction and land development loans experienced the highest growth within the portfolio, growing from $37.3 million to $362.9 million as of March 31, 2005. Residential real estate experienced the second highest amount of growth, growing from $20.0 million as of December 31, 2000 to $140.2 million as of March 31, 2005. Our overall growth in loans from December 31, 2000 to March 31, 2005 is consistent with our focus and strategy to grow our loan portfolio by focusing on markets which we believe have attractive growth prospects. See “Business — Business Strategy.”

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      The following table shows the amounts of loans outstanding by type of loan at the end of each of the periods indicated.
                                                   
        December 31,
    March 31,    
    2005   2004   2003   2002   2001   2000
                         
    (In thousands)
Construction and land development(1)
  $ 362,909     $ 323,176     $ 195,182     $ 127,974     $ 82,604     $ 37,283  
Commercial real estate
    544,168       491,949       324,702       209,834       208,683       168,314  
Residential real estate
    140,181       116,360       42,773       21,893       18,067       20,043  
Commercial and industrial
    266,691       241,292       159,889       94,411       85,050       84,200  
Consumer
    19,993       17,682       11,802       10,281       13,156       14,561  
Net deferred loan fees
    (2,141 )     (1,924 )     (1,270 )     (38 )     (350 )     (51 )
                                     
 
Gross loans, net of deferred fees
    1,331,801       1,188,535       733,078       464,355       407,210       324,350  
Less: Allowance for loan losses
    (17,114 )     (15,271 )     (11,378 )     (6,449 )     (6,563 )     (4,746 )
                                     
    $ 1,314,687     $ 1,173,264     $ 721,700     $ 457,906     $ 400,647     $ 319,604  
                                     
 
(1)  Includes raw commercial land of approximately $74.6 million, $77.3 million, $42.9 million, $30.2 million, $21.4 million, and $6.1 million at March 31, 2005 and December 31, 2004, 2003, 2002, 2001 and 2000, respectively.

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      The following tables set forth the amount of loans outstanding by type of loan as of March 31, 2005 and December 31, 2004 which were contractually due in one year or less, more than one year and less than five years, and more than five years based on remaining scheduled repayments of principal. Lines of credit or other loans having no stated final maturity and no stated schedule of repayments are reported as due in one year or less. The tables also present an analysis of the rate structure for loans within the same maturity time periods.
                                     
    March 31, 2005
     
    Due    
    Within   Due 1-5   Due Over    
    One Year   Years   Five Years   Total
                 
    (In thousands)
Construction and land development
  $ 285,887     $ 69,612     $ 7,410     $ 362,909  
Commercial real estate
    66,002       165,483       312,683       544,168  
Residential real estate
    17,247       15,016       107,918       140,181  
Commercial and industrial
    162,956       93,506       10,229       266,691  
Consumer
    15,378       4,501       114       19,993  
Net deferred loan fees
                      (2,141 )
                         
   
Gross loans, net of deferred fees
    547,470       348,118       438,354       1,331,801  
Less: Allowance for loan losses
                      (17,114 )
                         
    $ 547,470     $ 348,118     $ 438,354     $ 1,314,687  
                         
Interest rates:
                               
 
Fixed
  $ 55,106     $ 179,262     $ 318,779     $ 553,147  
 
Variable
    492,364       168,856       119,575       780,795  
Net deferred loan fees
                      (2,141 )
                         
   
Gross loans, net of deferred fees
  $ 547,470     $ 348,118     $ 438,354     $ 1,331,801  
                         
                                   
    December 31, 2004
     
    Due    
    Within   Due 1-5   Due Over    
    One Year   Years   Five Years   Total
                 
    (In thousands)
Construction and land development
  $ 249,878     $ 63,175     $ 10,123     $ 323,176  
Commercial real estate
    54,357       153,067       284,525       491,949  
Residential real estate
    16,101       15,834       84,425       116,360  
Commercial and industrial
    138,993       90,290       12,009       241,292  
Consumer
    13,256       4,283       143       17,682  
Net deferred loan fees
                      (1,924 )
                         
 
Gross loans, net of deferred fees
    472,585       326,649       391,225       1,188,535  
Less: Allowance for loan losses
                      (15,271 )
                         
    $ 472,585     $ 326,649     $ 391,225     $ 1,173,264  
                         
Interest rates:
                               
 
Fixed
  $ 44,341     $ 163,644     $ 291,742     $ 499,727  
 
Variable
    428,244       163,005       99,483       690,732  
Net deferred loan fees
                      (1,924 )
                         
 
Gross loans, net of deferred fees
  $ 472,585     $ 326,649     $ 391,225     $ 1,188,535  
                         

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      Concentrations. Our loan portfolio has a concentration of loans in real-estate related loans and includes significant credit exposure to the commercial real estate industry. As of March 31, 2005, December 31, 2004 and December 31, 2003, real estate-related loans comprised 78.52%, 78.25% and 76.62% of total gross loans, respectively. Substantially all of these loans are secured by first liens with an initial loan to value ratio of generally no more than 80%. Approximately one-half of these real estate loans are owner occupied. One-to-four family residential real estate loans have a lower risk than commercial real estate and construction and land development loans due to lower loan balances to single borrowers. Our policy for requiring collateral is to obtain collateral whenever it is available or desirable, depending upon the degree of risk we are willing to accept. Repayment of loans is expected from the sale proceeds of the collateral or from the borrower’s cash flows. Deterioration in the performance of the economy or real estate values in our primary market areas, in particular, could have an adverse impact on collectibility, and consequently have an adverse effect on our profitability. See “Risk Factors.”
      Non-Performing Assets. Non-performing loans include loans past due 90 days or more and still accruing interest, non-accrual loans, restructured loans, and other real estate owned, or OREO. In general, loans are placed on non-accrual 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. OREO results from loans where we have received physical possession of the borrower’s assets. The following table summarizes the loans for which the accrual of interest has been discontinued, loans past due 90 days or more and still accruing interest, restructured loans, and OREO.
                                                   
    At or for the    
    Three Months   At or for the Years Ended December 31,
    Ended March 31,    
    2005   2004   2003   2002   2001   2000
                         
    ($ in thousands)
Total nonaccrual loans
  $ 575     $ 1,591     $ 210     $ 1,039     $ 686     $ 3,251  
Loans past due 90 days or more and still accruing
    57       2       65       317       236       1,186  
Restructured loans
                      2,193              
 
Total non-performing loans
    632       1,593       275       3,549       922       4,437  
Other real estate owned (OREO)
                            79        
 
Total non-performing assets
    632       1,593       275       3,549       1,001       4,437  
 
Non-performing loans to gross loans
    0.05 %     0.13 %     0.04 %     0.76 %     0.23 %     1.37 %
Non-performing assets to gross loans and OREO
    0.05       0.13       0.04       0.76       0.25       1.37  
Non-performing assets to total assets
    0.03       0.07       0.02       0.41       0.17       1.00  
 
Interest income received on nonaccrual loans
  $ 3     $ 61     $ 6     $ 158     $ 49     $ 430  
Interest income that would have been recorded under the original terms of the loans
    26       96       29       242       108       669  
      As of March 31, 2005 and December 31, 2004, non-accrual loans totaled $575,000 and $1.6 million, respectively. Non-accrual loans at March 31, 2005 consisted of 13 loans with no single loan having a principal balance greater than $150,000.
      OREO Properties. As of March 31, 2005 and December 31, 2004, we did not have any OREO properties. One OREO property with a carrying value of $79,000 was sold during February 2002.
      Impaired Loans. A loan is impaired when it is probable we will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. The categories of non-accrual loans and impaired loans overlap, although they are

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not coextensive. A loan can be placed on non-accrual status due to payment delinquency or uncertain collectibility but is not considered impaired, if it is probable that we will collect all amounts due in accordance with the original contractual terms of the loan. We consider all circumstances regarding the loan and borrower on an individual basis when determining whether a loan is impaired such as the collateral value, reasons for the delay, payment record, the amount past due, and number of days past due.
      As of March 31, 2005, December 31, 2004 and December 31, 2003, the aggregate total amount of loans classified as impaired was $575,000, $1.7 million and $333,000, respectively. The total specific allowance for loan losses related to these loans was $259,000, $498,000 and $130,000 for March 31, 2005 and December 31, 2004 and 2003, respectively.
      The amount of interest income recognized on impaired loans for the three months ended March 31, 2005 was $3,000, compared to $61,000 and $6,000 for the years ended December 31, 2004 and 2003, respectively. We would have recorded interest income of $26,000, $96,000 and $29,000 on non-accrual loans had the loans been current for the three months ended March 31, 2005 and the years ended December 31, 2004 and 2003, respectively.
     Allowance for Loan Losses
      Like all financial institutions, we must maintain an adequate allowance for loan losses. The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when we believe that collectibility of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount that we believe will be adequate to absorb probable losses on existing loans that may become uncollectible, based on evaluation of the collectibility of loans and prior credit loss experience, together with the other factors noted earlier.
      Our allowance for loan loss methodology incorporates several quantitative and qualitative risk factors used to establish the appropriate allowance for loan loss at each reporting date. Quantitative factors include our historical loss experience, peer group experience, delinquency and charge-off trends, collateral values, changes in non-performing loans, other factors, and information about individual loans including the borrower’s sensitivity to interest rate movements. Qualitative factors include the economic condition of our operating markets and the state of certain industries. Specific changes in the risk factors are based on perceived risk of similar groups of loans classified by collateral type, purpose and terms. Statistics on local trends, peers, and an internal five-year loss history are also incorporated into the allowance. Due to the credit concentration of our loan portfolio in real estate secured loans, the value of collateral is heavily dependent on real estate values in Southern Nevada, Arizona and Southern California. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic or other conditions. In addition, the Federal Deposit Insurance Corporation, or FDIC, and state banking regulatory agencies, as an integral part of their examination processes, periodically review the Banks’ allowance for loan losses, and may require us to make additions to the allowance based on their judgment about information available to them at the time of their examinations. Management periodically reviews the assumptions and formulae used in determining the allowance and makes adjustments if required to reflect the current risk profile of the portfolio.
      The allowance consists of specific and general components. The specific allowance relates to watch credits, criticized loans, and impaired loans. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan are lower than the carrying value of that loan, pursuant to Financial Accounting Standards Board, or FASB, Statement No. 114, Accounting by Creditors for Impairment of a Loan. The general allowance covers non-classified loans and is based on historical loss experience adjusted for the various qualitative and quantitative factors listed above, pursuant to FASB Statement No. 5, or FASB 5, Accounting for Contingencies. Loans graded “Watch List/ Special Mention” and below are individually examined closely to determine the appropriate loan loss reserve.

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      The following table summarizes the activity in our allowance for loan losses for the period indicated.
     Allowance for Loan Losses
      The table below presents information regarding our provision and allowance for loan losses for the periods and years indicated.
                                                             
    At or for the                    
    Three Months    
    Ended March 31,   At or for the Years Ended December 31,
         
    2005   2004   2004   2003   2002   2001   2000
                             
    ($ in thousands)
Allowance for loan losses:
                                                       
Balance at beginning of year
  $ 15,271     $ 11,378     $ 11,378     $ 6,449     $ 6,563     $ 4,746     $ 4,166  
Provisions charged to operating expenses
    1,747       1,492       3,914       5,145       1,587       2,800       4,299  
Adjustments(1)
                      737       (850 )            
Recoveries of loans previously charged-off:
                                                       
 
Construction and land development
                                         
 
Commercial real estate
                      140                    
 
Residential real estate
    3       1       15       1                    
 
Commercial and industrial
    130       11       132       272       464       921       87  
 
Consumer
    5       1       10       7       7       32        
                                           
   
Total recoveries
    138       13       157       420       471       953       87  
Loans charged-off:
                                                       
 
Construction and land development
                                         
 
Commercial real estate
                      140             132        
 
Residential real estate
          4       9       20       60              
 
Commercial and industrial
    18             115       1,090       1,201       1,601       3,516  
 
Consumer
    24       5       54       123       61       203       290  
                                           
   
Total charged-off
    42       9       178       1,373       1,322       1,936       3,806  
Net charge-offs (recoveries)
    (96 )     (4 )     21       953       851       983       3,719  
                                           
Balance at end of year
  $ 17,114     $ 12,874     $ 15,271     $ 11,378     $ 6,449     $ 6,563     $ 4,746  
                                           
Net charge-offs (recoveries) to average loans outstanding
    (0.01 )%     0.00 %     0.00 %     0.17 %     0.19 %     0.27 %     1.24 %
Allowance for loan losses to gross loans
    1.29       1.55       1.28       1.55       1.39       1.61       1.46  
 
(1)  In accordance with regulatory reporting requirements and American Institute of Certified Public Accountants’ Statement of Position 01-06, Accounting by Certain Entities that Lend to or Finance the Activities of Others, the Company has reclassified the portion of its allowance for loan losses that relates to undisbursed commitments during the year ended December 31, 2002. During the year ended December 31, 2003, management reevaluated its methodology for calculating this amount and reclassified an amount from other liabilities to the allowance for loan losses. The liability amount was approximately $313,000, $307,000 and $68,000 as of March 31, 2005 and December 31, 2004 and 2003, respectively.

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     The following table details the allocation of the allowance for loan losses to the various categories. The allocation is made for analytical purposes and it is not necessarily indicative of the categories in which future credit losses may occur. The total allowance is available to absorb losses from any segment of loans. The allocations in the table below were determined by a combination of the following factors: specific allocations made on loans considered impaired as determined by management and the loan review committee, a general allocation on certain other impaired loans, and historical losses in each loan type category combined with a weighting of the current loan composition.
                                                                                                   
            December 31,
             
    March 31, 2005   2004   2003   2002   2001   2000
                         
        % of Loans       % of Loans       % of Loans       % of Loans       % of Loans       % of Loans
        in Each       in Each       in Each       in Each       in Each       in Each
        Category       Category       Category       Category       Category       Category
        to Gross       to Gross       to Gross       to Gross       to Gross       to Gross
    Amount   Loans   Amount   Loans   Amount   Loans   Amount   Loans   Amount   Loans   Amount   Loans
                                                 
    (In thousands)
Construction and land development
  $ 5,529       27.2 %   $ 4,920       27.1 %   $ 3,252       26.6 %   $ 1,050       27.6 %   $ 1,462       20.3 %   $ 493       11.4 %
Commercial real estate
    2,242       40.8       2,095       41.3       1,446       44.2       2,531       45.2       1,566       51.2       1,645       51.9  
Residential real estate
    960       10.5       327       9.8       179       5.8       282       4.7       100       4.4       89       6.2  
Commercial and industrial
    7,917       20.0       7,502       20.3       6,192       21.8       2,340       20.3       3,110       20.9       2,228       26.0  
Consumer
    466       1.5       427       1.5       309       1.6       246       2.2       325       3.2       291       4.5  
                                                                         
 
Total
  $ 17,114       100.0 %   $ 15,271       100.0 %   $ 11,378       100.0 %   $ 6,449       100.0 %   $ 6,563       100.0 %   $ 4,746       100.0 %
                                                                         
      In general, the “Commercial and Industrial Loans” category represents the highest risk category for commercial banks. Historically, our largest source of losses has been in this category. As a result, we utilize a larger estimated loss factor for this category than we do for real estate secured loans. Our commercial loan portfolio as of March 31, 2005 was $266.7 million, or 20.0% of total loans. Other categories, such as stock and bond secured or assignment of cash collateral loans are provided a nominal loss factor based upon a history of comparatively lower losses. While the majority of our historical charge-offs have occurred in the commercial portfolio, we believe that the allowance allocation is adequate when considering the current composition of commercial loans and related loss factors.
      Our “Construction and Land Development” category reflects some borrower concentration risk and carries the enhanced risk encountered with construction loans in general. Currently, construction activity within our primary markets is very competitive, presenting challenges in the timely completion of projects. A construction project can be delayed for an extended period as unanticipated problems arise. Unscheduled work can be difficult to accomplish due to the high demand for construction workers and delays associated with permitting issues. As a result, a higher loan loss allocation is devoted to this loan category than to other loan categories except commercial and industrial loans as noted earlier, and consumer loans.
      Our “Commercial Real Estate” loan category contains a mixture of new and seasoned properties, retail, office, warehouse, and some special purpose. Loans on properties are generally underwritten at a loan to value ratio of less than 80% with a minimum debt coverage ratio of 1.20. Historically, our losses on this product have been minimal and the portfolio continues to exhibit exceptionally high credit quality. Moreover, a large percentage of the Commercial Real Estate loan portfolio is comprised of owner-occupied relationships, which usually reflect a relatively low risk profile. Consequently, the estimated loan loss factor applied to this sub-category is comparatively low.

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Investments
      Securities are identified as either held-to-maturity or available-for-sale based upon various factors, including asset/liability management strategies, liquidity and profitability objectives, and regulatory requirements. Held-to-maturity securities are carried at cost, adjusted for amortization of premiums or accretion of discounts. Available-for-sale securities are securities that may be sold prior to maturity based upon asset/liability management decisions. Securities identified as available-for-sale are carried at fair value. Unrealized gains or losses on available-for-sale securities are recorded as accumulated other comprehensive income in stockholders’ equity. Amortization of premiums or accretion of discounts on mortgage-backed securities is periodically adjusted for estimated prepayments.
      We use our investment securities portfolio to ensure liquidity for cash requirements, manage interest rate risk, provide a source of income and to manage asset quality. The carrying value of our investment securities as of March 31, 2005 totaled $729.1 million, compared to $788.6 million at December 31, 2004, $716.0 million as of December 31, 2003, and $232.8 million as of December 31, 2002. The decrease experienced from December 31, 2004 to March 31, 2005 was a result of called U.S. Government-sponsored agency obligations and principal received from mortgage-backed obligations. The increase experienced from 2002 to 2003 was a result of growth in deposits and growth in other borrowings. In 2002, we executed short and long term advances with FHLB, which were used to purchase investment securities, and sold securities under agreement to repurchase. These FHLB advances and other borrowings will mature by December 31, 2007. The increase experienced from 2003 to 2004 was a result of growth in deposits, as well as a strategy whereby we increased earnings by investing in mortgage-backed securities funded by short-term FHLB borrowings. This strategy had the effect of leveraging our excess capital to produce incremental returns without incurring additional credit risk. In light of the rising interest rate environment, beginning in the third quarter of 2004, we discontinued this strategy, contributing to the decline in our investment balances and increase in our federal funds sold from December 31, 2004 to March 31, 2005.
      Our portfolio of investment securities during 2004, 2003, and 2002 consisted primarily of mortgage-backed obligations and U.S. Government agency obligations. From December 31, 2002 to March 31, 2005, the majority of our growth in investment securities was in mortgage-backed obligations, which typically yield more than other investment securities classes.
      The carrying value of our portfolio of investment securities at March 31, 2005 and December 31, 2004, 2003 and 2002 was as follows:
                                   
    Carrying Value
     
        December 31,
    March 31,    
    2005   2004   2003   2002
                 
    (In thousands)
U.S. Treasury securities
  $ 3,493     $ 3,501     $ 3,014     $ 3,040  
U.S. Government-sponsored agencies
    105,859       118,348       112,537       59,651  
Mortgage-backed obligations
    600,168       648,100       581,446       156,982  
SBA Loan Pools
    586       625       1,142       1,779  
State and Municipal obligations
    7,289       7,290       7,563       8,109  
Other
    11,749       10,758       10,276       3,287  
                         
 
Total investment securities
  $ 729,144     $ 788,622     $ 715,978     $ 232,848  
                         

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      The contractual maturity distribution and weighted average yield of our available for sale and held to maturity portfolios at March 31, 2005 and December 31, 2004 are summarized in the table below. Weighted average yield is calculated by dividing income within each maturity range by the outstanding amount of the related investment and has not been tax affected on tax-exempt obligations. Securities available for sale are carried at amortized cost in the table below for purposes of calculating the weighted average yield received on such securities.
                                                                                   
    March 31, 2005
     
    Due Under                
    1 Year   Due 1-5 Years   Due 5-10 Years   Due Over 10 Years   Total
                     
    Amount   Yield   Amount   Yield   Amount   Yield   Amount   Yield   Amount   Yield
                                         
    ($ in thousands)
Available for Sale:
                                                                               
U.S. Government-sponsored Agency obligations
  $ 2,000       2.25 %   $ 59,800       2.98 %   $ 29,062       3.72 %   $ 16,114       3.90 %   $ 106,976       3.31 %
Mortgage-backed obligations
                            7,654       3.47       482,884       4.17       490,538       4.16  
Other
    11,913       3.77                                           11,913       3.77  
                                                             
 
Total available for sale
  $ 13,913       3.53 %   $ 59,800       2.98 %   $ 36,716       3.67 %   $ 498,998       4.16 %   $ 609,427       4.00 %
                                                             
Held to Maturity:
                                                                               
U.S. Treasury securities
  $       %   $ 3,493       2.68 %   $       %   $       %   $ 3,493       2.68 %
State and Municipal obligations
                100       5.04       1,335       4.68       5,854       4.94       7,289       4.89  
Mortgage-backed obligations
                                        120,029       4.41       120,029       4.41  
SBA Loan Pools
                            79       3.08       507       2.76       586       2.80  
                                                             
 
Total held to maturity
  $       %   $ 3,593       2.75 %   $ 1,414       4.59 %   $ 126,390       4.43 %   $ 131,397       4.38 %
                                                             

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    December 31, 2004
     
    Due Under           Due Over    
    1 Year   Due 1-5 Years   Due 5-10 Years   10 Years   Total
                     
    Amount   Yield   Amount   Yield   Amount   Yield   Amount   Yield   Amount   Yield
                                         
    ($ in thousands)
Available for Sale:
                                                                               
U.S. Government- sponsored Agency obligations
  $           $ 66,800       2.40 %   $ 24,289       3.51 %   $ 27,709       3.59 %   $ 118,798       2.91 %
Mortgage-backed obligations
                            7,981       3.41       529,401       4.23       537,382       4.21  
Other
    10,781       3.71                                           10,781       3.71  
                                                             
 
Total available for sale
  $ 10,781       3.71 %   $ 66,800       2.40 %   $ 32,270       3.49 %   $ 557,110       4.19 %   $ 666,961       3.97 %
                                                             
Held to Maturity:
                                                                               
U.S. Treasury securities
  $ 1,000       1.37 %   $ 2,501       2.47 %   $       %   $       %   $ 3,501       2.16 %
State and Municipal obligations
                100       5.04       680       4.66       6,510       4.86       7,290       4.85  
Mortgage-backed obligations
                                        118,133       4.36       118,133       4.36  
SBA Loan Pools
                                        625       2.43       625       2.43  
                                                             
 
Total held to maturity
  $ 1,000       1.37 %   $ 2,601       2.57 %   $ 680       4.66 %   $ 125,268       4.38 %   $ 129,549       4.32 %
                                                             
      We had a concentration of U.S. Government sponsored agencies and mortgage-backed securities during the three months ended March 31, 2005 and each of the years 2004, 2003 and 2002. The aggregate carrying value and aggregate fair value of these securities at March 31, 2005 and December 31, 2004, 2003 and 2002 are as follows.
                                 
        December 31,
    March 31,    
    2005   2004   2003   2002
                 
    (In thousands)
Aggregate carrying value
  $ 706,027     $ 766,448     $ 693,983     $ 216,633  
                         
Aggregate fair value
  $ 703,672     $ 765,453     $ 693,044     $ 216,633  
                         
Deposits
      Deposits historically have been the primary source of funding our asset growth. As of March 31, 2005, total deposits were $2.0 billion, compared to $1.8 billion as of December 31, 2004 and $1.1 billion as of December 31, 2003. The increase in total deposits is attributable to our ability to attract a stable base of low-cost deposits. As of March 31, 2005, non-interest bearing deposits were $864.1 million, compared to $749.6 million as of December 31, 2004 and $441.2 million as of December 31, 2003. As of March 31, 2005, title company deposits comprised 17.0% of our total deposits. Substantially all of these deposits are non-interest bearing. Interest-bearing accounts have also experienced growth. As of March 31, 2005, interest-bearing deposits were $1.2 billion, compared to $1.0 billion and $653.5 million as of December 31, 2004 and 2003, respectively. Interest-bearing deposits are comprised of NOW accounts, savings and money market accounts, certificates of deposit under $100,000, and certificates of deposit over $100,000.

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      The average balances and weighted average rates paid on deposits for the three months ended March 31, 2005, and years ended December 31, 2004, 2003 and 2002, are presented below.
                                                                   
            Years Ended December 31,
         
    Three Months Ended            
    March 31, 2005   2004   2003   2002
                 
    Balance   Rate   Balance   Rate   Balance   Rate   Balance   Rate
                                 
    ($ in thousands)
Interest checking (NOW)
  $ 99,382       0.40 %   $ 73,029       0.19 %   $ 51,723       0.18 %   $ 43,139       0.24 %
Savings and money market
    714,193       1.71       561,744       1.35       336,012       1.30       198,613       1.92  
Time
    249,830       2.28       214,515       2.05       158,418       2.34       112,782       3.08  
                                                 
 
Total interest-bearing deposits
    1,063,405       1.72       849,288       1.43       546,153       1.49       354,534       2.09  
Non-interest bearing demand deposits
    722,561             600,790             345,274             229,843        
                                                 
 
Total deposits
  $ 1,785,966       1.03 %   $ 1,450,078       0.84 %   $ 891,427       0.92 %   $ 584,377       1.27 %
                                                 
      The remaining maturity for certificates of deposit of $100,000 or more as of March 31, 2005 is presented in the following table.
         
    March 31, 2005
     
    (In thousands)
3 months or less
    142,673  
3 to 6 months
    52,667  
6 to 12 months
    47,343  
Over 12 months
    6,293  
       
Total
  $ 248,976  
       
Capital Resources
      Current risk-based regulatory capital standards generally require banks and bank holding companies to maintain three minimum capital ratios. Tier 1 risk-based capital ratio compares “Tier 1” or “core” capital, which consists principally of common equity, and risk-weighted assets for a minimum ratio of at least 4%. Tier 1 capital ratio compares Tier 1 capital to adjusted total assets for a minimum ratio of at least 4%. Total risk-based capital ratio compares total capital, which consists of Tier 1 capital, certain forms of subordinated debt, a portion of the allowance for loan losses, and preferred stock, to risk-weighted assets for a minimum ratio of at least 8%. Risk-weighted assets are calculated by multiplying the balance in each category of assets by a risk factor, which ranges from zero for cash assets and certain government obligations to 100% for some types of loans, and adding the products together.

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      The following table provides a comparison of our risk-based capital ratios and leverage ratios to the minimum regulatory requirements for the periods indicated.
                                                   
    March 31, 2005
     
        Adequately    
    Actual   Capitalized(1)   Well-Capitalized
             
    Amount   Ratio   Amount   Ratio   Amount   Ratio
                         
    ($ in thousands)
Leverage ratio (to Average Assets)
                                               
 
BankWest of Nevada
  $ 100,623       6.4 %   $ 63,264       4.0 %   $ 79,080       5.0 %
 
Alliance Bank of Arizona(1)
    32,278       9.4       13,736       4.0       17,170       5.0  
 
Torrey Pines Bank(1)
    26,998       10.1       10,711       4.0       13,389       5.0  
 
Company
    169,062       7.7       87,802       4.0       109,753       5.0  
Tier I Capital (to Risk Weighted Assets)
                                               
 
BankWest of Nevada
  $ 100,623       9.3 %   $ 43,411       4.0 %   $ 65,116       6.0 %
 
Alliance Bank of Arizona
    32,278       10.4       12,461       4.0       18,692       6.0  
 
Torrey Pines Bank
    26,998       11.6       9,333       4.0       14,000       6.0  
 
Company
    169,062       10.4       65,325       4.0       97,988       6.0  
Total Capital (to Risk Weighted Assets)
                                               
 
BankWest of Nevada
  $ 111,738       10.3 %   $ 86,821       8.0 %   $ 108,526       10.0 %
 
Alliance Bank of Arizona
    36,173       11.6       24,922       8.0       31,153       10.0  
 
Torrey Pines Bank
    29,371       12.6       18,667       8.0       23,334       10.0  
 
Company
    186,489       11.4       130,651       8.0       163,314       10.0  
                                                   
    December 31, 2004
     
        Adequately    
    Actual   Capitalized(1)   Well-Capitalized
             
    Amount   Ratio   Amount   Ratio   Amount   Ratio
                         
    ($ in thousands)
Leverage ratio (to Average Assets)
                                               
 
BankWest of Nevada
  $ 95,449       6.1 %   $ 62,970       4.0 %   $ 78,713       5.0 %
 
Alliance Bank of Arizona
    31,810       10.3       12,394       4.0       15,492       5.0  
 
Torrey Pines Bank
    26,774       10.9       9,830       4.0       12,288       5.0  
 
Company
    163,205       7.7       85,321       4.0       106,651       5.0  
Tier I Capital (to Risk Weighted Assets)
                                               
 
BankWest of Nevada
  $ 95,449       9.4 %   $ 40,484       4.0 %   $ 60,726       6.0 %
 
Alliance Bank of Arizona(1)
    31,810       11.3       11,214       4.0       16,821       6.0  
 
Torrey Pines Bank(1)
    26,774       13.4       8,006       4.0       12,010       6.0  
 
Company
    163,205       10.9       59,816       4.0       89,724       6.0  
Total Capital (to Risk Weighted Assets)
                                               
 
BankWest of Nevada
  $ 105,544       10.4 %   $ 80,968       8.0 %   $ 101,210       10.0 %
 
Alliance Bank of Arizona
    35,258       12.6       22,428       8.0       28,035       10.0  
 
Torrey Pines Bank
    28,809       14.4       16,013       8.0       20,016       10.0  
 
Company
    178,784       12.0       119,632       8.0       149,540       10.0  
 
(1)  Alliance Bank of Arizona and Torrey Pines Bank have agreed to maintain a Tier 1 capital ratio of at least 8% for the first three years of their existence.

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      We were well capitalized at all the banks and the holding company as of March 31, 2005 and December 31, 2004.
Subordinated Debt
      In order to manage our capital position more efficiently, we formed BankWest Nevada Capital Trust I and BankWest Nevada Capital Trust II, both Delaware statutory trusts, for the sole purpose of issuing trust preferred securities.
      BankWest Nevada Capital Trust I. During the third quarter of 2001, BankWest Nevada Capital Trust I was formed with $464,000 in capital and issued 15,000 Floating Rate Cumulative Trust Preferred Securities, or trust preferred securities, with a liquidation value of $1,000 per security, for gross proceeds of $15.0 million. The entire proceeds of the issuance were invested by BankWest Nevada Capital Trust I in $15.5 million of Floating Rate Junior Subordinated Debentures issued by us, with identical maturity, repricing, and payment terms as the trust preferred securities. The subordinated debentures represent the sole assets of BankWest Nevada Capital Trust I and mature on July 25, 2031. The interest rate as of December 31, 2004 was 6.53% based on 6-month LIBOR plus 3.75% with repricing occurring and interest payments due semiannually. Proceeds of $10 million was invested in BankWest of Nevada. The remaining proceeds were retained by Western Alliance for general corporate purposes.
      The subordinated debentures are redeemable by us, subject to our receipt of prior approval from the Federal Reserve of San Francisco, on any January 25th or July 25th on or after July 25, 2006, at the redemption price. The redemption price is at a premium for a redemption occurring prior to July 25, 2011 as set forth in the following table plus accrued and unpaid interest.
         
Year Beginning   Percentage
     
July 25, 2006
    107.6875 %
July 25, 2007
    106.1500 %
July 25, 2008
    104.6125 %
July 25, 2009
    103.0750 %
July 25, 2010
    101.5375 %
July 25, 2011 and after
    100.0000 %
In the event of redemption under a special event occurring prior to July 25, 2006, the price of redemption is the greater of 100% of the principal amount and the sum of the present values of the principal amount and the premium payable as part of the redemption price together with the present value of interest payments calculated at a fixed per annum rate of interest equal to 10.25% over the remaining life of the security discounted to the special redemption date on a semi-annual basis at the Treasury rate plus 0.50% plus accrued and unpaid interest. Holders of the trust preferred securities are entitled to a cumulative cash distribution on the liquidation amount of $1,000 per security at an interest rate of 6.53% as of December 31, 2004. The rate will be adjusted to equal the 6-month LIBOR plus 3.75% for each successive period beginning January 25 of each year provided, however, that prior to July 25, 2011, such annual rate shall not exceed 12.5%. BankWest Nevada Capital Trust I has the option to defer payment of the distributions for a period of up to five years, but during any such deferral, we would be restricted from paying dividends on our common stock.
      BankWest Nevada Capital Trust II. During the fourth quarter of 2002, BankWest Nevada Capital Trust II was formed with $464,000 in capital and issued 15,000 Floating Rate Cumulative Trust Preferred Securities, or trust preferred securities, with a liquidation value of $1,000 per security, for gross proceeds of $15.0 million. The entire proceeds of the issuance were invested by BankWest Nevada Capital Trust II in $15.5 million of Floating Rate Junior Subordinated Debentures issued by us, with identical maturity, repricing, and payment terms as the trust preferred securities. The subordinated debentures represent the sole assets of BankWest Nevada Capital Trust II and mature January 7, 2033. The interest rate as of December 31, 2004 was 5.84% based on 3-month LIBOR plus 3.35% with repricing occurring and interest payments due quarterly. All of the net proceeds were retained by Western Alliance.

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      The subordinated debentures are redeemable by us, subject to our receipt of prior approval from the Federal Reserve of San Francisco, on any January 7th, April 7th, July 7th, or October 7th on or after January 7, 2008, at the redemption price. The redemption price is par plus accrued and unpaid interest, except in the case of redemption under a special event which is defined in the debenture occurring prior to January 7, 2008 which is the greater of 100% of the principal amount and the sum of the present values of the principal amount together with the present value of interest payments calculated at a fixed per annum rate of interest equal to 7.125% over the remaining life of the security discounted to the special redemption date on a quarterly basis at the Treasury rate plus 0.50% plus accrued and unpaid interest. Holders of the trust preferred securities are entitled to a cumulative cash distribution on the liquidation amount of $1,000 per security at an interest rate of 5.84% as of December 31, 2004. The rate will be adjusted to equal the 3-month LIBOR plus 3.35% for each successive period beginning January 7 of each year provided, however, that prior to January 7, 2008, such annual rate shall not exceed 12.5%. BankWest Nevada Capital Trust II has the option to defer payment of the distributions for a period of up to five years, but during any such deferral, we would be restricted from paying dividends on our common stock.
      A special event under which the trust preferred securities could be redeemed includes a Tax Event, Capital Treatment Event, or an Investment Company Event. A Tax Event includes any amendment or change in the laws or regulations of a taxing authority, an official administrative pronouncement, or a judicial decision interpreting or applying such laws or regulations that would subject the trust to federal income tax, interest payable would not be deductible in whole or part for federal income tax purposes, or subject the trust to more than a de minimis amount of other taxes, duties, assessments or other government charges. A Capital Treatment Event includes any amendment or change in the laws or an official administrative pronouncement to treat the amount equal to the aggregate liquidation amount of the capital securities as Tier 1 Capital for purposes of the capital adequacy guidelines of the Federal Reserve. An Investment Company Event includes changes, interpretation or application of laws or regulations that would require the trust to be registered under the Investment Company Act.
      We have guaranteed, on a subordinated basis, distributions and other payments due on the trust preferred securities. We own 100% of the common securities in the trusts. For financial reporting purposes, our investment in the trusts is accounted for under the equity method and is included in other assets on the accompanying consolidated balance sheet. The subordinated debentures issued and guaranteed by us and held by the trust are reflected on our consolidated balance sheet in accordance with provisions of Interpretation No. 46 issued by the Financial Accounting Standards Board, or FASB, No. 46, Consolidation of Variable Interest Entities. Under applicable regulatory guidelines, all of the trust preferred securities currently qualify as Tier 1 capital, although this classification is subject to future change.
Contractual Obligations and Off-Balance Sheet Arrangements
      We routinely enter into contracts for services in the conduct of ordinary business operations which may require payment for services to be provided in the future and may contain penalty clauses for early termination of the contracts. To meet the financing needs of our customers, we are also parties to financial instruments with off-balance sheet risk including commitments to extend credit and standby letters of credit. We have also committed to irrevocably and unconditionally guarantee the following payments or distributions with respect to the holders of preferred securities to the extent that BankWest Nevada Trust I and BankWest Nevada Trust II have not made such payments or distributions: (1) accrued and unpaid distributions, (2) the redemption price, and (3) upon a dissolution or termination of the trust, the lesser of the liquidation amount and all accrued and unpaid distributions and the amount of assets of the trust remaining available for distribution. We do not believe that these off-balance sheet arrangements have or are reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources. However, there can be no assurance that such arrangements will not have a future effect.
      Long-Term Borrowed Funds. We also have entered into long-term contractual obligations consisting of advances from Federal Home Loan Bank (FHLB). These advances are secured with collateral generally consisting of securities. As of March 31, 2005, these long-term FHLB advances totaled $63.7 million and will

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mature by December 31, 2007. Interest payments are due semi-annually. The weighted average rate of the long-term FHLB advances as of March 31, 2005 was 2.63%.
      The following table sets forth our significant contractual obligations as of December 31, 2004.
                                         
    December 31, 2004
     
        Less Than   1-3   3-5   After
    Total   1 Year   Years   Years   5 Years
                     
    (In thousands)
Long term borrowed funds
  $ 63,700     $     $ 63,700     $     $  
Junior subordinated deferrable interest debentures
    30,928                         30,928  
Operating lease obligations
    18,492       3,545       7,080       2,527       5,340  
                               
Total
  $ 113,120     $ 3,545     $ 70,780     $ 2,527     $ 36,268  
                               
      Our commitments associated with outstanding letters of credit, commitments to extend credit, and credit card guarantees as of December 31, 2004 are summarized below. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements.
                                         
    December 31, 2004
     
        Amount of Commitment Expiration Per Period
    Total    
    Amounts   Less Than   1-3   3-5   After
    Committed   1 Year   Years   Years   5 Years
                     
    (In thousands)
Commitments to extend credit
  $ 423,767     $ 292,013     $ 78,792     $ 8,100     $ 44,862  
Credit card guarantees
    5,421       5,421                    
Standby letters of credit
    5,978       3,984       1,994              
                               
Total
  $ 435,166     $ 301,418     $ 80,786     $ 8,100     $ 44,862  
                               
      Short-Term Borrowed Funds. Short-term borrowed funds are used to support liquidity needs created by seasonal deposit flows, to temporarily satisfy funding needs from increased loan demand, and for other short-term purposes. The majority of these short-term borrowed funds consist of advances from FHLB. The borrowing capacity at FHLB is determined based on collateral pledged, generally consisting of securities, at the time of borrowing. We also have borrowings from other sources pledged by securities including securities sold under agreements to repurchase, which are reflected at the amount of cash received in connection with the transaction, and may require additional collateral based on the fair value of the underlying securities. As of March 31, 2005, total short-term borrowed funds were $79.1 million with a weighted average interest rate at period end of 2.28%, compared to total short-term borrowed funds of $185.5 million as of December 31, 2004 with a weighted average interest rate at year end of 2.23%. The decrease of $106.4 million was, in general, a result of short-term advances that had matured and were replaced by other sources of funding.

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      The following table sets forth certain information regarding FHLB advances and repurchase agreements at the dates or for the periods indicated.
                                   
    At or for the   At or for the Years Ended
    Three Months    
    Ended   December 31,
    March 31,    
    2005   2004   2003   2002
                 
    ($ in thousands)
FHLB Advances:
                               
 
Maximum month-end balance
  $ 50,000     $ 174,200     $ 163,211     $ 11,300  
 
Balance at end of period
    50,000       151,900       163,211       11,300  
 
Average balance
    127,542       186,662       69,319       9,285  
Other:
                               
 
Maximum month-end balance
  $ 29,117     $ 78,050     $ 78,050     $ 6,000  
 
Balance at end of period
    29,117       33,594       78,050       6,000  
 
Average balance
    33,224       52,513       41,939       5,047  
Total Short-Term Borrowed Funds
  $ 79,117     $ 185,494     $ 241,261     $ 17,300  
Weighted average interest rate at end of period
    2.28 %     2.23 %     1.31 %     2.37 %
Weighted average interest rate during period/year
    2.59 %     1.87 %     1.50 %     2.47 %
      Since growth in core deposits may be at intervals different from loan demand, we may follow a pattern of funding irregular growth in assets with short-term borrowings, which are then replaced with core deposits. This temporary funding source is likely to be utilized for generally short-term periods, although no assurance can be given that this will, in fact, occur.
Liquidity
      The ability to have readily available funds sufficient to repay fully maturing liabilities is of primary importance to depositors, creditors and regulators. Our liquidity, represented by cash and due from banks, federal funds sold and available-for-sale securities, is a result of our operating, investing and financing activities and related cash flows. In order to ensure funds are available at all times, on at least a quarterly basis, we project the amount of funds that will be required and maintain relationships with a diversified customer base so funds are accessible. Liquidity requirements can also be met through short-term borrowings or the disposition of short-term assets. We have borrowing lines at correspondent banks totaling $45.0 million. In addition, securities are pledged to the FHLB totaling $532.6 million on total borrowings from the FHLB of $113.7 million as of March 31, 2005. As of March 31, 2005, we had $84.0 million in securities available to be sold or pledged to the FHLB.
      We have a formal liquidity policy, and in the opinion of management, our liquid assets are considered adequate to meet our cash flow needs for loan funding and deposit cash withdrawal for the next 60 — 90 days. At March 31, 2005, we had $794.2 million in liquid assets comprised of $196.5 million in cash and cash equivalents (including federal funds sold of $109.5 million) and $597.7 million in available-for-sale securities.
      On a long-term basis, our liquidity will be met by changing the relative distribution of our asset portfolios, for example, reducing investment or loan volumes, or selling or encumbering assets. Further, we will increase liquidity by soliciting higher levels of deposit accounts through promotional activities and/or borrowing from our correspondent banks as well as the Federal Home Loan Bank of San Francisco. At the current time, our long-term liquidity needs primarily relate to funds required to support loan originations and commitments and deposit withdrawals. All of these needs can currently be met by cash flows from investment payments and maturities, and investment sales if the need arises.
      Our liquidity is comprised of three primary classifications: (i) cash flows from or used in operating activities; (ii) cash flows from or used in investing activities; and (iii) cash flows provided by or used in

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financing activities. Net cash provided by or used in operating activities consists primarily of net income adjusted for changes in certain other asset and liability accounts and certain non-cash income and expense items such as the loan loss provision, investment and other amortizations and depreciation. For the three months ended March 31, 2005, net cash provided by operating activities was $11.4 million, compared to $7.1 million for the same period in 2004. For the years ended December 31, 2004, 2003 and 2002 net cash provided by operating activities was $27.3, $12.7 million and $10.1 million, respectively.
      Our primary investing activities are the origination of real estate, commercial and consumer loans and purchase and sale of securities. Our net cash provided by and used in investing activities has been primarily influenced by our loan and securities activities. The net increase in loans for the three months ended March 31, 2005 and 2004 was $143.3 million and $99.7 million, respectively. The net increase in loans for the years ended December 31, 2004, 2003 and 2002 was $455.5 million, $268.8 million and $58.0 million, respectively. Proceeds from maturities and sales of securities, net of purchases of securities available-for-sale and held-to-maturity for the three months ended March 31, 2005 were $54.6 million, compared to net purchases of $41.3 million for the same period in 2004. Net purchases of securities for the years ended December 31, 2004, 2003 and 2002 were $133.5 million, $514.0 million and $220.6 million, respectively.
      Net cash provided by financing activities has been impacted significantly by increases in deposit levels. During the three months ended March 31, 2005 and 2004 deposits increased by $262.7 million and $282.4 million, respectively. During the years ended December 31, 2004, 2003 and 2002, deposits increased by $661.4 million, $374.3 million and $171.0 million, respectively.
      Our federal funds sold increased $86.4 million from December 31, 2004 to March 31, 2005. This is due to the growth in our deposits combined with the decrease of our investment portfolio over the same period.
      Federal and state banking regulations place certain restrictions on dividends paid by the Banks to Western Alliance. The total amount of dividends which may be paid at any date is generally limited to the retained earnings of each Bank. Dividends paid by the Banks to the Company would be prohibited if the effect thereof would cause the respective Bank’s capital to be reduced below applicable minimum capital requirements.
Quantitative and Qualitative Disclosures About Market Risk
      Market risk is the risk of loss in a financial instrument arising from adverse changes in market prices and rates, foreign currency exchange rates, commodity prices and equity prices. Our market risk arises primarily from interest rate risk inherent in our lending, investing and deposit taking activities. To that end, management actively monitors and manages our interest rate risk exposure. We do not have any market risk sensitive instruments entered into for trading purposes. We manage our interest rate sensitivity by matching the re-pricing opportunities on our earning assets to those on our funding liabilities.
      Management uses various asset/liability strategies to manage the re-pricing characteristics of our assets and liabilities designed to ensure that exposure to interest rate fluctuations is limited within our guidelines of acceptable levels of risk-taking. Hedging strategies, including the terms and pricing of loans and deposits, and management of the deployment of our securities are used to reduce mismatches in interest rate re-pricing opportunities of portfolio assets and their funding sources.
      Interest rate risk is addressed by our Asset Liability Management Committee, or ALCO, which is comprised of senior finance, operations, human resources and lending officers, and the Western Alliance Board of Directors. ALCO and the Western Alliance Board monitor interest rate risk by analyzing the potential impact on the net economic value of equity and net interest income from potential changes in interest rates, and consider the impact of alternative strategies or changes in balance sheet structure. We manage our balance sheet in part to maintain the potential impact on economic value of equity and net interest income within acceptable ranges despite changes in interest rates.
      Our exposure to interest rate risk is reviewed on at least a quarterly basis by the ALCO and our Board of Directors. Interest rate risk exposure is measured using interest rate sensitivity analysis to determine our change in economic value of equity in the event of hypothetical changes in interest rates. If potential changes

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to net economic value of equity and net interest income resulting from hypothetical interest rate changes are not within the limits established by our Board of Directors, the Board of Directors may direct management to adjust the asset and liability mix to bring interest rate risk within board-approved limits.
      Economic Value of Equity. We measure the impact of market interest rate changes on the net present value of estimated cash flows from our assets, liabilities and off-balance sheet items, defined as economic value of equity, using a simulation model. This simulation model assesses the changes in the market value of interest rate sensitive financial instruments that would occur in response to an instantaneous and sustained increase or decrease (shock) in market interest rates.
      At March 31, 2005, our economic value of equity exposure related to these hypothetical changes in market interest rates was within the current guidelines established by us. The following table shows our projected change in economic value of equity for this set of rate shock at March 31, 2005.
Economic Value of Equity
                                 
        Percentage   Percentage   Percentage of
    Economic   Change   of Total   Equity Book
Interest Rate Scenario   Value   from Base   Assets   Value
                 
    ($ in millions)
Up 300 basis points
  $ 306.0       (1.2 )%     13.1 %     223.2 %
Up 200 basis points
    308.3       (0.5 )     13.2       224.9  
BASE
    309.8               13.2       226.0  
Down 100 basis points
    298.1       (3.8 )     12.7       217.4  
      The computation of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, asset prepayments and deposit decay, and should not be relied upon as indicative of actual results. Further, the computations do not contemplate any actions we may undertake in response to changes in interest rates. Actual amounts may differ from the projections set forth above should market conditions vary from the underlying assumptions.
      Net Interest Income Simulation. In order to measure interest rate risk at March 31, 2005, we used a simulation model to project changes in net interest income that result from forecasted changes in interest rates. This analysis calculates the difference between net interest income forecasted using a rising and a falling interest rate scenario and a net interest income using a base market interest rate derived from the current treasury yield curve. The income simulation model includes various assumptions regarding the re-pricing relationships for each of our products. Many of our assets are floating rate loans, which are assumed to re-price immediately, and proportional to the change in market rates, depending on their contracted index. Some loans and investments include the opportunity of prepayment (embedded options), and accordingly the simulation model uses indexes to estimate these prepayments and reinvest their proceeds at current yields. Our non-term deposit products re-price more slowly, usually changing less than the change in market rates and at our discretion.
      This analysis indicates the impact of changes in net interest income for the given set of rate changes and assumptions. It assumes the balance sheet remains static and that its structure does not change over the course of the year. It does not account for all factors that impact this analysis, including changes by management to mitigate the impact of interest rate changes or secondary impacts such as changes to our credit risk profile as interest rates change.
      Furthermore, loan prepayment rate estimates and spread relationships change regularly. Interest rate changes create changes in actual loans loan prepayment rates that will differ from the market estimates incorporated in this analysis. Changes that vary significantly from the assumptions may have significant effects on our net interest income.
      For the rising and falling interest rate scenarios, the base market interest rate forecast was increased and decreased over twelve months by 300 and 100 basis points, respectively. At March 31, 2005, our net interest

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margin exposure related to these hypothetical changes in market interest rates was within the current guidelines established by us.
Sensitivity of Net Interest Income
                 
        Percentage
    Adjusted Net   Change
Interest Rate Scenario   Interest Income   from Base
         
    (In millions)    
Up 300 basis points
  $ 100.0       5.4 %
Up 200 basis points
    99.5       4.9  
BASE
    94.9        
Down 100 basis points
    91.9       (3.1 )
Recent Accounting Pronouncements
FAS No. 123(R), Shared-Based Payment, Revised December 2004
      In December 2004, the Financial Accounting Standards Board published FASB Statement No. 123 (revised 2004), Share-Based Payment, or FAS 123(R). FAS 123(R) requires that the compensation cost relating to share-based payment transactions, including grants of employee stock options, be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. FAS 123(R) permits entities to use any option-pricing model that meets the fair value objective in the Statement. Modifications of share-based payments will be treated as replacement awards with the cost of the incremental value recorded in the financial statements.
      The Statement will be effective at the beginning of the first quarter of 2006. As of the effective date, we will apply the Statement using a modified version of prospective application. Under that transition method, compensation cost will be recognized for (1) all awards granted after the required effective date and to awards modified, cancelled, or repurchased after that date and (2) the portion of awards granted subsequent to completion of an IPO and prior to the effective date for which the requisite service has not yet been rendered, based on the grant-date fair value of those awards calculated for pro forma disclosures under SFAS 123.
      The impact of this Statement on the Company in 2006 and beyond will depend on various factors including our future compensation strategy.
EITF 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments
      On September 30, 2004, the Financial Accounting Standards Board issued FASB Staff Position, or FSP, Emerging Issues Task Force, or EITF, Issue No. 03-1-1 delaying the effective date of paragraphs 10-20 of EITF 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, which provides guidance for determining the meaning of “other-than-temporarily impaired” and its application to certain debt and equity securities within the scope of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, and investments accounted for under the cost method. The guidance requires that investments which have declined in value due to credit concerns or solely due to changes in interest rates must be recorded as other-than-temporarily impaired unless we can assert and demonstrate its intention to hold the security for a period of time sufficient to allow for a recovery of fair value up to or beyond the cost of the investment which might mean maturity. The delay of the effective date of EITF 03-1 will be superceded concurrent with the final issuance of proposed FSP Issue 03-1-a. Proposed FSP Issue 03-1-a is intended to provide implementation guidance with respect to all securities analyzed for impairment under paragraphs 10-20 of EITF 03-1. We continue to closely monitor and evaluate how the provisions of EITF 03-1 and proposed FSP Issue 03-1-a will affect us.

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FASB Interpretation (FIN) 46, Consolidation of Variable Interest Entities
      FIN 46 establishes accounting guidance for consolidation of variable interest entities, or VIE, that function to support the activities of the primary beneficiary. The primary beneficiary of a VIE is the entity that absorbs a majority of the VIE’s expected losses, receives a majority of the VIE’s expected residual returns, or both, as a result of controlling ownership interest, contractual relationship or other business relationship with VIE. Prior to the implementation of FIN 46, VIE’s were generally consolidated by an enterprise when the enterprise had a controlling financial interest through ownership of a majority of voting interest in the entity. The provisions of FIN 46 were effective immediately for all arrangements entered into after January 31, 2003. However, subsequent revisions to the interpretation deferred the implementation date of FIN 46 until the first period ending after March 15, 2004.
      We adopted FIN 46, as revised, in connection with our consolidated financial statements that are included herein. The implementation of FIN 46 required us to de-consolidate our investment in BankWest Nevada Capital Trusts I and II because we are not the primary beneficiary. Previous years were restated accordingly. There was no impact on stockholders’ equity or net income upon adoption of the standard.

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BUSINESS
Overview and History
      We are a bank holding company headquartered in Las Vegas, Nevada. We provide a full range of 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 our subsidiary banks and financial services companies located in Nevada, Arizona and California. On a consolidated basis, as of March 31, 2005, we had approximately $2.3 billion in assets, $1.3 billion in total loans, $2.0 billion in deposits and $137.1 million in stockholders’ equity. We have focused our lending activities primarily on commercial loans, which comprised 88.0% of our total loan portfolio at March 31, 2005. In addition to traditional lending and deposit gathering capabilities, we also offer a broad array of financial products and services aimed at satisfying the needs of small to mid-sized businesses and their proprietors, including cash management, trust administration and estate planning, custody and investments and equipment leasing.
      BankWest of Nevada was founded in 1994 by a group of individuals with extensive community banking experience in the Las Vegas market. We believe our success has been built on the strength of our management team, our conservative credit culture, the attractive growth characteristics of the markets in which we operate and our ability to expand our franchise by attracting seasoned bankers with long-standing relationships in their communities.
      In 2003, with the support of local banking veterans, we opened Alliance Bank of Arizona in Phoenix, Arizona and Torrey Pines Bank in San Diego, California. Over the past two years we have successfully leveraged the expertise and strengths of Western Alliance and BankWest of Nevada to build and expand these new banks in a rapid and efficient manner. Our success is evidenced by the fact that, of the 230 banks founded in the United States since January 1, 2003, Alliance Bank of Arizona and Torrey Pines Bank both rank among the top ten in terms of total assets, loans and deposits as of December 31, 2004.
      Through our wholly owned, non-bank subsidiaries, Miller/ Russell & Associates, Inc. and Premier Trust, Inc., we provide investment advisory and wealth management services, including trust administration and estate planning. We acquired Miller/ Russell and Premier Trust in May 2004 and December 2003, respectively. As of March 31, 2005, Miller/ Russell had $891.8 million in assets under management, and Premier Trust had $103.6 million in assets under management and $196.7 million in total trust assets.
      We have achieved significant growth. Specifically, from December 31, 2000 to March 31, 2005, we increased:
  •  total assets from $443.7 million to $2.3 billion;
 
  •  total net loans from $319.6 million to $1.3 billion;
 
  •  total deposits from $410.2 million to $2.0 billion; and
 
  •  core deposits (all deposits other than certificates of deposit greater than $100,000) from $355.8 million to $1.8 billion.

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      Our growth has accelerated over the past two years due, in part, to the addition of key management personnel in 2002 and the opening of Alliance Bank of Arizona and Torrey Pines Bank in 2003. For the five years preceding the enhancement of our executive management team in 2002, our assets grew at a compound annual rate of approximately 30%. Following the addition of key management personnel, including our current chairman and chief executive officer, Robert Sarver, our assets have grown at a compound annual rate of approximately 58% over the past two full fiscal years. The following chart demonstrates the growth in our total assets since 1994.
(TOTAL ASSETS CHART)
      Because our deposit growth has outpaced our loan growth, at March 31, 2005 we had a relatively low loan-to-deposit ratio of 66.0%. Our long-term goal is to increase this ratio by continuing to grow our loan portfolio, while maintaining our strong credit quality. To achieve this goal, we intend to continue to expand our lending activities by hiring experienced relationship bankers and adding new product offerings. In this regard, we have recently begun offering SBA 7(a) loans and equipment leasing, and originating residential mortgage loans for our own portfolio, rather than acting as a broker.
Business Strategy
      Since 1994, we believe that we have been successful in building and developing our operations by adhering to a business strategy focused on understanding and serving the needs of our local clients and pursuing growth markets and opportunities while emphasizing a strong credit culture. Our objective is to provide our shareholders with superior returns. The critical components of our strategy include:
  •  Leveraging our knowledge and expertise. Over the past decade we have assembled an experienced management team and built a culture committed to credit quality and operational efficiency. We have also successfully centralized at our holding company level a significant portion of our operations, processing, compliance, Community Reinvestment Act administration and specialty functions. We intend to grow our franchise and improve our operating efficiencies by continuing to leverage our managerial expertise and the functions we have centralized at Western Alliance.
 
  •  Maintaining a strong credit culture. We adhere to a specific set of credit standards across our bank subsidiaries that ensure the proper management of credit risk. Western Alliance’s management team plays an active role in monitoring compliance with our Banks’ credit standards. Western Alliance also continually monitors each of our subsidiary banks’ loan portfolios, which enables us to identify and take prompt corrective action on potentially problematic loans. As of March 31, 2005, non-performing assets represented approximately 0.03% of total assets. The average for similarly sized publicly traded banks in the United States was 0.45% as of March 31, 2005.
 
  •  Attracting seasoned relationship bankers and leveraging our local market knowledge. We believe our success has been the result, in part, of our ability to attract and retain experienced relationship bankers that have strong relationships in their communities. These professionals bring with them valuable customer relationships, and have been an integral part of our ability to expand rapidly in our market

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  areas. These professionals allow us to be responsive to the needs of our customers and provide a high level of service to local businesses. We intend to continue to hire experienced relationship bankers as we expand our franchise.
 
  •  Offering a broader array of personal financial products and services. Part of our growth strategy is to offer a broader array of personal financial products and services to high net worth individuals and to senior managers at commercial enterprises with which we have established relationships. To this end, we acquired Miller/ Russell & Associates, Inc. in May 2004, and Premier Trust, Inc. in December 2003.
 
  •  Focusing on markets with attractive growth prospects. We operate in what we believe to be highly attractive markets with superior growth prospects. Our metropolitan areas have a high per capita income and are expected to experience some of the fastest population growth in the country. We continuously evaluate new markets in the Western United States with similar growth characteristics as targets for expansion. Our long term strategy is to have four to six subsidiary banks each with assets between $500.0 million and $3.0 billion. We intend to implement this strategy through the formation of additional de novo banks or acquiring other commercial banks in new market areas with attractive growth prospects. As of March 31, 2005, we maintained 13 bank branch offices located throughout our market areas. To accommodate our growth and enhance efficiency, we intend to expand over the next 18 months to an aggregate of 24 offices, and to open a service center facility that will provide centralized back-office services and call center support for all our banking subsidiaries.
 
  •  Attracting low cost deposits. We believe we have been able to attract a stable base of low-cost deposits from customers who are attracted to our personalized level of service and local knowledge. As of March 31, 2005, our deposit base was comprised of 42.8% non-interest bearing deposits, of which 38.1% consisted of title company deposits, 56.1% consisted of other business deposits and 5.8% consisted of consumer deposits. Given our relatively current loan-to-deposit ratio of 66.0%, we expect to obtain additional value in the future by leveraging our low-cost deposit base to increase quality credit relationships.
Our Market Areas
      We believe that there is a significant market segment of small to mid-sized businesses that are looking for a locally based commercial bank capable of providing a high degree of flexibility and responsiveness, in addition to offering a broad range of financial products and services. We believe that the local community banks that compete in our markets do not offer the same breadth of products and services that our customers require to meet their growing needs, while the large, national banks lack the flexibility and personalized service that our customers desire in their banking relationships. By offering flexibility and responsiveness to our customers and providing a full range of financial products and services, we believe that we can better serve our markets.
      Through our banking and non-banking subsidiaries, we serve customers in Nevada, Arizona and California.
      Nevada. In Nevada, we operate in the cities of Las Vegas and Henderson, both of which are in the Las Vegas metropolitan area. The economy of the Las Vegas metropolitan area is primarily driven by services and industries related to gaming, entertainment and tourism, and is experiencing growth in the residential and commercial construction and light manufacturing sectors. Based on June 30, 2004 FDIC data (which is the most recent date for which public data is available), we ranked 5th out of 34 institutions in deposit market share with $1.3 billion in deposits in the Las Vegas metropolitan area.
      Arizona. In Arizona, we operate in Phoenix and Scottsdale, which are located in the Phoenix metropolitan area, and Tucson, which is located in the Tucson metropolitan area. These metropolitan areas contain companies in the following industries: aerospace, high-tech manufacturing, construction, energy, transportation, minerals and mining and financial services. Based on June 30, 2004 FDIC data, we ranked 12th out of 19 institutions in deposit market share with $111.0 million deposits in the Tucson metropolitan area and

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26th out of 55 institutions in deposit market share with $103.0 million in deposits in the Phoenix metropolitan area.
      California. In California, we operate in the cities of San Diego and La Mesa, both of which are in the San Diego metropolitan area. The business community in the San Diego metropolitan area includes numerous small to medium-sized businesses and service and professional firms that operate in a diverse number of in