Western Alliance Bancorporation One East Washington Street Phoenix, AZ 85004 www.westernalliancebancorporation.com PHOENIX--(BUSINESS WIRE)--July 17, 2025 Net interest income totaled $697.6 million in the second quarter 2025, an increase of $47.0 million, or 7.2%, from $650.6 million in the first quarter 2025, and an increase of $41.0 million, or 6.2%, compared to the second quarter 2024. The increase in net interest income from the first quarter 2025 is primarily due to higher average interest earning asse ...

Core Viewpoint - Western Alliance (WAL) is expected to report a quarterly earnings per share (EPS) of $2.02, marking a 15.4% increase year-over-year, with revenues projected at $848.1 million, reflecting an 8.5% increase compared to the same period last year [1]. Earnings Estimates - The consensus EPS estimate has been revised downward by 1.3% over the past 30 days, indicating a reassessment by analysts [2]. - Revisions to earnings projections are crucial for predicting investor behavior and are linked to short-term stock price performance [3]. Key Metrics Projections - Analysts predict a 'Net Interest Margin' of 3.4%, down from 3.6% in the same quarter last year [5]. - The estimated 'Efficiency Ratio' is 58.5%, compared to 62.3% in the same quarter of the previous year [5]. - 'Average Balance - Total interest earning assets' is forecasted to reach $79.16 billion, up from $73.87 billion year-over-year [5]. Income Projections - 'Total non-interest income' is expected to be $138.64 million, an increase from $115.20 million in the same quarter last year [6]. - 'Service charges and fees' are projected at $39.00 million, significantly higher than the $10.80 million reported a year ago [6]. - 'Net interest income' is anticipated to reach $689.27 million, compared to $656.60 million in the same quarter last year [7]. - 'Net gain on loan origination and sale activities' is expected to be $59.48 million, up from $46.80 million year-over-year [7]. - 'Other non-interest income' is projected at $15.06 million, compared to $8.10 million last year [8]. - 'Net loan servicing revenue' is expected to be $24.72 million, down from $38.10 million in the same quarter last year [8]. Stock Performance - Shares of Western Alliance have increased by 18.5% over the past month, outperforming the Zacks S&P 500 composite, which rose by 4% [8].

Core Viewpoint - The market anticipates Western Alliance (WAL) will report a year-over-year increase in earnings driven by higher revenues for the quarter ended June 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The upcoming earnings report is expected on July 17, with a consensus EPS estimate of $2.02, reflecting a +15.4% year-over-year change, and revenues projected at $847.65 million, an increase of 8.4% from the previous year [3][2]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised down by 1.27%, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a positive Earnings ESP of +0.87% for Western Alliance, suggesting analysts have recently become more optimistic about the company's earnings prospects [12]. Historical Performance - In the last reported quarter, Western Alliance exceeded the expected EPS of $1.78 by delivering $1.79, resulting in a surprise of +0.56%. The company has beaten consensus EPS estimates in three out of the last four quarters [13][14]. Investment Considerations - While a potential earnings beat is a positive indicator, other factors may influence stock performance, making it essential to consider the broader context [15][17].

Financial Performance - Net income for the three months ended March 31, 2025, was $199.1 million, compared to $177.4 million for the same period in 2024, reflecting an increase of 12.8%[13] - Earnings per share (EPS) for Q1 2025 was $1.80, up from $1.61 in Q1 2024, indicating a year-over-year growth of 11.8%[13] - Comprehensive income attributable to controlling interest for Q1 2025 was $254.3 million, compared to $132.7 million in Q1 2024, reflecting a substantial increase of 91.8%[15] - Net income for the three months ended March 31, 2025, was $199.1 million, an increase from $177.4 million in the same period of 2024, representing a growth of 11.0%[21] - Revenue from contracts with customers for the three months ended March 31, 2025, was $23.0 million, up from $13.5 million in the same period of 2024[208] Asset and Liability Management - Total assets increased to $83,043 million as of March 31, 2025, up from $80,934 million at December 31, 2024, representing a growth of 2.75%[11] - The company’s total liabilities were reported at $75,828 million as of March 31, 2025[204] - Total deposits increased to $69,322 million as of March 31, 2025, compared to $66,341 million at December 31, 2024, representing a growth of 4.5%[11] - The allowance for credit losses was $389 million as of March 31, 2025, compared to $374 million at December 31, 2024, an increase of 4.0%[11] Income and Expense Analysis - Total interest income rose to $1,095.6 million in Q1 2025, compared to $1,055.0 million in Q1 2024, marking an increase of 3.8%[13] - Non-interest income totaled $127.4 million in Q1 2025, slightly down from $129.9 million in Q1 2024, a decrease of 1.9%[13] - Total non-interest expense for Q1 2025 was $500.4 million, up from $481.8 million in Q1 2024, indicating an increase of 3.3%[13] - The company’s interest expense for the same period was $445.0 million, leading to a net interest income after provision for credit losses of $619.4 million[204] Credit Quality and Loss Provisions - Provision for credit losses increased to $31.2 million in Q1 2025, up from $15.2 million in Q1 2024, reflecting a significant rise of 105.3%[13] - The total allowance for credit losses (ACL) on loans held for investment (HFI) increased from $373.8 million as of December 31, 2024, to $388.6 million as of March 31, 2025, reflecting a net increase of $14.8 million[83] - The provision for credit losses for the three months ended March 31, 2025, was $40.6 million, compared to $13.4 million for the same period in 2024, indicating a significant increase in provisions[85] Loan Portfolio and Performance - Total loans held for sale (HFS) increased to $3,238 million, up from $2,286 million as of December 31, 2024, representing a growth of approximately 42%[63] - The total loans held for investment (HFI) as of March 31, 2025, amounted to $54,761 million, an increase from $53,676 million as of December 31, 2024, reflecting a growth of approximately 2%[66] - Total loans as of March 31, 2025, amounted to $54.761 billion, with past due loans totaling $662 million[71] - Nonaccrual loans totaled $451 million as of March 31, 2025, with $319 million classified as past due 90 days or more and still accruing[67] Securities and Investments - The Company reported significant unrealized losses in available-for-sale debt securities, totaling $671 million as of March 31, 2025[46] - The Company reported a total of $1,536 million in held-to-maturity securities with a fair value of $1,359 million as of March 31, 2025, reflecting unrealized losses of $178 million[44] - The fair value of available-for-sale (AFS) debt securities was reported at $14,231 million as of March 31, 2025, with $4,046 million from quoted prices in active markets and $10,185 million from significant observable inputs[177] Capital Management - The company issued $1,200.0 million in long-term debt during Q1 2025, compared to no issuances in Q1 2024[22] - The company paid cash dividends of $45.0 million on common and preferred stock in Q1 2025, slightly up from $43.9 million in Q1 2024[22] - The Company declared and paid a quarterly cash dividend of $0.38 per share, totaling $41.8 million for the three months ended March 31, 2025, compared to $40.7 million in the same period of 2024[127] Tax and Regulatory Matters - The effective tax rate for the three months ended March 31, 2025, was 19.2%, down from 23.5% in the same period of 2024[152] - The net deferred tax asset (DTA) balance as of March 31, 2025, was $272 million, a decrease of $9 million from $281 million at December 31, 2024[153] Derivatives and Risk Management - The net loss on derivatives for the three months ended March 31, 2025, was $37.1 million, compared to a net gain of $7.1 million for the same period in 2024[149] - The Company utilized interest rate swaps to manage interest rate risk, converting fixed rates to variable rates and vice versa[133] - The Company had a notional amount of $28.268 billion in forward contracts as of March 31, 2025, with a fair value of $21 million[146]

Financial Data and Key Metrics Changes - Western Alliance Bancorporation reported a pre-provision net revenue of $278 million, reflecting a year-over-year increase of $31 million or 12% [10] - Net interest income grew by $52 million year-over-year, representing a 9% increase, totaling $651 million [13][20] - The net interest margin remained stable at 3.47%, with a slight decline of 1 basis point from the previous quarter [11][20] - Total equity increased by $508 million, including $293 million from the issuance of REIT preferred equity [24] Business Line Data and Key Metrics Changes - Noninterest income remained stable year-over-year at $127 million, with mortgage loan production volume increasing by 25% annually [15] - Commercial and Industrial (C&I) loans drove most of the growth, now accounting for 44% of the held-for-investment loan portfolio, up from 39% a year ago [25] - Residential loans decreased by $63 million, now making up 26% of the portfolio compared to 29% previously [25] Market Data and Key Metrics Changes - The balance sheet expanded by $2.1 billion from year-end to $83 billion in total assets, driven by held-for-investment loan and deposit growth of $1.1 billion and $3 billion, respectively [23] - Deposits grew by $3 billion in Q1, primarily in noninterest-bearing accounts [27] Company Strategy and Development Direction - The company aims for $5 billion in loan growth and $8 billion in deposit growth for the full year, with healthy client engagement [41] - The focus remains on maintaining a strong capital position with a CET1 ratio above 11% [42] - The company emphasizes its diversified business model to navigate economic cycles effectively [8][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in asset quality stability, with full-year net charge-offs expected to hover around 20 basis points [44] - The company anticipates two rate cuts before the end of 2025, which will impact net interest income and margin positively [43][75] - Management is mindful of recent rate volatility affecting consumer behavior but expects noninterest income to follow the trajectory of net interest income [53] Other Important Information - The company has significantly increased its capital and liquidity over the past two years to prepare for potential market fluctuations [9] - The Corporate Trust business saw deposits grow by $270 million, now exceeding $800 million in total deposits [150] Q&A Session Summary Question: Concerns about the adequacy of the allowance for credit losses (ACL) - Management reassured that the reserve is adequate and based on a rigorous methodology, with no expected charge to increase reserves [49][50] Question: Guidance for 2025 and fee income expectations - Management expects fee income to rise in the second half of the year, supported by seasonal increases in mortgage income [52] Question: Insights on C&I growth dynamics - Management noted strong momentum in loan pipelines, expecting Q2 loan growth to surpass Q1 [56] Question: Capital raise structure and future capital moves - The capital raise aimed to enhance the Tier 1 leverage ratio, with management satisfied with the current levels [58][59] Question: Increase in service charges and deposit insurance costs - Management attributed the increase in service charges to improved treasury management services and outreach to clients [67] Question: Outlook on net interest income and margin trajectory - Management anticipates sequential growth in net interest income, with gradual increases in net interest margin throughout the year [74][75] Question: Loan yield dynamics and pricing pressures - Management acknowledged pricing pressures in the market but expects loan yields to increase in Q2 despite anticipated rate cuts [112][113] Question: Corporate Trust business traction post-rating upgrades - Management highlighted the positive impact of recent rating upgrades on confidence and growth in the Corporate Trust business [148][151]

Financial Performance - Earnings per Share (EPS) for Q1 2025 was $1.79, compared to $1.95 in Q4 2024 and $1.60 in Q1 2024[5] - Net income for Q1 2025 reached $199.1 million, a 12.2% year-over-year increase[5, 6] - Net revenue for Q1 2025 was $778.0 million, compared to $838.4 million in Q4 2024 and $728.8 million in Q1 2024[5] - Pre-Provision Net Revenue (PPNR) for Q1 2025 was $277.6 million, a 12.4% year-over-year increase[5, 6] Balance Sheet and Capital - Total loans increased to $54.8 billion in Q1 2025, up $1.1 billion from the previous quarter and $4.1 billion, or 8.0%, year-over-year[5, 6, 38] - Total deposits increased to $69.3 billion in Q1 2025, up $3.0 billion, or 4.5%, from the previous quarter and $7.1 billion, or 11.4%, year-over-year[5, 38] - The CET1 ratio was 11.1% in Q1 2025[5, 6] - Tangible book value per share increased to $54.10, a 14.4% year-over-year increase[5, 6, 38] Asset Quality - Provision for credit losses was $31.2 million in Q1 2025[5, 11] - Net loan charge-offs were $25.8 million, or 0.20% of average loans, in Q1 2025[5] - Non-Performing Assets (NPAs) to total assets ratio was 0.60% in Q1 2025[5, 6] Net Interest Income and Margin - Net Interest Income decreased by $15.9 million, or 2.4%, primarily due to smaller quarterly day count and lower yields on interest earning assets[23] - Net Interest Margin (NIM) decreased by 1 basis point to 3.47%[5, 23] Non-Interest Expenses and Efficiency - Adjusted efficiency ratio (excluding deposit costs) increased to 55.8%[5, 30] - Deposit costs decreased by $37.7 million to $136.8 million[30] Management Outlook for 2025 - Loan growth (HFI) is expected to increase by $5.0 billion[82] - Deposit growth is expected to increase by $8.0 billion[82] - Net Interest Income is projected to increase by 6%-8%[82]

Group 1 - Western Alliance (NYSE: WAL) shares have experienced a challenging 2025, declining approximately 35% from their peak, although they remain higher than a year ago [1] - The company reported mixed earnings results after the market closed on Monday, leading to shares trading slightly [1]

Core Insights - Western Alliance (WAL) reported revenue of $788.2 million for the quarter ended March 2025, reflecting a 6.7% increase year-over-year, while EPS rose to $1.79 from $1.72 in the previous year [1] - The revenue fell short of the Zacks Consensus Estimate of $794.4 million, resulting in a surprise of -0.78%, whereas the EPS exceeded the consensus estimate of $1.78 by +0.56% [1] Financial Performance Metrics - Efficiency Ratio stood at 63.5%, higher than the three-analyst average estimate of 60.3% [4] - Net Interest Margin was reported at 3.5%, surpassing the three-analyst average estimate of 3.2% [4] - Average Balance of Total Interest Earning Assets was $77.18 billion, slightly below the two-analyst average estimate of $77.62 billion [4] - Net charge-offs to average loans (annualized) were 0.2%, better than the 0.3% estimated by two analysts [4] - Total Non-Interest Income reached $127.40 million, lower than the three-analyst average estimate of $134.90 million [4] - Net Interest Income was reported at $650.60 million, compared to the two-analyst average estimate of $660.53 million [4] - Service Charges and Fees amounted to $37.20 million, exceeding the two-analyst average estimate of $31.20 million [4] - Net Gain on Loan Origination and Sale Activities was $49.50 million, compared to the $51.51 million average estimate based on two analysts [4] Stock Performance - Shares of Western Alliance have declined by -14.4% over the past month, in contrast to the Zacks S&P 500 composite's decline of -5.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Western Alliance (WAL) reported quarterly earnings of $1.79 per share, exceeding the Zacks Consensus Estimate of $1.78 per share, and up from $1.72 per share a year ago, representing an earnings surprise of 0.56% [1] - The company posted revenues of $788.2 million for the quarter ended March 2025, which missed the Zacks Consensus Estimate by 0.78%, but increased from $738.4 million year-over-year [2] - The stock has underperformed, losing about 20.6% since the beginning of the year compared to the S&P 500's decline of 10.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2 on revenues of $838.84 million, and for the current fiscal year, it is $8.67 on revenues of $3.41 billion [7] - The estimate revisions trend for Western Alliance is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Zacks Industry Rank for Banks - West is in the top 36% of over 250 Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8] - First Northwest Bancorp (FNWB), another company in the same industry, is expected to report quarterly earnings of $0.12 per share, reflecting a year-over-year change of +200% [9]

Financial Performance - Net income for Q1 2025 was $199.1 million, a decrease of 8.2% from $216.9 million in Q4 2024, but an increase of 11.9% from $177.4 million in Q1 2024[9] - Earnings per share for Q1 2025 was $1.79, down from $1.95 in Q4 2024, but up from $1.60 in Q1 2024[9] - Pre-provision net revenue (PPNR) was $277.6 million, down $41.8 million from $319.4 million in Q4 2024, but up $30.6 million from $247.0 million in Q1 2024[10] - Non-interest income for Q1 2025 was $127.4 million, a decrease of $44.5 million from $171.9 million in Q4 2024, and a slight decrease from $129.9 million in Q1 2024[6] - The net interest margin for Q1 2025 was 3.47%, a decrease from 3.48% in Q4 2024 and from 3.60% in Q1 2024[5] - Net income available to common stockholders for Q1 2025 was $195.9 million, compared to $174.2 million in Q1 2024, marking an increase of 12.9%[37] - Diluted earnings per share increased to $1.79 in Q1 2025, up from $1.60 in Q1 2024, a growth of 11.9%[37] Asset and Deposit Growth - Total deposits increased by $3.0 billion, or 4.5%, to $69.3 billion compared to Q4 2024, and increased by $7.1 billion, or 11.4%, compared to Q1 2024[13] - Total assets rose by $2.1 billion, or 2.6%, to $83.0 billion at March 31, 2025, from $80.9 billion at December 31, 2024, and increased by 7.9% from $77.0 billion at March 31, 2024[17] - Total deposits increased to $69.3 billion at March 31, 2025, an 11.4% increase from $62.2 billion at March 31, 2024[30] - Total assets reached $83,043 million as of March 31, 2025, compared to $76,989 million a year earlier, indicating a growth of 8.0%[39] Loan and Credit Quality - HFI loans totaled $54.8 billion, an increase of $1.1 billion, or 2.0%, from Q4 2024, and an increase of $4.1 billion, or 8.0%, from Q1 2024[11] - The provision for credit losses was $31.2 million, a decrease from $60.0 million in Q4 2024, but an increase from $15.2 million in Q1 2024[4] - Nonaccrual loans decreased by $25 million to $451 million during the quarter, but increased by $52 million from March 31, 2024[20] - The ratio of classified assets to Tier 1 capital plus the allowance for credit losses was 15.9% at March 31, 2025, up from 14.2% at December 31, 2024, and 12.0% at March 31, 2024[22] - Special mention loans rose to $460 million, up from $392 million in the previous quarter, with a ratio of 0.84% to funded HFI loans[43] - Loans past due 30 to 89 days increased to $182 million, compared to $92 million in the previous quarter, reflecting a rise in early-stage delinquencies[43] Equity and Capital Ratios - The tangible book value per share increased by 14.4% year-over-year to $54.10, with a CET 1 ratio of 11.1%[2] - Total equity increased to $7.2 billion at March 31, 2025, compared to $6.7 billion at December 31, 2024, and $6.2 billion at March 31, 2024, marking a 16.9% increase[16] - The common equity tier 1 capital ratio was 11.1% at March 31, 2025, slightly down from 11.3% at December 31, 2024, and up from 11.0% at March 31, 2024[17] - Tangible common equity ratio increased to 7.2% as of March 31, 2025, compared to 6.8% a year earlier[34] Expense Management - Non-interest expenses totaled $500.4 million in Q1 2025, compared to $481.8 million in Q1 2024, representing an increase of 3.8%[37] - Total non-interest expense for Q1 2025 was $500.4 million, a decrease from $519.0 million in Q4 2024[51] - Deposit costs for Q1 2025 were $136.8 million, down from $174.5 million in Q4 2024[51] - The efficiency ratio, adjusted for deposit costs, was 55.8% in Q1 2025, compared to 51.1% in Q4 2024 and 57.3% in Q1 2024[8]