Core Viewpoint - The market anticipates Western Alliance (WAL) to report a year-over-year increase in earnings driven by higher revenues for the quarter ended December 2024, with actual results being crucial for stock price movement [1][2]. Company Summary - Western Alliance is expected to post quarterly earnings of $1.92 per share, reflecting a year-over-year change of +0.5% [3]. - Revenues are projected to reach $817.22 million, representing an 18.2% increase from the same quarter last year [3]. - The consensus EPS estimate has been revised 0.42% lower in the last 30 days, indicating a reassessment by analysts [4]. Earnings Prediction Insights - The Zacks Earnings ESP model suggests that the Most Accurate Estimate for Western Alliance is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -1.09% [10][11]. - The stock currently holds a Zacks Rank of 3, making it challenging to predict an earnings beat conclusively [11]. - Historical performance shows that Western Alliance has beaten consensus EPS estimates in two out of the last four quarters [13]. Industry Context - In the Zacks Banks - West industry, Cathay General (CATY) is expected to report earnings of $1.11 per share, indicating a year-over-year decline of -11.2% [17]. - Cathay's revenue is anticipated to be $185 million, down 9.9% from the previous year [17]. - The consensus EPS estimate for Cathay has been revised 3.1% lower in the last 30 days, resulting in an Earnings ESP of -4.79% [18].

Financial Performance - Net income available to common stockholders for Q3 2024 was $196.6 million, down from $213.4 million in Q3 2023[249]. - Net income for the three months ended September 30, 2024, was $199.8 million, down from $216.6 million in the same period of 2023[260]. - Basic earnings per share for the three months ended September 30, 2024, was $1.81, a decrease of $0.16 from $1.97 in the same period of 2023[260]. - The efficiency ratio for Q3 2024 was 64.5%, compared to 58.8% in Q3 2023[249]. - The effective tax rate for the three months ended September 30, 2024 was 20.7%, down from 22.1% in the same period of 2023[293]. Loan and Deposit Growth - Total loans held for investment (HFI) increased by $3.0 billion, or 6.1%, to $53.3 billion from December 31, 2023[249]. - Total deposits rose by $12.7 billion, or 23.0%, to $68.0 billion compared to December 31, 2023[249]. - Loans held for investment (HFI) increased by $3.0 billion, or 6.1%, to $53.3 billion as of September 30, 2024, driven primarily by commercial and industrial loans[258]. - Total deposits rose by $12.7 billion, or 23.0%, to $68.0 billion as of September 30, 2024, compared to $55.3 billion at December 31, 2023[259]. Asset and Equity Changes - Total assets increased to $80.1 billion as of September 30, 2024, up from $70.9 billion at December 31, 2023, representing a 13.0% increase[258]. - Stockholders' equity increased by $599 million to $6.7 billion from December 31, 2023[249]. - Total stockholders' equity increased by $599 million, or 9.9%, to $6.7 billion at September 30, 2024, primarily due to net income and unrealized fair value gains[300]. Interest Income and Expense - Net interest income for the three months ended September 30, 2024, was $696.9 million, an increase of $109.9 million from $587.0 million in the same period of 2023[260]. - For the three months ended September 30, 2024, interest income was $1.2 billion, an increase of $173.4 million, or 16.9%, compared to the same period in 2023[281]. - For the three months ended September 30, 2024, interest expense was $503.1 million, an increase of $63.5 million, or 14.4%, compared to the same period in 2023[283]. Credit Quality and Losses - Nonaccrual loans and repossessed assets increased to 0.45% of total assets, up from 0.40% at December 31, 2023[249]. - Annualized net loan charge-offs to average loans outstanding were 0.20%, compared to 0.07% for Q3 2023[249]. - The provision for credit losses for the three and nine months ended September 30, 2024 was $33.6 million and $85.9 million, respectively, compared to $12.1 million and $53.3 million for the same periods in 2023[288]. - The total problem loan balance as of September 30, 2024, was $591 million, representing 1.11% of total loans HFI[329]. Capital Ratios - Common equity tier 1 ratio improved to 11.2% as of September 30, 2024, compared to 10.8% at the end of 2023[275]. - Total capital ratio increased to 14.1% as of September 30, 2024, from 13.7% at the end of 2023[275]. - The Company and the Bank exceeded the capital levels necessary to be classified as well-capitalized as of September 30, 2024, with a Total Capital Ratio of 14.1% for WAL and 13.2% for WAB[347]. Non-Interest Income and Expense - Non-interest income for the three months ended September 30, 2024, was $126.2 million, a slight decrease from $129.2 million in the same period of 2023[260]. - Total non-interest income for the three months ended September 30, 2024 decreased by $3.0 million compared to the same period in 2023[289]. - Total non-interest expense for the three months ended September 30, 2024 increased by $111.2 million to $537.4 million compared to the same period in 2023, primarily driven by higher deposit costs[291]. Liquidity and Funding - As of September 30, 2024, the Company has $14.1 billion in liquid assets, including $1.6 billion in cash at the FRB and $12.5 billion in securities not used as collateral[354]. - The Company maintains adequate liquidity capacity to operate without additional funding for over twelve months under stressed conditions[355]. - The Company paid dividends of $60 million and $180 million to the Parent during the three and nine months ended September 30, 2024, respectively[362].

Financial Data and Key Metrics Changes - Western Alliance Bancorporation reported earnings of $1.80 per share for Q3 2024, reflecting solid performance amid a changing rate environment [3] - Net interest income increased by $40 million from Q2 to $697 million, representing nearly 25% annualized growth due to higher average earning asset balances [7][12] - Non-interest income rose by $11 million or 10% quarter-over-quarter, totaling $126 million, although tempered by a decline in mortgage banking income [5][7] - Tangible book value per share increased by 19% year-over-year to $51.98 [5][15] - Asset quality remained stable, with non-performing assets to total assets declining by 6 basis points to 45 basis points [5][13] Business Line Data and Key Metrics Changes - HFI loan growth was $916 million, or 7% annualized, with significant contributions from regional banking and mortgage warehouse lending [3][10] - Mortgage loan production increased by 21% from Q2 and 10% year-over-year, although loan servicing revenue was negatively impacted by prepayment speeds [7][8] - The bank's C&I loans grew over $4 billion year-over-year, now accounting for 42% of the held for investment loan portfolio [10] Market Data and Key Metrics Changes - The bank experienced healthy deposit growth of $1.8 billion or 11% annualized, driven by seasonal inflows in mortgage warehouse deposits [3][10] - Juris Banking deposits decreased by $2.7 billion due to a large distribution of bankruptcy settlement funds [9][10] - The cost of interest-bearing deposits increased by 3 basis points due to $1.3 billion of quarterly deposit growth in the consumer digital channel [11] Company Strategy and Development Direction - The company aims to achieve loan growth of approximately $1.25 billion in Q4 2024, maintaining a focus on safe and sound lending practices [17] - Western Alliance plans to manage deposit costs actively, anticipating a decline of approximately 25% in ECR-related deposit costs in Q4 [18] - The bank's strategy includes diversifying its loan portfolio while focusing on commercial loans to enhance risk-adjusted returns [3][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the bank's ability to sustain strong deposit growth and deploy liquidity into attractive commercial loans [3] - The outlook for Q4 includes expectations for a decline in net interest income by approximately 3% due to market-tied variable loans repricing ahead of funding costs [17] - Management remains optimistic about the bank's performance in 2025, citing a robust balance sheet and effective credit origination platforms [70] Other Important Information - The adjusted efficiency ratio for the quarter was 53%, reflecting modestly higher operating expense growth compared to revenue growth [13] - The CET1 ratio increased approximately 20 basis points to 11.2%, positioning the bank in the top quartile of its asset class peers [15] Q&A Session Summary Question: Clarification on deposit seasonality and impact on NII - Management clarified that a large settlement from the Juris Banking Group impacted Q3 deposits, and typical seasonal declines are expected in Q4, leading to a projected $2 billion decline in deposits [21][22] Question: Outlook for non-interest income growth in Q4 - Management indicated that non-interest income is expected to grow by 8% to 12% in Q4, driven by commercial banking fees and improved mortgage banking income [28] Question: Loan growth opportunities and sustainability - Management highlighted strong pipelines in note financing, MSR lending, and warehouse lending as key areas for continued loan growth, projecting $1 billion in quarterly loan growth [34] Question: Expectations for ECR-related costs in 2025 - Management expects ECR-related costs to decline significantly in Q4 and continue to decrease in 2025, with a projected $50 million decline from Q3 to Q4 [41] Question: ROE potential in a down rate environment - Management believes ROE potential is not heavily dependent on the rate environment, aiming for an efficiency ratio that begins with a four on an adjusted basis [66]

Core Insights - Western Alliance (WAL) reported revenue of $833.1 million for Q3 2024, a year-over-year increase of 14.9% [1] - The EPS for the same period was $1.80, down from $1.97 a year ago, with a surprise of -5.26% compared to the consensus estimate of $1.90 [1] - The reported revenue exceeded the Zacks Consensus Estimate of $811.4 million, resulting in a surprise of +2.67% [1] Financial Metrics - Efficiency Ratio was 64.5%, higher than the estimated 59.1% [2] - Net Interest Margin stood at 3.6%, surpassing the average estimate of 3.4% [2] - Net charge-offs to average loans were 0.2%, matching the estimate [2] - Average Balance of Total interest earning assets was $77.80 billion, exceeding the estimate of $76.26 billion [2] - Tier 1 Leverage Ratio was 7.8%, below the average estimate of 8.1% [2] - Total non-interest income reached $126.20 million, above the estimate of $116.12 million [2] - Net interest income was $696.90 million, compared to the estimate of $685.35 million [2] - Net loan servicing revenue was $12.30 million, significantly lower than the estimate of $37.42 million [2] - Service charges and fees totaled $30.10 million, exceeding the estimate of $10.97 million [2] - Net Interest Income (FTE) was $706.90 million, above the estimate of $694.74 million [2] - Net gain on loan origination and sale activities was $46.30 million, slightly below the estimate of $49.69 million [2] - Other non-interest income was $18.60 million, significantly higher than the estimate of $7.07 million [2] Stock Performance - Shares of Western Alliance have returned +8.1% over the past month, outperforming the Zacks S&P 500 composite's +3.8% change [2] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [2]

Core Insights - Western Alliance Bancorporation (WAL) reported a significant year-over-year growth in total loans of $4.6 billion, with a notable increase in Commercial and Industrial (C&I) loans, which rose by $5.03 billion year-over-year [3][12] - The bank's deposit base also saw a substantial increase, with total deposits rising by $4 billion in the last quarter, primarily driven by non-interest-bearing deposits [6][16] - The overall loan quality remains strong, with WAL maintaining a lower Cumulative Net Charge-Offs/Average Nonperforming Loans ratio compared to many peers [5][24] Loan Portfolio - The loan portfolio increased by $1.7 billion from the previous quarter and $4.6 billion year-over-year, primarily due to C&I loans [12][11] - Management anticipates a loan portfolio of $54.8 billion by 2024, an increase of $500 million from previous guidance [4] Deposit Growth - Total deposits increased to $66.2 billion, with a quarterly change of $4 billion, reflecting a strong demand for non-interest-bearing deposits [6][16] - The guidance for deposits was raised to an expected increase of $14 billion over 2023, up from a previous estimate of $11 billion [7] Profitability and Net Interest Income - Net interest income improved by $57.7 million over the previous quarter, with net interest margin increasing by 3 basis points [27] - The updated guidance for net interest income is expected to rise between 9% and 14%, compared to a previous estimate of 5%-10% [28] Capital and Risk Management - WAL is well-capitalized, with a CET1 ratio adjusted for AOCI close to the 75th percentile, indicating strong financial health [19] - The bank's loss mitigation strategy is supported by strong underwriting standards, with an allowance for credit losses exceeding the peer median [24] Market Performance - Since the last article, WAL has outperformed the S&P 500 by approximately 22%, indicating strong market confidence in the bank's performance [10] - The price per share has seen significant appreciation, with expectations that it could reach a fair value of $98.54 in the coming months [31]

Core Viewpoint - Western Alliance Bancorporation reported strong second quarter results, highlighting significant growth in net interest income, loan momentum, and deposit generation [3]. Financial Performance - The company achieved a net income of $193.6 million and earnings per share of $1.75 for Q2 2024, surpassing the analyst consensus estimate of $1.71 per share [4]. - Quarterly sales reached $771.80 million, exceeding the analyst consensus estimate of $737.64 million [4]. - The return on tangible common equity was reported at 14.3% [3]. - Pre-provision net revenue grew by 22% on a linked quarter annualized basis, excluding the impact of the FDIC special assessment [3]. - Tangible book value per share increased by 13.2% year-over-year to $48.79, with a CET1 ratio of 11.0% [3]. Market Reaction - Following the earnings announcement, Western Alliance shares rose by 7.9%, closing at $76.72 [5]. - Analysts from Piper Sandler and Barclays maintained an Overweight rating on the stock, with Piper Sandler raising the price target from $76 to $93 and Barclays increasing it from $86 to $92 [5].

Financial Data and Key Metrics Changes - The company reported a net interest income growth of 39% annualized, driven by higher average earning assets and an expanding net interest margin (NIM) [10] - The tangible book value per share increased to $48.79, reflecting a growth rate of 3% from the previous quarter [19] - The pre-provision net revenue adjusted for FDIC special assessments is 22% annualized, indicating a positive trend [10] Business Line Data and Key Metrics Changes - Mortgage loan production rose by 14%, while interest rate commitment volume increased by 24%, although the gain on sale margin compressed by 3 basis points [32] - Loans held-for-investment (HFI) grew by $1.7 billion to $52.4 billion, while deposits increased by $4 billion to $66.2 billion at quarter-end [19] - The cost of interest-bearing deposits increased by 6 basis points from the first quarter, while the total cost of funds declined by 3 basis points to 2.79% [33] Market Data and Key Metrics Changes - The yield on total securities increased by 21 basis points to 4.87%, recovering two-thirds of the prior quarter's decline [8] - The company experienced outsized core deposit growth of $4 billion, with HFI loan growth of $1.7 billion or 14% on an annualized basis from Q1 [16] - Non-ECR, non-interest-bearing deposits have shown three consecutive quarters of growth, indicating a positive trend in deposit channels [53] Company Strategy and Development Direction - The company aims to maintain a CET1 capital ratio at or above 11%, supporting forecasted increases in loan volume [24] - The strategy focuses on thoughtful balance sheet growth, enhancing liquidity profiles, and capital bases to drive earnings growth [29] - The company is positioned to proactively lower the effective cost of deposits as interest rate cuts approach, particularly in the warehouse lending segment [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the quarter's performance and highlighted the importance of their proactive approach to risk management and liquidity [6] - The outlook for net interest income growth is projected at 9% to 14% from the Q4 2023 annualized jumping-off point, with expectations of two 25 basis-point cuts in the latter half of the year [24] - Management noted that asset quality is normalizing, with net charge-offs expected to remain low by industry standards at 15 to 20 basis points of average loans for the year [38] Other Important Information - The company has a strong focus on low-loss loan categories, which has resulted in a reserve level lower than some peers [21] - The company is actively working on initiatives to manage deposit costs and improve service levels in the warehouse lending space [80] - The Corporate Trust business is showing positive traction, with expectations for continued growth in deposits and services offered [133] Q&A Session Summary Question: What is the outlook for loan growth and deposit growth? - Management expects loan growth to continue at $1 billion per quarter, with total loans projected to grow by $4.5 billion for the year, and deposits expected to grow by $14 billion [37] Question: How does the company plan to manage deposit costs in a changing interest rate environment? - The company plans to leverage its strong balance sheet to lower effective costs of deposits as rates decline, particularly in the warehouse lending segment [80] Question: What is the company's strategy regarding the Corporate Trust business? - The Corporate Trust business is expected to grow significantly, with positive ratings actions from agencies and a strong pipeline of deals [133]

Core Insights - The article emphasizes the importance of key financial metrics in assessing a company's financial health, which can provide a clearer picture than just revenue and earnings changes year-over-year [1] Company Performance - Western Alliance reported revenue of $781.7 million for the quarter ended June 2024, reflecting a 15.3% increase compared to the same period last year [4] - The company achieved an EPS of $1.75, down from $1.96 in the year-ago quarter [4] - The reported revenue exceeded the Zacks Consensus Estimate of $736.28 million by 6.17%, and the EPS also surpassed the consensus estimate of $1.71 by 2.34% [2] Key Financial Metrics - Efficiency Ratio: 62.3%, slightly above the average estimate of 61.6% [3] - Net Interest Margin: 3.6%, compared to the average estimate of 3.4% [3] - Average Balance of Total Interest Earning Assets: $73.87 billion, exceeding the estimated $72.12 billion [3] - Net Charge-offs to Average Loans (annualized): 0.2%, higher than the estimated 0.1% [3] - Tier 1 Leverage Ratio: 8%, slightly below the average estimate of 8.1% [3] - Total Non-Interest Income: $115.20 million, above the estimated $112.09 million [3] - Net Interest Income: $656.60 million, surpassing the estimated $618.81 million [3] - Net Loan Servicing Revenue: $38.10 million, exceeding the estimated $33.23 million [3] - Net Gain on Loan Origination and Sale Activities: $46.80 million, below the estimated $48.83 million [3] - Service Charges and Fees: $10.80 million, above the estimated $9.92 million [3] - Commercial Banking Related Income: $6.70 million, slightly above the estimated $6.47 million [3] - Income from Equity Investments: $4.20 million, significantly lower than the estimated $9.52 million [3] Stock Performance - Shares of Western Alliance have returned +23.3% over the past month, significantly outperforming the Zacks S&P 500 composite's +2.1% change [5] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [5]

Core Viewpoint - Western Alliance (WAL) reported quarterly earnings of $1.75 per share, exceeding the Zacks Consensus Estimate of $1.71 per share, but down from $1.96 per share a year ago [1][6] Financial Performance - The company posted revenues of $781.7 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 6.17%, compared to $678 million in the same quarter last year [6] - The earnings surprise for the quarter was 2.34%, with a previous quarter's earnings of $1.72 per share exceeding expectations of $1.69 per share by 1.78% [5] Market Performance - Western Alliance shares have increased approximately 11.5% since the beginning of the year, while the S&P 500 has gained 17.2% [2] - The company has surpassed consensus EPS estimates three times over the last four quarters [6] Earnings Outlook - The estimate revisions trend for Western Alliance is currently unfavorable, leading to a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [4] - The current consensus EPS estimate for the upcoming quarter is $1.92 on revenues of $778.48 million, and for the current fiscal year, it is $7.41 on revenues of $3.05 billion [12] Industry Context - The Banks - West industry, to which Western Alliance belongs, is currently ranked in the bottom 36% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact investor sentiment [8]

Financial Performance - Net income for Q2 2024 was $193.6 million, up $16.2 million from Q1 2024, but down $22.1 million from Q2 2023[19]. - Net income for the three months ended June 30, 2024, was $193.6 million, an increase from $177.4 million in the previous quarter[32]. - Net income available to common stockholders was $190.4 million in Q2 2024, a decrease of 10.4% from $212.5 million in Q2 2023[55]. - Net income for the six months ended June 30, 2024, was $371.0 million, compared to $210.4 million in the same period last year, showing a significant increase of approximately 76.5%[67]. - Net income for the quarter was $357.9 million, an increase from $299.0 million year-over-year[69]. Asset Growth - Total assets increased to $80,581 million as of June 30, 2024, up 18.2% from $68,160 million in June 30, 2023[1]. - Total assets rose by 4.7% to $80.6 billion at June 30, 2024, from $77.0 billion at March 31, 2024, and increased by 18.2% from $68.2 billion at June 30, 2023[44]. - Total assets grew to $78.55 billion, up from $72.68 billion in the prior period[78]. Loan and Deposit Metrics - HFI loans, net of deferred fees, rose to $52,430 million, reflecting a 9.5% increase from $47,875 million year-over-year[1]. - Total deposits reached $66,244 million, marking a 29.8% increase from $51,041 million in June 30, 2023[1]. - HFI loans totaled $52.4 billion, an increase of $1.7 billion or 3.4% from the previous quarter[13]. - Total deposits reached $66.2 billion, up $4.0 billion or 6.5% compared to the previous quarter[13]. - Total loans held for investment (HFI) amounted to $50,251 million, with a yield of 6.78%, compared to $49,351 million and a yield of 6.38% in the previous year[64]. Income and Expense Analysis - The net interest income for the three months ended June 30, 2024, was $656.6 million, with a net interest margin of 3.63%[6]. - Total interest income was $1,147.5 million for the three months ended June 30, 2024, an increase from $1,055.0 million in the previous quarter[32]. - Total non-interest income was $115.2 million for the three months ended June 30, 2024, a decrease from $129.9 million in the previous quarter[32]. - Total non-interest expense was $486.8 million for the three months ended June 30, 2024, an increase from $481.8 million in the previous quarter[32]. - Non-interest expenses rose to $735.3 million, up 27.3% from $283.6 million in the previous year[69]. Capital and Equity - Common Equity Tier 1 capital stood at 11.0% as of June 30, 2024, compared to 10.1% a year earlier[7]. - Stockholders' equity rose to $6,334 million, an 11.4% increase from $5,685 million in June 30, 2023[1]. - Stockholders' equity increased to $6.3 billion at June 30, 2024, compared to $6.2 billion at March 31, 2024, and $5.7 billion at June 30, 2023, driven by net income[44]. - Total tangible common equity rose to $5,375 million, compared to $5,211 million in the previous quarter[86]. Credit Quality - Nonaccrual loans amounted to $401 million, with a ratio of nonaccrual loans to funded HFI loans at 0.76%[8]. - The provision for credit losses was $37.1 million, up $21.9 million from the previous quarter, primarily due to loan growth and net charge-offs of $22.8 million[40]. - Annualized net loan charge-offs to average loans outstanding was 0.18%, compared to 0.06% in the previous quarter[13]. - The allowance for credit losses stood at $349 million, compared to $314 million in the previous year, indicating a strengthening of reserves[64]. Operational Efficiency - The efficiency ratio, adjusted for deposit costs, improved to 51.5% in Q2 2024 from 57.3% in Q1 2024[19]. - The company's ratio of HFI loans to deposits was 79.1% at June 30, 2024, down from 81.5% in the previous quarter[43]. - Non-interest income reached $245.1 million, up from $234.8 million, indicating a growth of approximately 4.0% year-over-year[67]. Market Position and Recognition - The company received top rankings in 2023 for Best CEO, Best CFO, and Best Investor Relations Team, highlighting its strong market position[6]. - The company plans to continue expanding its market presence and investing in new technologies to enhance operational efficiency[80].