Group 1 - Western Alliance shares (NYSE: WAL) have rebounded strongly, sitting near a 52-week high, up 34% from last year after facing significant pressure during the regional banking crisis of 2022 [1] - Despite the strong rebound, shares experienced a slight decline after hours on Wednesday [1]

Core Insights - Western Alliance (WAL) reported revenue of $848.4 million for Q4 2024, a year-over-year increase of 22.7% and a surprise of +3.82% over the Zacks Consensus Estimate of $817.22 million [1] - The EPS for the same quarter was $1.95, compared to $1.91 a year ago, with an EPS surprise of +1.56% over the consensus estimate of $1.92 [1] Financial Performance Metrics - Efficiency Ratio was reported at 51.1%, significantly better than the estimated 59.2% by analysts [4] - Net Interest Margin stood at 3.5%, exceeding the average estimate of 3.3% [4] - Net charge-offs to average loans were annualized at 0.3%, slightly above the average estimate of 0.2% [4] - Average Balance of Total interest earning assets was $77.31 billion, higher than the estimated $76.07 billion [4] - Total non-interest income reached $171.90 million, surpassing the estimated $129.96 million [4] - Service charges and fees were $31.70 million, slightly above the average estimate of $31.32 million [4] - Net interest income was reported at $666.50 million, below the average estimate of $673.83 million [4] - Net gain on loan origination and sale activities was $67.90 million, compared to the average estimate of $46.99 million [4] - Other non-interest income was $14.80 million, below the average estimate of $19.77 million [4] - Income from equity investments was $11.10 million, exceeding the average estimate of $6.55 million [4] - Net loan servicing revenue was $24.70 million, below the average estimate of $27 million [4] Stock Performance - Shares of Western Alliance have returned +10.1% over the past month, outperforming the Zacks S&P 500 composite's +1.1% change [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 Viewpoint - Western Alliance (WAL) reported quarterly earnings of $1.95 per share, exceeding the Zacks Consensus Estimate of $1.92 per share, and showing an increase from $1.91 per share a year ago, indicating a positive earnings surprise of 1.56% [1] Financial Performance - The company achieved revenues of $848.4 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.82%, and up from $691.3 million in the same quarter last year [2] - Over the last four quarters, Western Alliance has exceeded consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance - Since the beginning of the year, Western Alliance shares have increased by approximately 10.3%, outperforming the S&P 500's gain of 3.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.92 on revenues of $803.92 million, while for the current fiscal year, the estimate is $8.87 on revenues of $3.4 billion [7] - The estimate revisions trend for Western Alliance is mixed, which may change following the recent earnings report [6] Industry Context - The Banks - West industry, to which Western Alliance belongs, is currently ranked in the top 36% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

Financial Performance - Net income for Q4 2024 was $216.9 million, an increase of 8.6% from $199.8 million in Q3 2024 and 46.6% higher than Q4 2023[10] - Earnings per share for Q4 2024 reached $1.95, up 8.3% from $1.80 in Q3 2024 and 46.6% from $1.33 in Q4 2023[10] - Non-interest income for Q4 2024 was $171.9 million, up 36.2% from $126.2 million in Q3 2024 and 90.1% from $90.5 million in Q4 2023[7] - The Company's net income for the fourth quarter 2024 was $216.9 million, a 46.7% increase from $147.9 million in the fourth quarter 2023[33] - Net income available to common stockholders reached $213.7 million in Q4 2024, compared to $144.7 million in Q4 2023, an increase of 47.7%[40] - Net interest income after provision for credit losses was $606.5 million for Q4 2024, compared to $582.4 million in Q4 2023, marking a 4.3% increase[40] - Net interest income for the year ended December 31, 2024, was $2,618.9 million, up from $2,338.9 million in 2023, representing a year-over-year increase of 12.0%[53] Asset and Deposit Management - Total assets increased by $854 million, or 1.1%, to $80.9 billion at December 31, 2024, compared to $80.1 billion at September 30, 2024, and increased by 14.2% from $70.9 billion at December 31, 2023[19] - Total deposits decreased by $1.7 billion, or 2.5%, to $66.3 billion in Q4 2024, but increased by $11.0 billion, or 19.9%, year-over-year[15] - The Company's total assets of the company were $82.688 billion, reflecting a strong balance sheet position[51] Loan Performance - HFI loans totaled $53.7 billion, an increase of $330 million, or 0.6%, from Q3 2024 and up $3.4 billion, or 6.7%, year-over-year[13] - Loans held for investment increased to $53.676 million in Q4 2024, compared to $53.346 million in Q3 2024, an increase of 0.6%[42] - The allowance for loan losses was $374 million as of December 31, 2024, up from $357 million in Q3 2024, indicating a rise of 4.8%[42] - Nonaccrual loans rose to $476 million, representing 0.89% of funded HFI loans, compared to 0.65% in the prior quarter[46] - Loans past due 30 to 89 days, still accruing, amounted to $92 million, which is 0.17% of funded HFI loans[46] Credit Quality and Provisions - The provision for credit losses increased to $60.0 million in Q4 2024, up from $33.6 million in Q3 2024 and $9.3 million in Q4 2023[5] - The provision for credit losses totaled $60.0 million for the fourth quarter 2024, compared to $33.6 million for the third quarter 2024, and $9.3 million for the fourth quarter 2023[21] - The company reported a provision for credit losses of $60.0 million in Q4 2024, up from $9.3 million in Q4 2023, reflecting a more cautious outlook on credit quality[55] Efficiency and Ratios - The efficiency ratio, adjusted for deposit costs, improved to 51.1% in Q4 2024 from 52.7% in Q3 2024 and 59.1% in Q4 2023[9] - The efficiency ratio improved to 61.2% in Q4 2024 from 66.8% in Q4 2023, demonstrating enhanced operational efficiency[56] - The Company's common equity tier 1 capital ratio was 11.3% at December 31, 2024, up from 10.8% at December 31, 2023[19] - The tangible common equity ratio remained stable at 7.2% as of December 31, 2024, consistent with the previous quarter[37] Investment and Interest Income - Total interest income rose to $1,138.6 million in Q4 2024, up from $1,039.0 million in Q4 2023, reflecting a year-over-year increase of 9.6%[40] - Total interest earning assets decreased to $77.306 billion with net interest income of $666.5 million, resulting in a net interest margin of 3.48% for the three months ended December 31, 2024[51] - Average yield on loans held for investment (HFI) was 6.63% in 2024, compared to 6.53% in 2023, indicating a slight improvement in loan profitability[53]

Core Viewpoint - Analysts forecast that Western Alliance (WAL) will report quarterly earnings of $1.92 per share, reflecting a year-over-year increase of 0.5%, with revenues expected to reach $817.22 million, an 18.2% increase compared to the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised down by 0.1% in the past 30 days, indicating a reassessment by covering analysts [2]. - Revisions to earnings estimates are significant indicators for predicting investor actions regarding the stock, with empirical research showing a strong correlation between earnings estimate trends and short-term stock price performance [3]. Key Metrics Projections - Analysts predict an 'Efficiency Ratio' of 59.2%, down from 66.8% a year ago [4]. - The 'Net Interest Margin' is estimated at 3.3%, compared to 3.7% in the previous year [5]. - The average prediction for 'Total interest earning assets' is $76.07 billion, up from $65.33 billion in the same quarter last year [5]. - 'Total non-interest income' is expected to be $129.96 million, an increase from $90.50 million year-over-year [5]. - 'Net gain on loan origination and sale activities' is forecasted at $46.99 million, slightly down from $47.80 million a year ago [6]. - 'Net interest income' is estimated at $673.83 million, up from $591.70 million in the same quarter last year [6]. - 'Service charges and fees' are expected to reach $31.32 million, compared to $22.70 million in the previous year [7]. - 'Net loan servicing revenue' is projected at $27.00 million, significantly up from $9.10 million year-over-year [7]. - 'Other non-interest income' is anticipated to be $19.77 million, compared to $8.10 million a year ago [8]. Stock Performance - Over the past month, shares of Western Alliance have returned +8.9%, outperforming the Zacks S&P 500 composite's +2.1% change [8].

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 Viewpoint - Western Alliance Bancorporation reported mixed earnings for Q3, with earnings per share of $1.80, missing expectations of $1.89, but revenues of $823 million exceeded consensus of $807 million [1][2][3] Financial Performance - Earnings per share were reported at $1.80, with operating earnings at $1.81, both below the consensus estimate of $1.89 [3] - The company generated strong revenues of $823 million, surpassing the consensus estimate of $807 million [1] - Adjusted pre-provision net revenue (PPNR) was $285.7 million, missing expectations by 6% due to higher expenses related to ECR deposit costs [4] Analyst Ratings and Expectations - RBC Capital Markets maintained an Outperform rating with a price target of $99, noting decent overall performance despite headwinds [1] - Stephens maintained an Overweight rating with a price target of $102, indicating potential downside in PPNR for Q4 [2] - Truist Securities reiterated a Buy rating with a price target of $100, highlighting mixed guidance for FY 2024 [4] Cost and Growth Insights - Higher ECR deposit costs were a significant factor in the earnings miss, with costs growing by 20% in Q3 [5] - ECR deposit balances increased by approximately $3 billion sequentially to $27.8 billion [5] - Management updated guidance, projecting loan growth of $4.5 billion but reducing deposit growth expectations from $14 billion to $11 billion [3]

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]