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Western Alliance: A Flawless Quarterly From Multiple Perspectives
WALWestern Alliance Bancorporation(WAL) Seeking Alpha·2024-07-23 14:04

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 4billioninthelastquarter,primarilydrivenbynon−interest−bearingdeposits[6][16]−Theoverallloanqualityremainsstrong,withWALmaintainingalowerCumulativeNetCharge−Offs/AverageNonperformingLoansratiocomparedtomanypeers[5][24]LoanPortfolio−Theloanportfolioincreasedby4 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 500millionfrompreviousguidance[4]DepositGrowth−Totaldepositsincreasedto500 million from previous guidance [4] Deposit Growth - Total deposits increased to 66.2 billion, with a quarterly change of 4billion,reflectingastrongdemandfornon−interest−bearingdeposits[6][16]−Theguidancefordepositswasraisedtoanexpectedincreaseof4 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 11billion[7]ProfitabilityandNetInterestIncome−Netinterestincomeimprovedby11 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]