Western Alliance Bancorporation Q4 Earnings Call Highlights

Core Insights - The company reported record financial results for 2025, including net interest income of $2.9 billion, net revenue of $3.5 billion, and pre-provision net revenue (PP&R) of $1.4 billion, with net income available to common shareholders at $956 million and EPS at $8.73, reflecting a 12% increase in net revenue and a 26% increase in PP&R year-over-year [1][6][4] Financial Performance - For Q4, the company achieved an EPS of $2.59, a 33% increase from the same period last year, with a return on average assets of 1.23% and a return on average tangible common equity of 16.9% [2] - The company ended 2025 with strong momentum, citing robust loan growth, reduced seasonal deposit outflows, and stable net interest margin (NIM) [3][4] Balance Sheet and Growth - Total assets reached approximately $93 billion, with deposits increasing by 16% year-over-year, amounting to an additional $10.8 billion, and held-for-investment (HFI) loan growth of $5 billion for 2025 [5][7] - The company expects to achieve $6 billion in loan growth and $8 billion in deposit growth for 2026, with net interest income projected to rise by 11-14% [6][24] Income and Expense Trends - Non-interest income increased by 25%, primarily driven by commercial banking and disbursement fees, while non-interest expense growth moderated to 4% due to lower deposit costs [1][8] - In Q4, net interest income was $766 million, up from the previous quarter, while net interest margin slightly compressed to 3.51% [11] Credit Quality and Capital - Asset quality remained stable, with net charge-offs at $44.6 million, or 31 basis points of average loans, and the allowance for funded loans fully covering non-performing loans at 102% [14][17] - The company reported a tangible common equity to tangible assets ratio of 7.3% and a CET1 ratio of 11%, consistent with management's targets [17][19] Strategic Outlook - The company plans to de-emphasize certain areas, such as residential loan growth, while focusing on specialized commercial and lower-cost deposit initiatives [20] - Management expressed confidence in the bank's organic growth strategy and earnings momentum heading into 2026 [21]