Key insights
- Western Alliance reported strong Q1 earnings and revenue, exceeding estimates with a 31% YoY revenue increase. Deposit growth and net interest margin expansion were positive signals. However, significant fraud-related charge-offs impacted reported earnings, though adjusted EPS remained strong. Overall, the report suggests stability in a previously stressed regional bank, but the fraud event warrants monitoring.
NEW YORK - Western Alliance Bancorporation (NYSE:WAL) reported first quarter adjusted earnings per share of $2.22, exceeding the analyst estimate of $1.69 by $0.53. Revenue reached $1.02 billion, surpassing the consensus estimate of $958.12 million and marking a 31.0% increase from $778.0 million in the same quarter last year. The stock showed no significant movement following the earnings release.
The bank’s reported earnings per share of $1.65 reflected the impact of fraud-related charge-offs totaling $152.5 million from two credits—Leucadia Asset Management LLC and Cantor Group V, LLC—partially offset by $50.5 million in gains from security sales. Excluding these notable items, adjusted earnings per share reached $2.22. Net interest margin expanded to 3.54%, up from 3.51% in the prior quarter and 3.47% YoY, as the cost of interest-bearing deposits declined 21 basis points.
"Western Alliance achieved solid first quarter results featuring robust deposit growth, net interest margin expansion, and core earnings momentum, while taking decisive action to resolve two fraud-related credits," said Kenneth A. Vecchione, President and Chief Executive Officer.
Deposits surged $5.6 billion, or 7.2%, to $82.7 billion during the quarter, while loans increased $465 million to $59.1 billion. The provision for credit losses totaled $213.2 million, driven primarily by net charge-offs of $208.5 million. Excluding the fraud-related charge-offs, net loan charge-offs were 0.39% of average loans on an annualized basis.
The bank’s tangible book value per share climbed 13.0% YoY to $61.14, while the common equity tier 1 capital ratio remained stable at 11.0%. Western Alliance repurchased $50.0 million in shares during the quarter, representing 0.7 million shares at $71.61 per share.
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