TLDR
- EPS surges 26.7% YoY to $2.28 on robust loan and deposit growth.
- Net income hits $260.5M, marking a 30% rise from last year’s quarter.
- Deposits jump 8.6% to $77.2B, boosting liquidity and balance strength.
- Efficiency ratio improves to 47.8% as margins hold steady at 3.53%.
- CET1 ratio at 11.3% signals strong capital and stable credit quality.
Western Alliance Bancorporation(WAL) stock advanced steadily during the trading day, closing at $76.25 after strong third-quarter financial performance.
Western Alliance Bancorporation, WAL
The company posted a 26.7% year-over-year rise in earnings per share, reaching $2.28. Solid loan growth, deposit expansion, and firm margins strengthened its balance sheet and supported higher profitability.
Robust Financial Performance and Margin Stability
Western Alliance reported net income of $260.5 million, a 10.1% increase from the previous quarter and a 30.4% rise year-over-year. Net revenue grew 10.9% sequentially to $938.2 million, driven by higher net interest income and mortgage banking gains. Pre-provision net revenue rose to $393.8 million, marking a record level supported by expanding interest-earning assets and stable funding costs.
Net interest income reached $750.4 million, rising 7.6% from the prior quarter due to increased average asset balances. The bank maintained a steady net interest margin of 3.53%, reflecting controlled funding costs despite a shifting rate environment. Additionally, non-interest income climbed to $187.8 million, aided by stronger mortgage origination and higher rental income from owned real estate assets.
Non-interest expenses increased moderately to $544.4 million, primarily due to higher salaries and deposit-related costs. The adjusted efficiency ratio improved to 47.8%, compared to 51.8% last quarter. The effective tax rate fell to 17%, supporting overall earnings growth.
Deposit Expansion and Solid Balance Sheet Growth
Deposits rose $6.1 billion during the quarter to reach $77.2 billion, an 8.6% sequential increase. Non-interest-bearing deposits accounted for 34.5% of total deposits, signaling strong liquidity and customer confidence. The loan-to-deposit ratio improved to 73.3%, reflecting a well-balanced funding mix.
Loans held for investment totaled $56.6 billion, growing $707 million from the prior quarter, primarily in commercial and real estate lending. Total assets exceeded $91 billion, marking a 13.6% increase year-over-year. Meanwhile, total equity reached $7.7 billion, up 15.2% annually, supported by retained earnings and market gains.
Borrowings declined by $2.2 billion from the previous quarter as the company reduced short-term debt. The Common Equity Tier 1 (CET1) ratio stood firm at 11.3%, highlighting a strong capital position. Tangible book value per share increased to $58.56, up 12.7% year-over-year, reinforcing capital strength and shareholder value.
Asset Quality and Credit Performance Remain Stable
Asset quality metrics remained consistent with prior guidance, showing resilience in loan performance. Nonperforming loans represented 0.92% of funded loans, while net loan charge-offs held steady at 0.22%. Criticized loans declined to $1.3 billion, reflecting improved portfolio health.
Provision for credit losses rose to $80 million, aligning with loan growth and maintaining prudent reserve coverage. The allowance for credit losses to funded loans ratio reached 0.85%, ensuring adequate protection against potential risks. Furthermore, total criticized assets declined by $284 million during the quarter, underlining disciplined credit management.
Western Alliance closed the quarter with record profitability, solid liquidity, and a growing capital base. Strong deposit inflows, controlled expenses, and sustained margins positioned the bank for continued momentum heading into the next quarter
