WAL - Western Alliance: Limited Upside In 2024 (Rating Downgrade)
2024-01-31 03:29:19 ET
Summary
- Western Alliance Bancorporation underperformed estimates in Q4 but nonetheless saw deposit gains and declining short-term borrowings.
- WAL's earnings were negatively affected due to an FDIC charge that is non-recurring.
- The bank's net interest income grew Q/Q.
- Despite positive trends in the business, shares are now fairly valued, in my opinion.
Western Alliance Bancorporation ( WAL ) submitted its earnings card for the fourth-quarter on Friday and the regional bank slightly missed consensus estimates on both the top and the bottom line. The earnings report showed continual deposit gains and declining outstanding borrowings which have been a way for Western Alliance to grow its net interest income. With the Federal Reserve set to pivot in terms of benchmark interest rates in FY 2024 and short-term borrowings greatly reduced since Q1'23, I believe Western Alliance is set for headwinds in net interest income. Given that the bank's price-to-book ratio has now almost fully revalued to its pre-crisis valuation, I believe the risk profile at this point is no longer attractive....
Western Alliance: Limited Upside In 2024 (Rating Downgrade)