WAL - Western Alliance other hard-hit regional lenders added to Wedbush Best Ideas List

2023-04-19 10:58:23 ET

Wedbush upgraded shares of Western Alliance Bancorporation ( NYSE: WAL ) to Outperform from Neutral and added the stock to its Best Ideas List on Wednesday, citing a partial reversal in deposit outflows since last month's turmoil in the banking sector.

WAL surged 16.3% in early morning trading after the company's Q1 earnings exceeded Wall Street expectations. Notably, Arizona-based Western Alliance ( WAL ) saw its deposits stabilize after sliding in the midst of the bank crisis.

And its "higher level of insured deposits at 73% should help support deposit levels going forward," analyst David Chiaverini wrote in a note. And while the bank guided for flat deposit growth for the full year, the analyst still called it a "solid outlook."

See why Daniel Jones, Investing Groups Leader of 'Crude Value Insights,' laid out a Strong Buy thesis for WAL.

Beaten-down shares of fellow regional lenders Regions Financial ( NYSE: RF ), +1.3% , New York Community Bancorp ( NYSE: NYCB ), +0.7% , M&T Bank ( NYSE: MTB ), +2.4% , were also included in the BIL.

For RF, in particular, it saw deposits for Q1 retreating $3B Q/Q to $128.5B, according to an SEC filing , roughly matching Chiaverini's expectations and management's guidance.

In a separate note, Chiaverini praised RF's deposit base, which is 75% insured and collateralized making it the highest insured deposit base among peers. "We expect deposits to be under pressure in 1H23, in-line with guidance calling for a decline of $3-$5 billion, but we expect core deposits to exhibit relative stability thereafter."

Seeking Alpha contributor Damir Tokic acknowledged that the recent stresses in the banking system have receded, "but it's nowhere near finished yet," calling for further downside in small and regional bank stocks .

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