WAL - Western Alliance soars 15% after hours on Q1 earnings beat stabilizing deposits

2023-04-18 17:45:00 ET

Western Alliance ( NYSE: WAL ) stock soared 15.4% after the bell on Tuesday as the regional bank's Q1 results topped Street estimates and its deposits, which declined in the wake of the recent turmoil in the banking space, stabilized this month.

Q1 adj. EPS was $2.30 vs. $2.22 in Q1 2022. Adj. net revenue increased 28.2% Y/Y to $712.2M.

Deposits, a closely watched metric after the failures of Silicon Valley Bank and Signature Bank, totaled $47.6B at March 31, down 11.3% from Q4 and 8.8% lower Y/Y.

"While we experienced elevated net deposit outflows immediately following the closure of other banks, deposit balances quickly stabilized with Q1-end deposits of $47.6B," said CEO Kenneth Vecchione. "Since March 31, deposits increased an additional $2B through April 14, with total insured deposits representing 73% of total deposits."

Q1 net interest income was $609.9M, down 4.7% from Q4, but 35.7% higher Y/Y. Tangible book value per share was $41.56, up 3.3% from Q4 and 11.9% higher Y/Y.

Balance sheet repositioning, which included surgical sale of assets and loan reclassifications, resulted in after-tax net non-operating charges of $109.7M. This is expected to have an immediate accretive impact to regulatory capital.

Provision for credit losses was $19.4M, primarily due to charge-off of a financial institution's debt security and economic uncertainty.

"As we travel through the year and into 2024, capital expectations are targeted against a higher CET1 ratio at or above 11% with greater liquidity to be evidenced by a loan-to-deposit ratio in the mid-80% range," Vecchione projected.

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