Western Alliance Reports Strong Q1 2024 Results, Accelerates Balance Sheet Repositioning

Western Alliance Bancorporation reported exceptional financial results for the first quarter of 2024, with deposit growth of $6.9 billion accelerating their balance sheet repositioning plan. The bank reached its Common Equity Tier 1 (CET1) capital ratio target of 11%, lowered its held-for-investment loan-to-deposit ratio, and increased its insured deposit ratio.

Asset quality remained steady, with special mention loans and classified assets declining. Net charge-offs were low at 8 basis points of average loans. Western Alliance's excellent liquidity positions the bank to drive stronger loan growth starting in the second quarter, with loan growth expected to track proportionately with deposits.

The company updated its full-year 2024 guidance, expecting loans to grow $4 billion, up from the previous estimate of $2 billion. Deposits are projected to end up $11 billion, an increase of $3 billion from the previous consensus. Net interest income is reaffirmed to grow 5-10% from the fourth quarter of 2023 annualized, tracking to the upper end of the range. The net interest margin is expected to trough in Q2 but ascend afterward.

Noninterest income is expected to increase 10-20% from the adjusted 2023 baseline, while noninterest expense is projected to rise 6-9% from the Q4 baseline, mainly due to the accelerated deposit growth. Western Alliance remains focused on achieving consistent upper teens return on tangible common equity (ROTCE) and sustainable earnings growth as it fortifies its balance sheet and sees earnings velocity pick up in late 2024 and 2025.

Why this matters: Western Alliance's strong performance and accelerated balance sheet repositioning demonstrate the bank's resilience and ability to navigate challenges in the banking sector. The company's focus on fortifying its balance sheet and driving sustainable earnings growth positions it well for the future.

Western Alliance's Q1 2024 results highlight the bank's ability to generate exceptional deposit growth, maintain steady asset quality, and drive stronger loan growth. With updated guidance projecting increased loans and deposits, along with growing net interest income and noninterest income, Western Alliance is poised for continued success. The company's commitment to achieving consistent upper teens ROTCE and sustainable earnings growth as it fortifies its balance sheet underscores its long-term strategic focus.

Key Takeaways

• Western Alliance reported exceptional Q1 2024 financial results.
• Deposit growth of $6.9B accelerated balance sheet repositioning.
• Asset quality remained steady, with low net charge-offs.
• Guidance updated: $4B loan growth, $11B deposit growth.
• Focused on consistent upper teens ROTCE and earnings growth.