TLDR
- Q1 2025 net income of $199.1M; EPS $1.79
- Loans and deposits rose by $1.1B and $3.0B, respectively
- Net revenue hit $778.0M, up 6.8% YoY
- CET1 ratio strong at 11.1%; TBV per share rose 14.4%
- Efficiency ratio adjusted for deposit costs at 55.8%
Western Alliance Bancorporation (NYSE: WAL) reported first-quarter 2025 earnings on April 21. The stock closed at $64.88, down 2.17% for the day. Despite the dip, the company posted steady results, underpinned by continued loan and deposit growth. Net income stood at $199.1 million, with earnings per share of $1.79. While this marked an 8.2% decline from the previous quarter’s $1.95 EPS, it represented an 11.9% increase from the prior year.
Western Alliance Bancorporation (NYSE: WAL)
Total loans held for investment (HFI) rose to $54.8 billion, a $1.1 billion or 2.0% increase quarter-over-quarter. Total deposits climbed 4.5% to $69.3 billion. Year-over-year, HFI loans and deposits jumped by $4.1 billion and $7.1 billion, respectively. The HFI loan-to-deposit ratio declined to 79.0%, down from 80.9% sequentially and 81.5% a year ago.
Revenue and Profitability Overview
Net revenue for Q1 2025 totaled $778.0 million, down $60.4 million or 7.2% from the prior quarter. However, this was a 6.8% increase from Q1 2024. The pre-provision net revenue (PPNR) came in at $277.6 million, compared to $319.4 million in Q4 2024 and $247.0 million in Q1 2024.
Net interest income was $650.6 million, a 2.4% drop from Q4 due to a shorter quarter, yet it rose 8.6% year-over-year. The bank’s net interest margin contracted slightly to 3.47% from 3.48% in Q4 and 3.60% in Q1 2024, impacted by lower yields on earning assets.
Non-interest income dropped to $127.4 million from $171.9 million in the previous quarter, due to lower gains from loan sales and equity investments. Compared to a year ago, it fell slightly by $2.5 million.
Expense Management and Asset Quality
Non-interest expense decreased 3.6% quarter-over-quarter to $500.4 million, helped by lower deposit costs. However, it rose 3.9% year-over-year due to higher salaries and technology costs. The efficiency ratio adjusted for deposit costs rose to 55.8% from 51.1% in Q4 but improved from 57.3% a year ago.
Asset quality remained stable. Nonperforming assets declined to 0.60% of total assets, and net charge-offs dropped to 0.20% of average loans. The provision for credit losses was $31.2 million, down from $60.0 million in Q4 but up from $15.2 million in Q1 2024. These provisions accounted for charge-offs, loan growth, and adjustments in commercial real estate and construction portfolios.
Capital Strength and Book Value Growth
Western Alliance’s capital position strengthened with a Common Equity Tier 1 (CET1) ratio of 11.1%. Tangible book value per share rose 14.4% year-over-year to $54.10. The return on tangible common equity for the quarter was 13.4%, underscoring profitability gains. Equity rose to $7.2 billion, up $508 million sequentially and $1.0 billion annually.
Long-Term Return Performance
WAL has outperformed the broader market over longer periods. The stock’s five-year return is 133.89%, versus 88.49% for the S&P 500. On a year-to-date basis, WAL is up 22.00%, outpacing the S&P 500’s 12.30% gain.
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