By Senad Karaahmetovic
Western Alliance (NYSE:WAL) shares are trading nearly 20% higher in pre-market Wednesday after the regional bank said deposits jumped $2 billion in a month to April 14.
"While we experienced elevated net deposit outflows immediately following the closure of other banks, deposit balances quickly stabilized with end of quarter deposits of $47.6 billion," said CEO Kenneth Vecchione.
WAL reported an adjusted EPS of $2.3, beating the $1.97 analyst target. Net interest income (NII) was $609.9 million, above the $592.8M expected. The common equity Tier 1 ratio was 9.4%, just below the 9.5% expected.
"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 added.
WAL shares were further boosted after they were added to Wedbush's Best Idea List. Wedbush analysts also upgraded Western Alliance stock from Neutral to Outperform with a price target of $50.00 (from $38.00).
Wells Fargo analysts believe the existential risk is now off the table for WAL.
"A transitional qtr. for our tactical call, but one that took existential risk off the table. The combination of TBV growth and an outlook that calls for $2B of quarterly deposit growth should send the shares to at least TBV, and ultimately higher," the analysts said.