By Noel Randewich
(Reuters) – Shares of Western Alliance Bancorp surged over 20% on Wednesday after the regional bank posted stronger-than-expected earnings and said its deposits had stabilized after the March banking crisis.
The Phoenix, Arizona bank was among several regional players punished by stock investors last month as consumers shifted their deposits into bigger institutions following the collapse of Silicon Valley Bank.
Graphic: Western Alliance rebounds as report allays investor worries – https://fingfx.thomsonreuters.com/gfx/mkt/gkvlwjnwnpb/Pasted%20image%201681925364807.png
Western Alliance said late on Tuesday that total deposits fell 11% to $47.6 billion in the first quarter from the previous three months, but that deposits steadied late in the quarter and grew $2 billion from March 31 to April 14.
Balance sheet repositioning, which included selling some assets and reclassifying loans, resulted in non-operating charges of $110 million.
“WAL’s decisive balance sheet actions and resulting meaningful capital build are exactly what we wanted,” Keefe, Bruyette and Woods analyst Christopher McGratty wrote in a client note on Wednesday.
Wedbush raised its rating on Western Alliance to “outperform” from “neutral” and added the bank to its “Best ideas list”, among stocks including Apple and Microsoft.
Western Alliance’s results helped lift the SPDR S&P Regional Banking ETF nearly 2%, while Zions Bancorp jumped nearly 5% ahead of its report due after the bell.
The rally in Western Alliance following its report stands out among several regional banks that have posted their quarterly results this week.
Citizens Financial Group Inc tumbled 2% after reporting a quarterly profit early on Wednesday that missed Wall Street’s estimates.
U.S. Bancorp dipped 0.1% after beating estimates for first-quarter profit, while increasing its rainy-day funds to $427 million from $112 million last year.
Charles Schwab Corp’s stock has climbed about 10% this week after the brokerage’s quarterly profit surpassed estimates on Monday, while its slump in deposits was not as severe as expected.
Western Alliance’s stock remains down nearly 50% from early March, before Silicon Valley Bank’s implosion.
(Reporting by Noel Randewich)
