Western Alliance third-quarter net income rises to $277.2 million as deposit costs fall

Western Alliance Bancorporation (WAL) said Monday it earned $277.2 million, or $2.45 per diluted share, in the quarter ended Sept. 30, 2026. It said in a regulatory filing that the results were furnished under Item 2.02 and were not filed.

Here's how the company did:

• Net income: $277.2 million vs. $260.5 million a year earlier
• Earnings per diluted share: $2.45 vs. $2.28 a year earlier
• Net revenue: $1,014.2 million vs. $938.2 million a year earlier
• Pre-provision net revenue: $419.1 million vs. $393.8 million a year earlier

Net income rose 6.4% from a year earlier. Diluted earnings per share rose 7.5%.

Return on average tangible common equity was 15.5%, compared with 15.6% a year earlier.

Net interest income totaled $807.6 million, up 7.6% from $750.4 million a year earlier and up $10.7 million from the second quarter. The company said the increase from a year earlier was driven by a $5.5 billion increase in average interest-earning asset balances and lower rates on interest-bearing liabilities.

Net interest margin rose to 3.57% from 3.53% a year earlier.

Non-interest income was $206.6 million, up 10.0% from $187.8 million a year earlier. The increase was primarily driven by service charges and fees and gains on sales of investment securities.

Non-interest expense was $595.1 million, up from $544.4 million a year earlier. Salaries and employee benefits rose $32.6 million over the same period, and data processing costs rose $7.7 million.

Deposit costs were $165.4 million, down $13.8 million from the second quarter. The company said the decline was mainly driven by lower average ECR-related deposit balances, resulting from its deposit optimization efforts.

The provision for credit losses was $80.0 million, the same as a year earlier. Net loan charge-offs were $45.8 million, or 0.30% of average loans on an annualized basis, compared with 0.22% a year earlier.

Nonaccrual loans fell $77 million from the second quarter to $485 million, or 0.79% of funded loans held for investment, down from 0.92% a year earlier.

The allowance for credit losses rose to 0.93% of funded loans held for investment, up from 0.85% a year earlier. Coverage of nonaccrual loans increased to 118% from 92%.

Loans held for investment totaled $61.5 billion, up $4.9 billion, or 8.7%, from a year earlier. Total deposits were $81.8 billion, up $4.5 billion, or 5.8%, while non-interest-bearing deposits fell $876 million over the same period.

Chairman, President and Chief Executive Officer Kenneth A. Vecchione said the quarter featured "enhanced profitability, lower deposit costs, improved asset quality and stronger reserve coverage, as well as accelerated share repurchase activity."

The company repurchased $92.1 million of shares, about 1.15 million shares at an average price of $79.78. Since the program began, it has bought back 2.7 million shares for $212.5 million under a $300 million authorization.

Tangible book value per share was $62.22, up 6.3% from $58.56 a year earlier. Total equity was $7.9 billion. The common equity Tier 1 ratio was 10.9%, down from 11.3% a year earlier. In the quarter, the company paid a quarterly common dividend of $0.42 per share.

The company revised its 2026 outlook in an earnings presentation filed as Exhibit 99.2. It now expects loans held for investment to grow by $4.0 billion this year, down from its earlier forecast of $5.0 billion.

Deposit growth is now expected at $3.5 billion to $4.0 billion, compared with $6.0 billion previously. Deposit costs are now expected at $650 million to $675 million, compared with $650 million to $700 million previously.

The company said the deposit range depends on its ongoing optimization strategy and a shift toward commercial banking deposits.

The company will host a conference call on its third-quarter results at 12:00 p.m. ET on Tuesday, Oct. 20. The press release was attached as Exhibit 99.1 to the filing.