Western Alliance surges after beating earnings estimates
Regional bank posts record net interest income and raises dividend as tangible book value jumps 17%
Western Alliance Bancorporation shares advanced after the regional lender reported fourth-quarter earnings that surpassed analyst expectations, boosted by record net interest income and robust loan growth that underscore the bank's recovery from industry-wide turbulence in 2023.
The Phoenix-based banking company reported earnings per share of $2.59 for the fourth quarter of 2025, up 32.8% from the same period a year earlier, according to the company's earnings release. Net revenue reached $980.9 million, representing a 17% increase compared with the fourth quarter of 2024.
The strong performance was driven by net interest income of $766.2 million, which rose 15% year-over-year, reflecting the bank's ability to maintain healthy margins even as the Federal Reserve kept interest rates elevated. Non-interest income also contributed to the upside, climbing 24.9% to $214.7 million.
"These results position us to sustain a strong earnings trajectory in 2026," said Kenneth A. Vecchione, chief executive officer of Western Alliance, in the earnings announcement.
A key metric for banking investors, tangible book value per share, increased 17.3% year-over-year to $61.29, signaling that the bank is building shareholder value through disciplined growth and risk management. The bank's tangible book value has now climbed 4.7% just since the third quarter.
Western Alliance returned capital to shareholders through both dividends and buybacks during the quarter. The company paid cash dividends of $0.42 per common share and repurchased 0.7 million shares for $57.5 million under its $300 million authorization program.
On the balance sheet, held-for-investment loans grew by $2.0 billion, or 3.6%, to reach $58.7 billion at December 31, 2025. Total deposits stood at $77.2 billion, an increase of $10.8 billion, or 16.3%, from year-end 2024. While deposits decreased slightly from the third quarter by $88 million, the bank attributed this to a seasonal $3.1 billion runoff in mortgage-related balances.
The bank's asset quality metrics remained stable, with total criticized assets declining $8 million quarter-over-quarter. Net charge-offs to average loans were 0.24% for the full year 2025, while nonperforming assets represented 0.69% of total assets.
Western Alliance has emerged as one of the stronger performers among regional banks following the sector crisis in early 2023. The bank's focus on commercial banking and technology-driven services has helped it attract deposit inflows while maintaining healthy lending growth.
Looking ahead to 2026, management indicated confidence in continued momentum. While specific numerical guidance for the new year wasn't detailed in the press release, the bank's strong fourth-quarter performance and management commentary suggest continued expansion in both loans and deposits.
Analysts remain broadly positive on Western Alliance, with the stock currently trading at approximately 10.75 times forward earnings. The consensus analyst target price stands at $101.50, representing potential upside from current levels, with 15 analysts rating the stock a buy or strong buy versus just one sell rating.
Western Alliance's results reflect a broader resurgence in the regional banking sector, which has benefited from higher interest rates improving net interest margins while many lenders have strengthened their balance sheets following the volatility of 2023. The company's return on tangible common equity reached 16.9% in the fourth quarter, a level that exceeds many of its large-cap banking peers.