Western Alliance says deposits are recovering; shares rally

Western Alliance Bancorp.
WAL,
-0.94%
on Tuesday said that consumer deposits were recovering, after the collapse of Silicon Valley Bank prompted more consumers to pull money from regional financial institutions, and the company reported a year-over-year gain in net-interest income in its first quarter. “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,” Chief Executive Kenneth Vecchione said in a statement. That figure was still down from the prior quarter and the prior-year period. But the company said deposits had increased more recently: “Since March 31, deposits have increased an additional $2.0 billion through April 14, with total insured deposits representing 73% of total deposits, which is well above industry norms compared to the 50 largest U.S. banks.” Shares rallied 13.7% after hours. Earlier this month, the bank had spooked investors, after a financial update from the company did not provide a specific figure for its deposit balance as of March 31. For its first quarter, the bank reported net income of $142.2 million, or $1.28 a share, compared with $240.1 million, or $2.22 a share, in the same quarter last year. Analysts polled by FactSet expected $1.97. Net interest income was $609.9 million, a 35.7% jump from the prior-year quarter. Management said that balance-sheet “repositioning,” which included the sale of some assets and loan reclassifications, resulted in after-tax net non-operating charges of $109.7 million. But the company said that would “have an immediate accretive impact to regulatory capital and allow us to prioritize core client relationships with holistic lending, deposit, and treasury management needs.”