Western Alliance Bancorporation (NYSE:WAL) management struck an upbeat tone on its fourth-quarter and full-year 2025 earnings call, highlighting what it described as record quarterly results, broad-based franchise momentum, and continued operating leverage. Executives also laid out a 2026 outlook calling for solid organic growth in loans and deposits, expanding net interest income, and modestly higher expenses tied to scale and targeted investments.
Record quarter and full-year results
President and CEO Ken Vecchione said the company ended 2025 with “strong momentum,” citing robust loan growth, reduced seasonal deposit outflows, positive net interest income trends, stable net interest margin (NIM), rising fee income, and continued expansion in pre-provision net revenue (PP&R). In the fourth quarter, he said net interest income, net revenue, and PP&R all reached record levels.
New CFO Vishal Idnani said 2025 results included record net interest income of $2.9 billion, net revenue of $3.5 billion, and PP&R of $1.4 billion. Net income available to common shareholders was $956 million and EPS was $8.73. Idnani noted that net revenue and PP&R rose 12% and 26%, respectively, from the prior year. Non-interest income increased 25%, driven primarily by commercial banking and disbursement fees, while mortgage banking was “essentially flat” versus expectations. Non-interest expense growth slowed to 4%, with Idnani attributing the moderation to lower deposit costs and reduced insurance expense.
Balance sheet growth and funding trends
Western Alliance reported held-for-investment (HFI) loan growth of $2 billion in the fourth quarter and $5 billion for the full year, matching its prior full-year guidance. Idnani said total assets increased by $1.8 billion from the third quarter to about $93 billion, while total equity ended the year at $8 billion, supported by earnings and an improved accumulated other comprehensive income (AOCI) position.
On the funding side, total deposits were essentially flat in the fourth quarter, which management said reflected strong growth in regional banking and specialty deposit channels offset by typical seasonal pressure in mortgage warehouse. For the full year, deposits grew $10.8 billion, or 16%, which Idnani said exceeded the company’s revised guidance by about $2.5 billion. He also noted interest-bearing deposit costs fell 23 basis points during the quarter and overall liability funding costs declined 18 basis points from the prior quarter due to lower borrowing costs.
Management provided additional detail on deposit composition and rate sensitivity during Q&A. Idnani said earnings credit rate (ECR) deposits represented about 37% of total deposits on an average basis (about 33% end of period) and that the company expects that mix to remain “pretty consistent” with current levels as it pursues $8 billion of deposit growth in 2026. He pegged ECR deposit beta at roughly 65% to 70% overall, with variation by business line, including mortgage warehouse at about 100% beta and HOA at about 35% to 40%.
Net interest income, margin, and fee income drivers
Fourth-quarter net interest income was $766 million, up $16 million from the third quarter, which Idnani said was driven by strong loan growth and a $2.5 billion increase in average earning assets. Net interest margin compressed 2 basis points to 3.51%, which he said largely reflected a decline in the yield on average earning assets, higher cash balances, and lower loan and security yields following Federal Reserve rate cuts. Management said elevated average cash balances were tied to deposit outperformance and are expected to normalize.
Non-interest income rose 14% from the third quarter to approximately $215 million. Executives highlighted the continued build in commercial banking fees, including cross-selling treasury management and commercial products. Vecchione said service charges and fees increased 77% in 2025, while Idnani and Vecchione pointed to growth in digital disbursement fees tied to the Juris Banking platform. Vecchione said the company completed the first round of more than 17 million digital payments connected to the Facebook Cambridge Analytica settlement, which he described as the largest U.S. consumer data privacy settlement. Management declined to quantify fees from the settlement and cautioned that settlement-related revenue can be hard to predict quarter-to-quarter.
On mortgage banking, management said results held up better than typical seasonal patterns. Vecchione said fourth-quarter mortgage banking revenue was down $5 million from the prior quarter and expressed optimism for 2026, citing potential tailwinds such as policy focus on affordable homeownership, possible regulatory relief related to mortgage servicing rights (MSRs), and declining mortgage rates. He said the company’s 2026 outlook assumes a 10% year-over-year increase in total mortgage fee-related revenues and added that the company expected first-quarter mortgage revenues to be nearly equal to fourth-quarter results, while noting January volumes and margins were trending above planning assumptions as of the date of the call.
Credit and capital: stable metrics, proactive cleanup
Management said asset quality remained stable in the fourth quarter. Idnani reported criticized assets of $1.4 billion, down slightly from the third quarter, with reductions in classified accruing assets and non-accrual loans partly offset by modest increases in special mention loans and other real estate owned. Net charge-offs were $44.6 million, or 31 basis points of average loans, and provision expense was $73 million, down $7 million from the prior quarter. The allowance for funded loans increased about $20 million to $461 million, with the allowance-to-funded loans ratio at 0.87%. Idnani said the total allowance fully covered non-performing loans at 102%.
Vecchione said the company expects net charge-offs to remain elevated in the first half of 2026 as it works through non-accrual loans, with improvement expected by the end of the second quarter. During Q&A, he suggested the full-year net charge-off range should be modeled around the midpoint of guidance (30 basis points) and said charge-offs could be “a little bit higher” in the first half depending on the timing of resolutions.
On specific credits, Vecchione said the loan related to Point Bonita (a Jefferies subsidiary) continued to pay down faster than modeled, declining to $124 million outstanding from $168 million previously cited. He also noted an ongoing legal process related to “Canter,” saying a receiver had been put in place, appraisals were ordered, and appraisals were expected in early March; the outstanding loan balance was $98 million, he said.
Capital levels were described as solid. Idnani said tangible common equity to tangible assets rose to 7.3%, while the CET1 ratio edged down to 11%, which management said was at its target. The bank issued $400 million of subordinated debt in late November, lifting total capital to 14.5%. The company repurchased about 0.7 million shares in the fourth quarter for $57.5 million at a weighted average price of $79.55 and increased the quarterly cash dividend by $0.04.
2026 outlook: loan and deposit growth, NII expansion, and expense discipline
For 2026, management projected:
- Loan growth: $6 billion
- Deposit growth: $8 billion
- Net interest income growth: 11% to 14%, assuming two 25-basis-point rate cuts
- Non-interest income growth: 2% to 4%
- Total operating expense growth: 2% to 7%
- Net charge-offs: 25 to 35 basis points
- Effective tax rate: approximately 19%
Vecchione said the bank expects to remain around 11% CET1 and to pursue opportunistic share repurchases depending on market pricing, but he suggested buybacks are not something investors should assume in modeling. He also said the company expects to cross $100 billion in assets by year-end 2026 “without a notable step up in expenses,” citing prior investments made to prepare for large financial institution status.
Management also emphasized a continued shift in business mix. Executives said they are de-emphasizing certain areas, including less residential loan growth, while leaning into specialized commercial and C&I categories and lower-cost deposit initiatives. Chief Banking Officer for Deposit Initiatives and Innovation Dale Gibbons pointed to growth initiatives in HOA banking, Juris Banking and digital disbursements, the Digital Asset Group, the trust company (including CLO trustee activity), and Business Escrow Services, which he said are expected to grow faster than the bank overall and carry lower costs than traditional deposit channels.
Vecchione closed by reiterating confidence in the bank’s organic growth strategy and earnings momentum heading into 2026.
About Western Alliance Bancorporation (NYSE:WAL)
Western Alliance Bancorporation is a bank holding company headquartered in Phoenix, Arizona. Through its principal subsidiary, Western Alliance Bank, the company provides a range of banking services to commercial clients, entrepreneurs and real estate developers. As one of the largest regional banks in the western United States, it focuses on relationship-driven banking solutions tailored to niche industries and growing businesses.
The company’s core offerings include deposit products, treasury management and a variety of lending services.
Featured Articles
- Five stocks we like better than Western Alliance Bancorporation
- How a Family Trust May Be Able To Help Preserve Your Wealth
- Do not delete, read immediately
- Refund From 1933: Trump’s Reset May Create Instant Wealth
- NEW LAW: Congress Approves Setup For Digital Dollar?
- The $100 Trillion AI Story No One Is Telling You
