Executive Summary

Q4 delivered solid earnings growth despite NIM compression: EPS rose to $1.95 (+8% q/q; +47% y/y) on higher PPNR ($319.4M), with noninterest income strength offsetting lower asset yields; ROAA/ROTCE improved to 1.04%/14.6% .
Net revenue ticked up to $838.4M (+2% q/q; +23% y/y) as mortgage banking and servicing revenue surged; adjusted efficiency ratio improved to 51.1% while deposit costs declined $33.5M q/q .
Deposits fell $1.7B q/q to $66.3B on seasonal mortgage escrow outflows; loan-to-deposit rose to 80.9%; CET1 strengthened to 11.3% .
2025 outlook: management guides to ~$5B loan growth, ~$8B deposit growth, NII +6–8%, noninterest income +6–8%, non-deposit-cost opex $1.425–$1.475B, ECR deposit costs $475–$525M, NCOs ~20 bps, tax ~21%, adjusted efficiency ratio below 50% by year-end—positioning for margin expansion and upper-teens ROTCE exit run-rate .
Potential stock catalysts: visible ECR cost deflation, margin stabilization/rebound as deposit rate cuts outpace asset yield resets, and resilient credit with CRE de-risking progress; watch NPAs uptick (0.65% of assets) and classified assets build as near-term overhangs .

What Went Well and What Went Wrong

What Went Well
- Fee momentum and operating leverage: noninterest income jumped to $171.9M (+$45.7M q/q), led by mortgage banking (gain-on-sale and servicing), driving PPNR to $319.4M and a better adjusted efficiency ratio (51.1%) .
- Deposit costs fell faster than NII: deposit costs declined $33.5M q/q to $174.5M; management emphasized accelerating ECR repricing and broader funding cost tailwinds to support margins in 2025 .
- Capital and book value: CET1 improved to 11.3% while tangible book value per share rose to $52.27 (+0.6% q/q; +11.9% y/y), underpinning flexibility for growth .
- “Rate-neutral” posture and clearer 2025 playbook: management expects NII +6–8% with margin improvement as deposit beta benefits emerge; adjusted efficiency targeted sub‑50% by year-end .
- Management quote: “We are well positioned to resume deploying…into more normal earning asset mix that prioritizes higher‑yielding loan growth…This positions [us] in 2025 to…expand our net interest margin…[and] move toward a higher teens [ROTCE] by year‑end” .
What Went Wrong
- NIM compression: net interest margin fell 13 bps q/q to 3.48% as term SOFR dipped below effective Fed funds for part of Q4, pressuring variable‑rate asset yields; asset yields declined more than expected while seasonal deposit mix required more borrowings .
- Seasonal deposit outflows and higher borrowings: deposits declined $1.7B q/q (mortgage escrow seasonality) and borrowings rose $2.6B to bridge funding; loan-to-deposit ratio moved up to 80.9% .
- Credit normalization in CRE: provision increased to $60.0M (from $33.6M) on $34.1M NCOs and a qualitative CRE overlay; NPAs/Assets rose to 0.65%; repossessed assets increased to $52M, and classified assets to $1.0B .
- Analyst concern: clarity on ECR betas and pace of cost relief—management reiterated further ECR cuts enacted in December/January and expects less reliance on MW deposits in 2025 .

Financial Results

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Net Revenue ($MM)	$682.2	$771.8	$823.1	$838.4
Diluted EPS ($)	$1.33	$1.75	$1.80	$1.95
Net Interest Margin (%)	3.65	3.63	3.61	3.48
Adjusted Efficiency Ratio (%)	59.1	51.5	52.7	51.1
PPNR ($MM)	$220.3	$285.0	$285.7	$319.4
Provision for Credit Losses ($MM)	$9.3	$37.1	$33.6	$60.0
Net Charge-offs ($MM)	$8.5	$22.8	$26.6	$34.1
ROAA (%)	0.84	0.99	0.96	1.04
ROTCE (%)	11.9	14.3	13.8	14.6

KPIs and balance-sheet metrics

KPI	Q2 2024	Q3 2024	Q4 2024
Loans HFI ($MM)	$52,430	$53,346	$53,676
Total Deposits ($MM)	$66,244	$68,040	$66,341
Loan/Deposit Ratio (%)	79.1	78.4	80.9
Non-Interest Bearing Deposits ($MM)	$21,522	$24,965	$18,846
NIB as % of Deposits (%)	32.5	36.7	28.4
CET1 Ratio (%)	11.0	11.2	11.3
TCE / Tangible Assets (%)	6.7	7.2	7.2
Tangible BVPS ($)	48.79	51.98	52.27
NPAs / Total Assets (%)	0.51	0.45	0.65
ACL / Funded HFI Loans (%)	0.74	0.74	0.77

Deposit mix (% of total)

Type	Q4 2023	Q3 2024	Q4 2024
Non-interest bearing	26.2	36.7	28.4
Interest-bearing demand	28.8	20.3	23.9
Savings & MMA	26.7	28.8	32.0
CDs	18.3	14.2	15.7

Narrative drivers

NIM down 13 bps q/q (3.48%) due to lower variable asset yields (SOFR) vs deposits/ECR tied more to Fed funds; deposit cost reductions (27 bps on interest-bearing deposits) partially offset .
Noninterest income up $45.7M q/q, led by net gain on loan originations (+$21.6M) and servicing (+$12.4M), plus other income (+$9.0M) .
Deposit costs fell $33.5M q/q; adjusted efficiency improved to 51.1% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Loans HFI growth	FY 2025	n/a	~+$5B for 2025	New
Deposits growth	FY 2025	n/a	~+$8B for 2025	New
Net Interest Income (NII)	FY 2025	n/a	+6% to +8% y/y	New
Noninterest Income	FY 2025	n/a	+6% to +8% y/y	New
Adjusted efficiency ratio	Exit 2025	n/a	<50% by year-end	New
ECR-related deposit costs	FY 2025	n/a	$475–$525M	New
Non-deposit-cost operating expenses	FY 2025	n/a	$1.425–$1.475B	New
CET1 ratio	FY 2025	n/a	~11.3% (consistent)	New
Net charge-offs	FY 2025	n/a	~20 bps of avg loans	New
Effective tax rate	FY 2025	n/a	~21%	New
Dividend	Q4 2024	n/a	Paid $0.38/common share in Q4	Info

Management explained that deposit repricing (especially ECRs) and balanced asset-liability positioning should support margin expansion; fee growth to come from regional banking/service charges and digital disbursements, while mortgage revenue is modeled flat y/y .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
Margin/NIM and rate sensitivity	NIM 3.63% in Q2; 3.61% in Q3; management managed liquidity build; LOA: deposit and asset yields narrowing; deposit costs elevated (Q3 adj. efficiency 52.7%)	NIM 3.48%; deposit costs down; “rate-neutral” on EaR; expect further ECR cuts; NII +6–8% in 2025	Stabilizing with improving funding costs
Deposits & ECR	Deposits +$4.0B in Q2 and +$1.8B in Q3; NIB % 32.5%/36.7%; ECR costs were rising in Q3	Q4 deposits −$1.7B (seasonal MW outflows); ECR deposit costs cut in Dec/Jan; balances expected broader and less MW-dependent in 2025	Mix improving; cost deflation underway
Mortgage banking	Q2/Q3 had solid but volatile servicing fair values; MSR revenue varied	Mortgage banking revenue up $34M q/q to $93M; strong CRA pools and servicing margins; 2025 revenue modeled flat y/y	Positive q/q; 2025 steady
CRE/credit	Q2/Q3: NCOs 0.18–0.20% annualized; special mention fluctuated; classified assets up modestly	Provision $60M; NCOs 0.25%; NPAs/Assets 0.65%; repossessed assets up; confident bulk of CRE migration behind; NCOs ~20 bps in 2025	Elevated but stabilizing in 2025
Capital & Basel/LFI	CET1 11.0% (Q2), 11.2% (Q3)	CET1 11.3%; LFI readiness investments $55–$65M over 3 years; maintain ~11.3% CET1	Strong capital; regulatory readiness
Crypto/blockchain deposits	n/a in Q2/Q3 releases	~2% of deposits from crypto; compliant approach; sees opportunity	Emerging contribution

Management Commentary

Strategy and 2025 playbook: “We are well positioned to resume deploying future incremental deposits into more normal earning asset mix…This positions [us] in 2025 to…expand our net interest margin, improve profitability…[and] move toward a higher teens return on tangible common equity by year‑end” .
Rate environment: “Rate declines work best…If we could have a slowly declining rate environment, that’s what I would prefer…we’re ready for everything…we can swap [variable loans] to fixed if [rates] fall more precipitously” .
Margin dynamics: “Indicative of our funding cost reductions…interest‑bearing deposit [spot rate] is 20 bps below Q4 average…we have further reduced deposit rates and ECRs in January” .
ECR fees: “We implemented…charging the client [~40 bps] for fully insured deposit network—[pushing] that back to clients…so far, it’s working out” .
Credit outlook: “Bulk of CRE migration to classifieds [is] behind us…net charge‑offs in 2025 will be comparable to 2024” .
Mortgage: “We’re assuming flat revenue for [AmeriHome] in 2025” .

Q&A Highlights

Capital deployment: Sufficient organic capital to fund growth; buybacks opportunistic but not priority near‑term .
Margin outlook: Adjusted margin improved q/q; core NIM should “look okay” with further ECR cuts and asset/liability alignment .
ECR dynamics: Expect lower ECR costs in 2025; ECR beta ~80% remains a fair sensitivity; multiple sequential cuts executed in Dec/Jan .
Fee income growth drivers: Service charge increases (1/1) and digital disbursements/settlement services; mortgage modeled flat; no securities gains assumed .
M&A/LFI: No need for M&A to cross $100B; focused on organic growth and performance metrics before any step‑ups .

Estimates Context

Wall Street consensus (S&P Global) was unavailable at the time of this analysis due to data access limits. As a result, we cannot provide vs‑consensus comparisons for Q4 EPS or revenue at this time (Values retrieved from S&P Global were unavailable).
Reported results: EPS $1.95; net revenue $838.4M (for reference); update vs estimates can be provided when S&P Global access is restored .

Key Takeaways for Investors

2025 guide implies visible operating leverage: NII +6–8%, noninterest income +6–8%, ECR costs falling, adjusted efficiency <50% by year‑end—supporting upper‑teens exit ROTCE; focus on execution against this plan .
Margin path turning: deposit cost deflation (ECRs) and reduced reliance on seasonal MW deposits should outpace asset yield resets as SOFR/Fed funds relationship normalizes—potential NIM stabilization then improvement .
Credit is manageable: elevated NPAs/OREO and CRE overlays are acknowledged, but management expects 2025 NCOs ~20 bps and indicates the “bulk” of CRE migration is behind, aided by proactive remediation .
Capital remains a strength (CET1 11.3%) enabling growth without dilutive actions; TBVPS compounding continues (+11.9% y/y) .
Watchlist items: trajectory of ECR betas and overall deposit mix, pace of loan growth toward ~$5B target, mortgage banking run‑rate sustainability, and progress on LFI readiness spending cadence .
Potential upside surprise: faster‑than‑modeled ECR cost relief or stronger mortgage gain‑on‑sale/servicing; downside risks: slower deposit growth requiring higher borrowings, or renewed pressure in CRE office .
Tactical angle: narratives around margin inflection and sub‑50% adjusted efficiency by year‑end are likely near‑term stock catalysts, contingent on early‑2025 ECR savings and stable asset yields .

Source Documents Read (Q4 2024)

8‑K (Item 2.02) with earnings press release, slides and details (Jan 27, 2025) –.
Earnings press release (Jan 27, 2025) –.
Earnings call transcript (Jan 28, 2025) – / –.
Q4 2024 earnings announcement press release (Jan 8, 2025) .

Prior Quarters Referenced

Q3 2024 press release (Oct 17, 2024) –.
Q2 2024 press release (Jul 18, 2024) –.

WESTERN ALLIANCE BANCORPORATION (WAL)·Q4 2024 Earnings Summary