third quarter 2026
Filed Oct 19, 2026Western Alliance reported third-quarter net income of $277.2 million and diluted earnings per common share of $2.45, with net interest income, net interest margin and PPNR higher from both the prior quarter and prior year.
Profitability, net interest income, net interest margin, loan balances and reserve coverage improved, while deposits were stable sequentially and asset quality metrics improved. Offsetting factors were higher non-interest expense, a sequential decline in total equity and tangible book value per share, and higher past-due and repossessed asset balances.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net interest income, third quarter 2026GAAP | $807.6M | 1.3% | 7.6% |
| Provision for credit losses, third quarter 2026GAAP | $80M | – | — |
| Non-interest income, third quarter 2026GAAP | $206.6M | – | 10.0% |
| Net revenue, third quarter 2026GAAP | $1.01B | 1.9% | 8.1% |
| Non-interest expense, third quarter 2026GAAP | $595.1M | – | 9.3% |
| Income before income taxes, third quarter 2026GAAP | $339.1M | – | 8.1% |
| Income tax expense, third quarter 2026GAAP | $61.9M | – | 16.1% |
| Effective tax rate, third quarter 2026GAAP | 18.3% | – | – |
| Net income, third quarter 2026GAAP | $277.2M | 3.1% | 6.4% |
| Net income attributable to Western Alliance, third quarter 2026GAAP | $270.1M | – | 6.6% |
| Net income available to common stockholders, third quarter 2026GAAP | $266.9M | – | 6.7% |
| Diluted earnings per common share, third quarter 2026GAAP | $2.45 | 3.8% | 7.5% |
| Pre-provision net revenue, third quarter 2026non-GAAP | $419.1M | 1.6% | 6.4% |
| Net interest margin, third quarter 2026GAAP | 3.57% | – | 1.1% |
| Efficiency ratio, third quarter 2026non-GAAP | 58.1% | – | 1.2% |
| Efficiency ratio, adjusted for deposit costs, third quarter 2026non-GAAP | 50.0% | – | 4.6% |
| Return on average assets, third quarter 2026GAAP | 1.12% | – | (0.9)% |
| Return on average tangible common equity, third quarter 2026non-GAAP | 15.5% | – | (0.6)% |
| HFI loans, net of deferred feesGAAP | $61.5B | 1.0% | 8.7% |
| Loans held for saleGAAP | $4B | – | – |
| Total depositsGAAP | $81.8B | (0.1)% | 5.8% |
| Non-interest bearing depositsGAAP | $25.8B | – | – |
| HFI loan-to-deposit ratioother | 75.3% | – | 2.7% |
| Allowance for credit losses to funded HFI loansGAAP | 0.93% | – | 9.4% |
| Nonaccrual loansGAAP | $485M | – | – |
| Nonaccrual loans to funded HFI loansGAAP | 0.79% | – | (14.1)% |
| Allowance for credit losses to nonaccrual loansGAAP | 118% | – | 28.3% |
| Net loan charge-offs, third quarter 2026GAAP | $45.8M | – | – |
| Net charge-offs to average loans outstanding, annualized, third quarter 2026GAAP | 0.30% | – | 36.4% |
| Total assetsGAAP | $98.1B | (0.6)% | 7.8% |
| BorrowingsGAAP | $5.6B | – | 45.3% |
| Total equityGAAP | $7.9B | (2.3)% | 3.3% |
| Tangible common equity rationon-GAAP | 6.9% | – | – |
| Common Equity Tier 1 capital ratioother | 10.9% | – | – |
| Book value per common shareGAAP | $68.14 | – | 5.7% |
| Tangible book value per common share, net of taxnon-GAAP | $62.22 | (1.6)% | 6.3% |
Capital returns
- Repurchased $92.1 million, or 1.15 million shares at an average price of $79.78 per share.
- Since inception of the share repurchase program through September 30, 2026, the Company has repurchased 2.7 million shares for $212.5 million under its $300 million authorization.
- Third quarter cash dividends paid included $45.7 million, or $0.42 per share, for common stockholders; $3.2 million, or $0.27 per depositary share, for preferred stockholders; and $7.1 million on preferred stock of the Company's REIT subsidiary.
What drove it
- Net interest income increased from the second quarter due to higher yields on interest earning assets and higher average HFI loan balances, partly offset by lower average cash and other interest-earning asset balances and higher average interest-bearing liabilities and related costs.
- Net interest income increased from the third quarter of 2025 due to an increase in average interest earning asset balances of $5.5 billion and lower rates on interest bearing liabilities, partially offset by declining yields on interest earning assets.
- The sequential increase in non-interest income reflected a $13.8 million increase in gain on sales of investment securities, partly offset by a $5.2 million decrease in mortgage banking revenue.
- The sequential increase in non-interest expense reflected a $21.8 million increase in salaries and employee benefits, partly offset by a $13.8 million decrease in deposit costs driven by decreased average ECR-related deposit balances.
- Commercial and industrial HFI loans increased $336 million sequentially and $4.4 billion from September 30, 2025.
- Deposit optimization efforts reduced non-interest bearing deposits, while commercial banking growth increased interest bearing demand deposits, certificates of deposit, and savings and money market accounts.
Concerns
- Non-interest expense increased $50.7 million from the third quarter of 2025, led by increased salaries and employee benefits of $32.6 million and increased data processing costs of $7.7 million.
- Total equity declined $188 million sequentially, primarily due to AOCI changes related to higher interest rates, unrealized fair value losses of $338.0 million on available-for-sale securities, share repurchases and dividends.
- Tangible book value per share, net of tax, declined 1.6% sequentially to $62.22.
- Loans past due 90 days and still accruing interest increased to $58 million from $55 million sequentially, while repossessed assets increased to $165 million from $126 million.
- Borrowings were $5.6 billion, compared with $3.9 billion at September 30, 2025.
What to watch
- The trajectory of deposit optimization and commercial banking deposit growth after total deposits declined $119 million sequentially.
- Whether net interest margin sustains improvement after reaching 3.57% in the third quarter.
- Non-interest expense, particularly salaries and employee benefits and data processing costs.
- Credit performance, including nonaccrual loans, past-due loans, repossessed assets, net charge-offs and reserve coverage.
- The effect of higher interest rates and available-for-sale securities valuation changes on total equity, tangible common equity and tangible book value per share.
- Further use of the remaining authorization under the $300 million share repurchase program.
Balance sheet and cash flow
- Cash and due from banks totaled $5,328 million at September 30, 2026, compared to $5,936 million at June 30, 2026, and $5,756 million at September 30, 2025.
- Total assets were $98.1 billion at September 30, 2026, down $629 million, or 0.6%, from $98.7 billion at June 30, 2026, and up 7.8% from $91.0 billion at September 30, 2025.
- Borrowings totaled $5.6 billion at September 30, 2026, compared with $6.2 billion at June 30, 2026, and $3.9 billion at September 30, 2025.
- Qualifying debt totaled $1.1 billion at both September 30, 2026 and June 30, 2026, compared with $681 million at September 30, 2025.
- Unrealized fair value losses of $338.0 million on the Company's available-for-sale securities were recorded in other comprehensive loss, net of tax.
Analysis
Western Alliance delivered higher third-quarter earnings on both a linked-quarter and year-over-year basis. Net income was $277.2 million and diluted earnings per common share was $2.45, compared with $268.8 million and $2.36 in the second quarter and $260.5 million and $2.28 in the third quarter of 2025. Net revenue was $1,014.2 million, while non-GAAP PPNR was $419.1 million. The filing attributes the improvement in net interest income to higher yields on interest earning assets and higher average HFI loan balances sequentially, and to higher average interest earning asset balances and lower interest-bearing liability rates year over year.
Balance-sheet growth remained centered on HFI lending. HFI loans, net of deferred fees, reached $61.5 billion, up $600 million from June 30, 2026 and $4.9 billion from September 30, 2025. Commercial and industrial loans rose $336 million sequentially and $4.4 billion year over year. Total deposits were essentially stable sequentially at $81.8 billion after deposit optimization reduced non-interest bearing deposits, while commercial banking growth supported interest-bearing deposit categories. The HFI loan-to-deposit ratio increased to 75.3%.
Margin performance improved despite higher funding costs. Net interest margin was 3.57%, compared with 3.53% in both the prior quarter and prior-year quarter. Non-interest income increased sequentially, aided by higher gain on sales of investment securities, although mortgage banking revenue declined. Expense growth remained a counterweight: non-interest expense rose to $595.1 million, with higher salaries and employee benefits partly offset by lower deposit costs. The efficiency ratio was 58.1%, and the adjusted efficiency ratio increased to 50.0% from 48.9% in the prior quarter.
Credit quality showed meaningful improvement in nonaccrual and reserve coverage measures. Nonaccrual loans declined to $485 million, and nonaccrual loans to funded HFI loans declined to 0.79%. Allowance for credit losses to funded HFI loans increased to 0.93%, while allowance coverage of nonaccrual loans rose to 118%. Net charge-offs declined sequentially to $45.8 million, or 0.30% of average loans on an annualized basis. However, loans past due 90 days and still accruing interest and repossessed assets both increased sequentially.
Capital allocation emphasized repurchases and dividends. The company repurchased $92.1 million of shares during the quarter, while common dividends paid totaled $45.7 million. Total equity declined to $7.9 billion from $8.1 billion in the prior quarter, reflecting AOCI changes associated with higher interest rates, unrealized fair value losses on available-for-sale securities, repurchases and dividends, partly offset by earnings. Tangible book value per share declined sequentially to $62.22, and the CET1 ratio was 10.9%. The release did not provide forward financial guidance.
Management, verbatim
Western Alliance’s third quarter results featured enhanced profitability, lower deposit costs, improved asset quality and stronger reserve coverage, as well as accelerated share repurchase activity.
Kenneth A. Vecchione, Chairman, President and Chief Executive Officer
Strong execution generated pre-provision net revenue 1 of $419 million, up $25 million, or 6.4%, year-over-year and earnings per share of $2.45, up $0.17, or 7.5%.
Kenneth A. Vecchione, Chairman, President and Chief Executive Officer
We continued to prioritize shareholder returns, repurchasing $92 million of shares.
Kenneth A. Vecchione, Chairman, President and Chief Executive Officer
Not in the filing
stated, not guessed- Forward revenue guidance
- Forward gross margin guidance
- Forward operating expense guidance
- Forward tax-rate guidance
- Other forward guidance figures
- Prior-release outlook for comparison
- Operating cash flow
- Free cash flow
- Gross margin
- Reportable segment revenue and segment profitability
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.