On Thursday, JPMorgan (NYSE:JPM) showed a vote of confidence in Western Alliance (NYSE:WAL) Bancorporation (NYSE: WAL) by increasing its price target from $85.00 to $90.00 and maintaining an Overweight rating. The financial institution's recent investor meeting with CEO Ken Vecchione and CFO Dale Gibbons has reinforced the analyst's belief that Western Alliance is well-positioned for outperformance compared to its peers both in the near and longer term.
The meeting highlighted that the recent issues faced by New York Community Bancorp (NYSE:NYCB) and the resulting sell-off in its stock have not affected Western Alliance's deposit customers. The bank had preemptively begun working towards Category IV compliance over three years ago, starting when the company's assets were at $36 billion in December 2020. This proactive approach included hiring new staff and consulting with external advisors.
Furthermore, Western Alliance began enhancing liquidity and capital levels in October 2022, well ahead of the March Madness period. This strategic foresight is indicative of a management team with a long-term vision. As the bank approaches its mid-80% loan/deposit ratio target and aims to reach its 11% Common Equity Tier 1 (CET1) target by the end of 2024, growth prospects remain a focal point.
Despite a slowdown from historical growth rates above 20%, the bank's ambition to grow is still evident. The analyst suggests that Western Alliance is positioned to join the "15x15" group, characterized by mid-teen growth rates supported by a similar return on tangible equity (ROTE). With shares trading at only 6.8 times the estimated earnings per share for 2024, the stock is considered very attractive at its current level.
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