Western Alliance Bancorporation (NYSE:WAL) improves credit quality, with profitability expected to follow in the coming couple of years, allowing this Southwestern bank to continue growing while having exposure to upside in their loan portfolio, says Brett Rabatin, Managing Director, Equity Research, at Sterne Agee & Leach, Inc.
“I continue to like Western Alliance. It’s a bank headquartered in Phoenix that has exposure to Vegas and California, and they have what I consider two catalysts of continued strong growth in their loan portfolio, so they should have topline revenue improvement,” Rabatin said.
Rabatin says California has had strong loan growth, although it’s dependent on which verticals the bank participates. He also says WAL is cleaning up its Nevada exposure, and the company has a promising future in the coming years.
“They’re also getting their Vegas operation cleaned up, and so as credit quality continues to improve, profitability should actually be stable to improving over the next two years, which is going to be somewhat unique in the environment, so I still think that’s a name where people are underestimating the earning power of the franchise a year or two from now,” Rabatin said.
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