This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Play 'Vegas Recovery' With This Bank Stock: Credit Suisse

Stocks in this article: WAL BAC WFC C

NEW YORK ( TheStreet) -- Western Alliance Bancorporation (WAL) has weathered the brutal real estate meltdown in Arizona and Nevada, and is now ready to "restore top-tier profitability," according to Credit Suisse analyst Matthew Clark.

Credit Suisse on Friday initiated its coverage of the Phoenix-based lender, with an "outperform" rating and a price target of $22, which would represent a 21% gain from Thursday's closing share price of $18.16.

Western Alliance had $8.6 billion in total assets as of June 30, mainly through three bank subsidiaries, including Western Alliance Bank of Phoenix, Bank of Nevada of Las Vegas and Torrey Pines Bank of San Diego.

The holding company owes $141 million to the Small Business Lending Fund, which is a program run by the U.S. Treasury, enabling participating banks to repay federal bailout funds received through the Troubled Assets Relief Program, or TARP. Western Alliance is the largest participant in SBLF, and has certainly been meeting the goals of the program, by growing its commercial loan portfolio at a strong pace.

Total loans were $6.41 billion as of June 30, increasing 24% from $5.16 billion a year earlier, although the growth included a $343 million increase from the acquisition of Centennial Bank of Fountain Valley, Calif., in April.

SBLF has turned out to be a very low-cost source of capital for Western Alliance, since the dividend on the preferred shares held by the Treasury is just 1% for banks achieving an annual growth rate of 10% for commercial and industrial loans or loans secured by owner-occupied commercial real estate to businesses with less than $50 million in annual revenue. In April 2016, the annual dividend on SBLF preferred shares for all participants is set to increase to 9%.

"We expect WAL to pay back the SBLF with retained earnings before the reset date and still maintain Tier 1 capital in excess of 9.50% under Basel III," Clark wrote in a note to investors on Friday.

Bank of Nevada was operating under a regulatory memorandum of understanding (MOU) that required the bank to maintain higher-than-normal capital ratios and obtain regulators' approval of any dividend payments to the holding company. This MOU was lifted in July, removing the last regulatory order for any of Western Alliance's subsidiary banks.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,687.28 +330.41 1.90%
S&P 500 2,051.04 +38.15 1.90%
NASDAQ 4,732.5130 +88.2010 1.90%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs