WAL - Warren Buffett Said There Would Be Other Bank Failures. Is Western Alliance Safe?
2023-05-10 08:20:00 ET
SVB Financial failed on March 10, 2023, and two days later, New York state regulators shut down Signature Bank. These events caused investors to fear that other regional banks would fail soon. As a result, Western Alliance Bancorporation's (NYSE: WAL) stock opened on Monday, March 13, down 74% from its Friday closing price . By the end of the day, the Phoenix-based bank had lost nearly two-thirds of its market value over the previous three trading sessions.
In early April, Berkshire Hathaway Chief Executive Officer Warren Buffett appeared on CNBC, telling viewers, "We're not over bank failures," while reassuring depositors their money is safe thanks to the Federal Deposit Insurance Corporation (FDIC). Considering other banks have failed since Buffett made that statement, many investors have avoided investing in banks and are waiting for the next shoe to drop.
Western Alliance trades at just three times its trailing-12-month (TTM) earnings, well below its 10-year median valuation of 15.25 times TTM earnings. So should investors buy at this great valuation or heed Warren Buffett's warning about possible additional bank failures?
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Warren Buffett Said There Would Be Other Bank Failures. Is Western Alliance Safe?