WAL - Western Alliance Bank's Safe and Sound Growth Strategy in the Wake of Regional Bank Failures
2023-08-02 06:50:00 ET
Investing in a bank can be daunting, especially after multiple bank failures this year. However, Western Alliance Bank (NYSE: WAL) stands out as a safe and reliable option for investors. With its strong financial position and commitment to responsible banking practices, Western Alliance is well-positioned to weather potential economic downturns. Here's why.
There's a lot investors can learn from the survival of Western Alliance compared to the failure of Silicon Valley Bank and Signature Bank. For starters, it had a more diversified loan portfolio, which helped to reduce its risk exposure.
In contrast, Silicon Valley Bank had heavy loan exposure to venture capital (VC) and start-ups, and Signature Bank had concentrated its loans heavily in commercial real estate (CRE). These areas came under pressure due to rising interest rates, a decline in the value of CRE, and the collapse of the VC market, an unfortunate situation that led to both banks holding more loans that were not likely to be repaid and starved for cash to cover their potential losses. These two banks' aggressive lending practices ultimately led to their downfall.
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Western Alliance Bank's Safe and Sound Growth Strategy in the Wake of Regional Bank Failures