PACW - Western Alliance deposits stabilize amid banking turmoil

2023-05-04 09:05:16 ET

With the news that PacWest Bancorp ( PACW ) is considering strategic options including a sale, Western Alliance Bancorporation ( NYSE: WAL ) has issued an update on its deposits and financial strength.

The Phoenix, Arizona-based bank said it has not experienced unusual deposit flows after the sale of First Republic Bank and other recent industry news. WAL's total deposits were $48.8B as of Tuesday, May 2, up from $48.2B as of May 1, and flat compared with April 28.

Still, Western Alliance ( WAL ) stock dropped 15% in Thursday premarket trading. Metropolitan Bank ( MCB ), another stock that's been hit by the regional bank worries, fell 14% .

Quarter-to-date, WAL's deposits are up $1.2B from $47.6B at March 31, it added.

Due to seasonality in its mortgage warehouse business, mortgage warehouse deposits fell by ~$700M since April 14, "which are rebuilding in a typical fashion and pace," it said.

Western Alliance ( WAL ) reaffirmed its $2B Q/Q deposit growth rate guidance.

As of May 2, insured deposits represent more than 74% of total deposits, the bank said. Of its 20 largest deposit relationships, more than 88% of deposits are insured. Liquidity coverage of uninsured deposits from on-balance sheet liquidity and available borrowing capacity was ~165%.

Completion of $6B of full-year select asset disposition that WAL management discussed on its Q1 earnings call remains on track.

Held-for-investment loan/deposit ratio improved to ~95% as of May 2 vs. ~98% as of March 31.

The company's CET1 ratio was ~9.7% as of April 30 vs. 9.4% at March 31.

Jefferies analyst Casey Haire said the update reveals "a resilient deposit franchise" and shows that "stock volatility is not indicative of deposit instability."

A KBW analyst said the Western Alliance ( WAL ) balance sheet is "in a very strong position" in terms of deposits, liquidity and capital and "the company can achieve its near-term goals on all of these important items."

More on banking turmoil:

• Regional bank stocks still vulnerable as selloff continues at PacWest, Western Alliance
• Western Alliance: Major Recovery Ahead
• Famed bond investor Bill Gross buys regional bank stocks after sector selloff

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