WAL - Western Alliance grapples with Fitch's Rating Watch Negative amid market's liquidity stress

2023-03-16 07:39:23 ET

• Based on current market conditions creating liquidity stresses outside the baseline assumptions, Fitch ratings placed Western Alliance Bancorporation ( NYSE: WAL ) and Western Alliance Bank's  'BBB+' Long-Term Issuer Default Rating and associated debt and deposit ratings on Rating Watch Negative (RWN).
• Earlier to the SVB collapse, Fitch viewed WAL's funding and liquidity profile as supportive of its rating.
• The resolution of the RWN could include a range of outcomes, including the assignment of a Negative or Stable Outlook, depending on market conditions and the impact to WAL's deposit franchise, long-term earning power and capitalization.
• WAL's ratings reflect strong earnings relative to mid-tier bank peers and consistently strong asset quality.
• In its Mar.13 filing, WAL reported cash reserves of $25B which is equivalent to ~47% of total deposits reported as of year-end 2022; it also added moderate deposit outflows and insured deposits in excess of 50% of total deposits.
• CET1 ratio, adjusted for unrealized losses in its available for sale and held to maturity securities portfolio, would be 7.9%, which Fitch views as adequate.
• Shares trading 9.2% lower premarket.

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