Another one bites the dust ?
Apr 06, 2023
The US regional bank Western Alliance Bank Corp announced yesterday an 11% drop in it deposit base during the first quarter. Its stock price fell another 12.3% yesterday on this deposit flight representing 5 bn USD, an amount equal to the book value of the bank with a market cap of 3.2 bn USD. Insured deposits represent 68% of the total deposits and current liquidity levels cover 140% of insured deposits. Unrealized losses on securities-held-for-investment loans amount to 2.9 bn USD. While management is unsurprisingly trying to reassure investors about the survival of its business, we know from recent experiences that client psychology is a truly powerful driver and can bring any bank to its knees. Uncertain outcome.