Is Western Capitalized? Is Western Alliance Bank safe?
Depositors of Western Alliance find themselves thinking the same thoughts today.
Will their accounts be ok?
Of course, we all know to keep our accounts maxed out at $250,000. As a result of Uncle Sam’s guarantee via FDIC: Federal Deposit Insurance Corporation. Remember any amount above that rests on President Biden’s guarantee. Not quite the same thing.
Everyone sees the stock in free fall and feels panic regardless of the guarantee.
Then global ratings firm Moody’s Investors Service drops an axe: Research: Rating Action: Moody’s places Western Alliance’s ratings on review for downgrade – Moody’s (moodys.com)
Wall Street research and banking house Wedbush wrote about Western Alliance that they; “had a fair market value 92% below its book value based on generally accepted accounting principles (GAAP) for publicly traded U.S. companies.”
Thats pretty terrible. Essentially book value from an “honest perspective” regarding where their assets would sell for TODAY. Puts the bank at less than 10 cents on the dollar for their reported worth.
That puts them in awful company with Silicon Valley Bank.
Let’s take a look at the whole industry:
Below we have a chart showing unrealized depreciation on Hold to Maturity Securities (HTM) for top 100 banks versus equity.
These unrealized losses are NOT reflected in profits or a deduct to equity via Other Comprehensive Income (OCI) – only in the footnotes! Moreover, we don’t find these losses reflected in stress tests or measures of capital adequacy.
Furthermore a 25 bp (1/4 of 1 percent) increase in rates for a 10-year security causes approximately 2 points in losses (100 par to 98 to reflect yield discount).
Lately all we can read about these days are banks failing everywhere! Are we in a financial crisis? Now some worry Will Bank of America Collapse?
And many others worry whether or not there is a Hawaii Bank Run? And of course, many others worry about the more local establishments. Will First Republic Bank Fail ?
Western Alliance Bank is a financial institution that operates in the western United States. In addition, the bank’s history dates back to 1994 when Robert Sarver founded the National Bank of Arizona in Tucson, Arizona.
Under Sarver’s leadership, the National Bank of Arizona grew rapidly, acquiring several other banks and expanding its reach across the state. In 2002, the bank merged with Western Alliance Bancorporation, a holding company that owned several other banks in the region, to form Western Alliance Bank.
Following the merger, Western Alliance Bank continued to grow and expand!
Acquiring other banks and opening new branches in Arizona, Nevada, California, and Colorado. Furthermore, in the mid-2000s, the bank began to focus on serving niche industries like healthcare, technology, and gaming, offering specialized products and services tailored to the needs of these businesses.
In the years since, Western Alliance Bank has continued to innovate and adapt to changing market conditions. Furthermore, introducing new technologies and expanding its offerings in areas like commercial lending, treasury management, and international banking.
Is Western Capitalized? Is Western Alliance Bank safe?
In conclusion, today, Western Alliance Bank now one of the largest regional banks in the western United States. Lastly, with over $30 billion in assets and more than 40 offices across the region.
- Research: Rating Action: Moody’s places Western Alliance’s ratings on review for downgrade – Moody’s (moodys.com)
- Unrealized Losses Have Piled Up at Regional Banks Facing Credit Downgrades: Report (investopedia.com)
- Moody’s places First Republic Bank’s ratings under review for downgrade.”
- Moody’s Analytics. “Moody’s places Western Alliance’s ratings on review for downgrade.”
- Board of Governors of the Federal Reserve System. “Federal Reserve Board announces it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors
Is Western Capitalized? Is Western Alliance Bank safe?
