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Western Alliance Bancorp Sees 11% Drop in Deposits Amid U.S. Banking Crisis

Western Alliance Bancorporation faces an 11% decline in first-quarter deposits due to the ongoing U.S. banking crisis and customers withdrawing funds.

Western Alliance Bank
Western Alliance Bank

Western Alliance Bancorporation's First-Quarter Deposit Decline

Western Alliance (NYSE: WAL) Bancorporation reported on Wednesday that its first-quarter deposits were 11% lower than at the end of 2022. The decline comes as customers, alarmed by the sudden collapse of two U.S. mid-sized lenders, withdrew their funds.

Stock Price Recovery and Deposit Figures

Despite falling as much as 19% during the session, Western Alliance's stock recovered some ground, last down 11% at $29.81 in midday trading. The bank revealed that total deposits amounted to $47.6 billion as of March 31, down from $53.6 billion at the end of 2022.

Insured Deposits and Stabilization Hopes

Approximately 68% of Western Alliance's total deposits were insured, a considerably higher proportion than at year-end. Analysts at Truist Securities believe stabilizing deposit pressures should ease investor concerns about severe deposit outflows.

Regional Banks Reassure Customers After Bank Runs

In the wake of recent bank runs following the failures of Silicon Valley Bank and Signature Bank (OTC: SBNY) last month, regional banks have been working to assure customers that their deposits are secure. The collapses sparked the most significant banking crisis since 2008, fueling heavy volatility in the sector and exacerbating fears of an imminent recession.

Policymakers Stress Differences in the Current Crisis

Policymakers have sought to highlight that the current crisis differs from the previous one, as lenders are now better capitalized. However, Federal Reserve data revealed that banks sought record amounts of emergency liquidity in mid-March.

RBC Capital Markets on Western Alliance's Deposit Decrease

Analysts at RBC Capital Markets noted that while Western Alliance reported a substantial decrease in deposits, they believe "this is ultimately an acceptable and manageable outcome for the company."

Upcoming Banking Sector First-Quarter Reports

The banking sector will begin the first-quarter reporting season next week, with investors likely to closely monitor balance sheets for signs of further stress and liquidity crunch.