It’s been a rough few weeks for bank stocks, as confidence has been shaken amid a growing array of closures, mergers, and distress cases. For Western Alliance Bancorporation (NYSE:WAL), it has been no different, and its shares are down today, largely thanks to a less-than-impressive financial report.
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There was some good news. Available liquidity actually provides a coverage ratio on deposits of better than 140%. Thus, even if everyone pulled their balances, Western Alliance wouldn’t be out of the game, necessarily. Moreover, its insured deposits went up to 68% on March 31. That’s up from 55% about three months prior, so a lot more of Western Alliance’s deposits now fall under FDIC jurisdiction.
That may be a problem, however, as demonstrated by David Chiaverini, an analyst with Wedbush. Chiaverini noted that the insured deposits improvement may not be related to inflows of people with deposits sufficiently small to qualify under FDIC protections. Rather, Chiaverini suggests that it may be a matter of “uninsured deposit run-off.” While we also know there are no borrowings outstanding from the Fed directly, Jefferies’ Casey Haire notes that we also don’t know what the “peak usage” was, nor do we know what Western Alliance borrowed elsewhere.
Still, analysts are very much behind Western Alliance. Analyst consensus calls WAL stock a Strong Buy by a factor of four to one. Furthermore, it offers 132.33% upside potential thanks to its average price target of $69.63 per share.
