WAL Stock Alert: Western Alliance Climbs Back From the Brink


  • Western Alliance (WAL) stock climbed 12% after revealing its deposits are up this quarter.
  • Other regional banks were also rising.
  • If the crisis is over, then these stocks are incredible bargains.
WAL stock - WAL Stock Alert: Western Alliance Climbs Back From the Brink

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Western Alliance (NYSE:WAL) stock jumped over 12% overnight after announcing its deposits grew.

Analysts see this as an indication the regional bank crisis that began with the collapse of Silicon Valley Bank may be ending.

A Western Alliance 8K filing disclosed that quarter-to-date deposits are up $2 billion during the quarter, to $49 billion. The stock opened at about $35.50, a market capitalization of almost $3.9 billion.

WAL Stock: Bank Stock Bargains?

If WAL and other regional banks are safe, their stocks are bargains. Western Alliance’s stock is now just 58% of its book value. Wells Fargo (NYSE:WFC), the most troubled of the nation’s big banks, is priced at 86% of its book value. Megabank  JPMorgan Chase (NYSE:JPM) trades at 1.42 times.

Sensing an end to the contagion, one analyst raised his price target on Western Alliance stock to $71. A doubling would be unusual for any bank. But WAL stock was trading at $75 per share just before SVB collapsed. Bank of America (NYSE:BAC) analysts predicted a quick 30% rally for WAL, saying 80% of its deposits are under FDIC insurance limits.

One thing the failed Silicon Valley Bank, Signature Bank and First Republic had in common was that they were favored by wealthy clients who held deposits well above insured limits. When those depositors were told that the bonds backing their deposits wouldn’t guarantee their repayment, many rushed to take out their money in a classic “bank run.”

Other troubled bank stocks rose in sympathy. PacWest (NASDAQ:PANW) was up 12% overnight, and Zions (NASDAQ:ZION) in Utah rose nearly 5%. The SPDR S&P Regional Banking ETF (NYSEARCA:KRE) rose 2%.

It’s important to note how far these stocks have fallen, however. Even with the overnight gains PacWest is trading at less than one-quarter of its book value.

What Happens Next?

If the regional bank crisis is over, it means investors can pick up some bargains by acting quickly. This assumes, of course, that the whole country doesn’t go into default.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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