Western Alliance Bank signage on display on Western Alliance Bancorp headquarters in Phoenix, Arizona.
PATRICK T. FALLON/AFP via Getty Images
Western Alliance shares surged Wednesday after telling investors that deposits continue to stabilize.
Deposit growth exceeded $2 billion on a quarter-to-date basis as of May 12, the lender said.
Regional bank stocks followed Western Alliance’s lead higher.
Western Alliance stock jumped Wednesday on fresh signs that deposits are stabilizing after Silicon Valley Bank’s collapse two months ago, igniting a rally in other regional lenders.
Western Alliance shares zoomed up 12% to $35.45, the highest since May 2 when they traded above $36 each. The surge was set off after the Phoenix-based lender, in an investor update late Tuesday, said deposit growth exceeded $2 billion on a quarter-to-date basis as of May 12.
Western Alliance said deposit balances had stabilized by March 20 and “resumed growth trajectory.” The bank previously said deposits grew by $1.8 billion from the end of the first quarter to $49.4 billion as of May 9.
Riding alongside Western Alliance was PacWest, with its stock up 12%. Last week, the bank said deposit outflows resumed in the first week of May. Zions Bancorp tacked on 2.9% early Wednesday, and the SPDR S&P Regional Banking ETF (KRE) rose 2.3%.
Western Alliance and other small to mid-sized lenders came under deposit scrutiny after Silicon Valley Bank and Signature Bank collapsed in March and were seized by federal regulators to head off a potentially wider run on bank deposits. Customers fled SVB, worried about the safety of their money after a fire sale of SVB’s value-hit bond portfolio resulted in huge losses.
Western Alliance shares have suffered a loss of more than 40% during 2023.
Weekly deposit flows at banks have been stabilizing, Fitch Ratings said earlier this month while also saying near-term deposit challenges are a risk to profitability at regional and community banks.