First Republic, Western Alliance seek to calm contagion worries from SVB meltdown
March 10 (Reuters) - U.S. lenders First Republic Bank (FRC.N) and Western Alliance (WAL.N) said on Friday their liquidity and deposits remained strong, aiming to calm investors worried of a spill-over of risks from troubled startup focused-bank SVB Financial Group (SIVB.O).
Shares of the three banks slumped between 20% and 60% in choppy trading that led to halts and resumptions.
The disclosures come after banking regulators shut California-based SVB after a failed share sale that triggered worries of a liquidity crisis, hammered bank stocks and rippled through global markets.
Silicon Valley Bank is the first FDIC-insured institution to fail this year, the Federal Deposit Insurance Corporation said. The last FDIC-insured institution to close was Almena State Bank in Kansas on October 23, 2020.
Western Alliance reported total deposits of $61.5 billion and warned of a moderate decline from these levels by the end of the quarter due to seasonal and monthly activity, but affirmed its full-year deposit growth forecast of 13% to 17%.
It held $2.5 billion cash on its balance sheet while held-to-maturity securities made up less than 2% of assets with unrecognized loss of $192 million as of Feb. 28.
Meanwhile, FRC said average account size of consumer deposits are less than $200,000 and business deposits less than $500,000. Technology-related deposits accounted for 4% of total
Its investment portfolio is less than 15% of total bank assets and only less than 2% of total bank assets is categorized as available for sale.
Banks park bonds under either available-for-sale (AFS) or held-to-maturity securities.
While AFS securities are carried at fair value and unrealized gains and losses are reported against capital, HTM securities are carried at amortized cost and are not required to count changes in value if held until repayment.
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