First Republic, Western Alliance calm contagion worries from SVB meltdown

(Reuters) – U.S. lenders First Republic Bank and Western Alliance said on Friday their liquidity and deposits remained strong, calming investors worried of a spill-over of risks from troubled startup focused-bank SVB Financial Group.

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.

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

deposits.

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 they hold it until they are repaid.

(Reporting by Mehnaz Yasmin in Bengaluru; Editing by Arun Koyyur)