2 More Banks Seek to Reassure Customers After Silicon Valley Bank Collapse
California-based First Republic Bank and Arizona-based Western Alliance Bancorporation both attempted to calm nerves around the collapse of Silicon Valley Bank after shares for both financial institutions plunged in the past week or so.
First Republic Bank told customers that their deposits were safe amid fears of spillover caused by SVB’s collapse late last week and as shares of First Republic Bank dropped 33 percent over the past five days.
In a regulatory filing with the U.S. Securities and Exchange Commission (SEC) on Friday, First Republic said its liquidity position remains strong amid falling share prices.
The U.S. Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per depositor per insured bank, for each account category. There were reports that about 85 percent of Silicon Valley Bank (SVB) accounts weren’t insured as the financial institution was often used by tech firms and startups.
“Within business deposits, no one sector represents more than 9 percent of total deposits, with the largest being diversified real estate. Technology-related deposits represent only 4 percent of total deposits,” First Republic also said. Its investment portfolio is less than 15 percent of total bank assets and only less than 2 percent of total bank assets are categorized as available for sale.
Meanwhile, Western Alliance, based in Phoenix, issued a news release on March 11 that “deposits remain strong,” saying that “total deposits of $61.5 billion, an increase of $7.8 billion since year end, led by our deposit verticals of Settlement Services, Home Owner Associations and Mortgage Warehouse. The company expects deposits to moderately decline from these levels by quarter end due to typical seasonal and monthly activity.”
On Twitter, a highly visible post alleged that people were going on “a bank run” at a Brentwood, California, First Republic Bank location. That post’s video, shot from a moving vehicle, showed what appeared to be a long line of people standing outside the branch.
“I’ve never seen a bank run in Brentwood Los Angeles in over 40 years—this is at first republic bank branch. People standing in rain,” the user alleged on March 11. The Epoch Times has contacted First Republic Bank for comment on the claim and others.
Those concerns were also exacerbated by a Wall Street Journal article with a headline that blared, “First Republic Hit by Silicon Valley Bank Failure” and that “investors have grown wary of First Republic Bank for reasons similar to those that caused concern at SVB.”
The bank, which was founded in San Francisco in 1985, has some 80 branches in 11 states around the United States. The WSJ article noted that the bank’s funding relies largely on wealthy individuals who want to seek higher yields on their money.
With about $212 billion in total assets, First Republic Bank is the 14th largest in the United States. Western Alliance is smaller, with about $34 billion in total assets.