The run on Silicon Valley Bank on Thursday and its subsequent collapse Friday has sparked investor concern with regional banks offering equipment finance with high exposure to unrealized losses.
Santa Monica, Calif.-based Silicon Valley Bank’s (SVB) collapse was the product of a convergence of factors spurred by a decline in deposits following a pandemic boom and rising interest rates that pushed down bond values. When deposits declined, SVB took a $2 billion loss selling those bonds, spurring more businesses to withdraw cash. Shares plummeted 63.8% Thursday.
Silicon Valley Bank had an average balance of securities available for sale of $29.4 billion as of Dec. 31 on the bank’s Q4 financial statements, up 21.8% YoY. Silicon Valley Bank posted total deposits of $173.1 billion in 2022, down 8.5% YoY, prior to Thursday’s bank run. The bank has since gone under FDIC receivership.
Three regional banks that offer equipment finance with a high volume of assets held for sale, commonly referred to as unrealized losses, saw share values plummet on Friday. Banks are not required to take a balance sheet loss on depreciating bonds until they are sold.
Beverly Hills, Calif.-based Pacific Western Corporate Asset Finance originated more than $365.9 million in new business volume in 2022 and slightly more than $1 billion in managed assets at yearend, according to the Monitor 100.
PacWest Bancorp stocks were $12.35, down $7.54 or 37.91% at market close today. PacWest has a market capitalization of $1.46 billion.
PacWest had $4.8 billion in securities available for sale as of Dec. 31 on the bank’s fourth-quarter financial statements, down 54.7% year over year. PacWest Bancorp posted total deposits of $33.9 billion in 2022, down 3% YoY.
Melville, N.Y.-based Signature Financial, the equipment finance subsidiary of Signature Bank, originated nearly $2.3 billion in new business volume in 2022 and $5.3 billion in managed assets at yearend, according to the Monitor 100.
Signature Bank stocks were $70, down $20.76 or 22.87% as of market close today. Signature Bank has a market capitalization of $4.41 billion.
Signature Bank had $21.1 billion in amortized costs of securities available for sale as of Dec. 31 on the bank’s Q4 financial statements, up 21.1% YoY. Signature Bank also updated its financial figures in a press release yesterday. Signature Bank posted total deposits of $88.6 billion in 2022, down 16.5% YoY.
Western Alliance Bancorp
Phoenix-based Western Alliance Equipment Finance originated nearly $138 million in new business volume in 2022 and $334 million in managed assets at yearend, according to the Monitor 100.
Western Alliance Bancorp stocks were $49.34, down $13.05 or 20.92% as of market close today. Western Alliance has a market capitalization of $5.41 billion.
Western Alliance Bank also issued updated financial figures Friday due to the company’s stock market decline. Western Alliance Bancorp had unpledged available-for-sale marketable securities of $5.3 billion as of Feb. 28, according to the company release. Western Alliance Bancorp posted total deposits of $53.6 billion, up 12.7% YoY.