What happened
Wednesday wasn't exactly a difficult Hump Day for shares of regional American lenders; in fact, it proved to be quite good for them. A prominent one that did rather well was First Republic Bank (FRCB), the share price of which shot 12% higher thanks to some very encouraging developments posted by a big peer in its sector.
So what
That peer is Western Alliance Bancorporation, which reported its latest set of quarterly figures after market hours on Tuesday. While the bank didn't come anywhere near the average analyst estimate for revenue despite beating on non-GAAP (adjusted) profitability, neither headline number was the main concern of many investors.
Rather, the top worry with regional banks is their deposit bases. Investors and other bank-watchers fret that depositors will pull their money from lenders seen to be more exposed to risk. With its relatively high exposure to the tech industry, Western Alliance appeared to be a business directly in the firing line.
Those concerns were put aside with the company's first-quarter results. After experiencing a queasy 13% drop in deposits between the end of last year and late March, the bank has actually witnessed growth in that all-important figure. It has risen by 6% since the latter period, going in quite the opposite direction than many had feared.
Now what
As banking is a cyclical industry, the dynamics of lenders that are broadly similar tend to mirror each other -- hence, the blast of optimism First Republic caught after those Western Alliance numbers hit the headlines. It doesn't look like we're in front of a major banking crisis, at least at the moment, so for now things are looking good for the sector.
