Timeline: Western Alliance dodges a bullet

March 10, 2024 8:00 AM

Phoenix-based Western Alliance Bancorp. was a quiet, regional bank that mostly stayed out of national headlines for three decades, until last year's banking crisis.

The financial services industry experienced significant turmoil last year as Silicon Valley Bank failed, and then the government took over Signature Bank just two days later. Other regional banks faced market contagion as customers rushed to withdraw funds from their accounts and investors sold off bank stock.

Western Alliance in Phoenix was one of the hardest hit institutions during the March 2023 banking crisis. Here's an in-depth look at critical decisions its executives made during a hectic seven-day window, followed by how they responded to news reports in May that Western Alliance planned to put itself up for sale.

For additional coverage on the one-year anniversary of the March 2023 banking crisis, please visit:

Wednesday, March 8, 2023

3 p.m.:

Driving to a late-afternoon dental appointment, Western Alliance Bank CEO Ken Vecchione receives a phone call from an investment banker alerting him to the news that SVB has just taken a $1.8 billion after-tax loss from selling mostly long-term investments including Treasury and mortgage bonds, without issuing any equity to cover the loss. The news jolts bankers across the country, with particular reverberations for firms like Western Alliance with technology industry-based depositors.

6 p.m.:

Vecchione, Western Alliance Chief Financial Officer Dale Gibbons and other top managers begin an around-the-clock exchange of phone calls and texts tracking SVB's developments and weighing the Arizona bank's next moves.

Thursday, March 9

After a nearly sleepless night, Western Alliance executives learn SVB has failed to raise equity funds critically needed to offset the previous day's losses. Western Alliance executives worry about market contagion and that their institution may also be hurt by investors and depositors, given its own exposure to the technology sector. About 13% of Western Alliance's deposits are tied to tech firms, through its Bay Area-based Bridge Bank brand.

Friday, March 10

SVB is closed by regulators in the morning. Panicked customers pull about $42 billion in deposits out of SVB and Treasury Secretary Janet Yellen says during a House Ways and Means Committee meeting that she's monitoring "a few" other banks that could be at risk. Western Alliance sees customer requests to withdraw funds begin to increase. Around noon, Western Alliance issues a press release with updated financial figures, and bank managers hit the phones.

In the course of the day, Western Alliance contacts hundreds of corporate customers with at least $20 million in deposits, reassuring them of the bank's strong capital position.

Saturday, March 11

Vecchione and Gibbons activate the bank's long-established contingency funding plan, moving significant collateral to the Federal Reserve Bank in order to receive an influx of emergency funding as a proactive measure.

Western Alliance requests $25 billion in funds to arrive first thing Monday morning, more than double what bank leaders estimate they would need in the worst-case scenario. The amount still falls below Western Alliance's $30 billion available credit line from the Fed.

Sunday, March 12

5 p.m.:
During a late-afternoon emergency board meeting, Western Alliance executives are stunned to learn that Signature Bank has failed. Executives at Western Alliance's headquarters said they suddenly felt "a chill down the spine."

9 p.m.:
Vecchione calls bank treasurer John Radwanski, fretting that some technology glitch could prevent the $25 billion from being available to the bank via the Fed the next day. He asked: "What if you push the button and the money isn't there?" Radwanski calmly replies: "I'll push the button again." (The funds arrive in Western Alliance's accounts the moment the Fed's discount window opens the next day.) JPMorgan Chase later reaches out to offer Western Alliance an additional credit facility as a backstop, which provides some relief to the anxious team.

Monday, March 13

5 a.m.:
Western Alliance's stock plunges in premarket trading, coming in at $12 per share, a 75% drop from Friday's $50 closing price. At midday, CNBC covers the story of regional bank stocks, including Western Alliance, being hammered.

2 p.m.:
Western Alliance issues a quickly produced 8-K detailing its expanded capital and liquidity status. Bank executives immediately sense a positive shift in bank customers' moods. The firm's stock, which had bottomed out at about $7 a share earlier that day, rises to about $26 a share by day's end.

5 p.m.:
The end-of-day tally shows about $8 billion in deposits have left Western Alliance.