Docker - "FATAL: database does not exist"

Question

I'm running into the following issue when trying to run an app in docker with docker-compose. Judging from other posts here on SO, my docker-compose.yml file looks correct (which seems to be causing the issue in the majority of cases).

So not sure why the db does not exist in this case?

20] FATAL:  database "db" does not exist

Dockerfile

FROM node:12.18.2-stretch-slim

# Set a directory for the app
WORKDIR /usr/src/app

# Install dependencies
RUN apt-get update && apt-get -y install procps
RUN yarn global add typeorm

# Copy package.json and package-lock.json to the container
COPY package*.json ./

# Install dependencies
RUN yarn install

# Copy all source files to the container
COPY . .

EXPOSE 3000

docker-compose.yml

version: '3'
services:
  redis:
    image: redis
    ports:
      - '6380:6379'
    volumes:
      - redis:/data
  db:
    image: postgres:11
    user: postgres
    environment:
      POSTGRES_USER: '${ORM_USERNAME}'
      POSTGRES_PASSWORD: '${ORM_PASSWORD}'
      POSTGRES_MULTIPLE_DATABASES: '${ORM_DATABASE}, ${ORM_TEST_DATABASE}'
    ports:
      - '5434:5432'
    volumes:
      - ./pg-init-scripts/:/docker-entrypoint-initdb.d/
      - pg-data:/var/lib/postgresql/data
  api:
    build: .
    command: yarn start:dev
    volumes:
      - .:/usr/src/app
      - /usr/src/app/node_modules
    ports:
      - '3000:3000'
    depends_on:
      - db
      - redis
volumes:
  pg-data:
    driver_opts:
      type: none
      device: '${HOME}/db-pg-data'
      o: bind
  redis:

#!/bin/bash

set -e
set -u

function create_user_and_database() {
    local database=$1
    echo "  Creating user and database '$database'"
    psql -v ON_ERROR_STOP=1 --username "$POSTGRES_USER" <<-EOSQL
        CREATE USER $database;
        CREATE DATABASE $database;
        GRANT ALL PRIVILEGES ON DATABASE $database TO $database;
EOSQL
}

if [ -n "$POSTGRES_MULTIPLE_DATABASES" ]; then
    echo "Multiple database creation requested: $POSTGRES_MULTIPLE_DATABASES"
    for db in $(echo $POSTGRES_MULTIPLE_DATABASES | tr ',' ' '); do
        create_user_and_database $db
    done
    echo "Multiple databases created"
fi