PacWest stocks fall amid bank snub

Investors are selling off shares in regional lenders following the recent collapse of three prominent banks, leaving the fate of PacWest Bancorp hanging in the balance. Shares in the $44bn bank plummeted 55% to $2.88 following a report that PacWest was considering its strategic options, including a possible sale. The day before, the bank’s stock price had already fallen 28%. PacWest has hired a financial adviser and is also considering a breakup or trying to raise capital.

PacWest’s shares have dropped 78% over the last three months, prompting the bank to release a statement on Wednesday night in which it confirmed it had “explored strategic asset sales” and was in talks with potential partners and investors. The bank has not experienced a significant capital flight, unlike Silicon Valley Bank and Signature Bank. PacWest’s total deposits increased by $1.1bn to $28.2bn in the first quarter of this year, with the bank having far fewer uninsured deposits than SVB.

Wall Street is becoming increasingly wary of midsize lenders, and other regional banks’ stocks also fell sharply on Wednesday. Western Alliance saw a 4% decline in trading, followed by a 29% plunge in after-hours trading, while Comerica and Zions Bancorporation also suffered sharp falls. The KBW regional bank index has lost 29% this year.

JPMorgan Chase has agreed to buy most of the assets of First Republic, a move that JPMorgan CEO Jamie Dimon says will help stabilize the banking industry. However, he warned that the turmoil affecting midsize and small lenders could continue. Analysts note that while the situation is concerning, investors should not extrapolate what happened to Silicon Valley and First Republic to the whole regional landscape.

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