PacWest and Western Alliance banks posted heavy losses on Tuesday as the market was still reeling from problems caused by the recent collapse.
Shares of bank holding company PacWest (NASDAQ: PACW) fell heavily in bank stocks on Tuesday. The stock declined nearly 28% as the general banking environment continues to sour following bank failures.
PacVest’s stock closed at $6.55 after falling 27.78% on the day. In addition to PacWest, Arizona-based Western Alliance Bancorp (NYSE: WAL) also crashed yesterday. WAL fell more than 15% and lost nearly $6 to end the day at $30.93. Both banks capped a number of swings as their values continued to crash.
The SPDR S&P Regional Banking ETF (KRE) also lost 6.3% yesterday.
Besides PacWest and Western Alliance, there were several other notable crashes in banking stocks. For example, Metropolitan Bank Holding Corp. (NYSE: MCB) fell 20%, while Zions Bancorp (NASDAQ: ZION) and Comerica Inc. (NYSE: CMA) both fell 11% and 13%, respectively.
PacWest stock crash follows US banking crisis
Analysts and economists are still unsure about the main cause of the crash. Interestingly, the accident happened a day after JP Morgan CEO (NYSE: JPM) Jamie Dimon Said that the ongoing upheaval in the banking sector may end soon. He said this after JPMorgan bought the failing First Republic Bank (NYSE:FRC).
jpm successfully acquired all First Republic deposits And some of its shares. In April, First Republic crashed more than 93% year-to-date (YTD). The crash wiped out all of the company’s profits over the past 10 years. In Q1, the bank’s revenue was $1.2 billion, a year-on-year (YoY) loss of 13.4%. Earnings per share were $1.23, a 39% decline from the first quarter of 2022. Deposits also declined by 35.5% to $104.5 billion.
While there has been some respite from First Republic’s woes, Wells Fargo & Company analyst Mike Mayo believes the worst is not yet over. According to Mayo:
“First Republic’s resolution helps reduce concerns but does not eliminate them. A triple dose of negative sentiment is hitting the regionals: commercial real estate, diversification and regulation.
PacWest and Western Alliance have numbers that have kept investor jitters away, according to earnings published in April. Deposits in both the banks seem to have stabilized now after the March outflow scare. However, investors are still paying close attention, especially after record falls from Signature Bank, Silicon Valley Bank and Silvergate Capital Corp.
Bloomberg Intelligence analyst Herman Chan has Said Although frc’s solution is good, there is another problem. Chan believes there is still a clear lack of confidence in regional banks. One possible solution would be a “more holistic response” from the authorities.
For RBC Capital Markets analyst John Arfstrom, there may be light at the end of the tunnel for PacWest, Western Alliance and Comerica. Arfstrom suggests buying the dip regardless of downside sentiment.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to strip crypto stories down to the basics so that anyone anywhere can understand without a lot of background knowledge. When he is not delving deep into crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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