By
Steve Muchoki
April 24th, 2024
The demise of several United States regional banks including PacWest has come amid the rise of top banks – like Bank of America, and JPMorgan – and Fintechs – like Binance, and Coinbase Global.
In the latest United States banking developments, PacWest Bancorp (NASDAQ: PACW), a California-based bank holding company with about 69 full-service branches, lost investors’ confidence resulting in a 50% share dip on Thursday. According to the latest stock market data, PacWest shares closed Thursday trading at $3.17, down 50.62% from the day’s opening price. However, PACW shares regained about 13.56% during the after-hours to trade around $3.60. Thursday’s PACW share bleeding was attributed to the announcement that the bank is exploring a strategic sale of assets to maximize liquidity despite an increase in deposits during Q1.
“In light of the recent events, management took immediate steps to maximize liquidity, including the exploration of strategic asset sales, which has led to the transfer of our $2.7 billion Lender Finance loan portfolio to held for sale,” Paul Taylor, PacWest President and CEO noted.
Western Alliance Bankcorporation
Meanwhile, Western Alliance Bancorporation (NYSE: WAL) stock was also down yesterday, losing more than 38% and reaching the level of $18.20. However, in the after-market trading the stock started regaining its losses. It is up more than 9% and is exchanging hands at $19.90.
The stock went down after the rumors that the bank is considering various strategic options including a sale. Nevertheless, the bank denied these reports.
PacWest Shares and US Banking Woes
PacWest has seen its stock market plummet more than 86% YTD, down below the 2008/2009 lows. This comes as economists warn the 2023 banking crisis is much worse than the 2008 woes by far. Already, several regional United States banks have collapsed including Silicon Valley Bank and Signature Bank. The effects have also been felt at the international stage with Credit Suisse’s collapse earlier this year.
On Thursday, shares of several United States banks were in red including Wells Fargo & Co (NYSE: WFC), and National Bank Holdings Corp (NYSE: NBHC) which dropped 4.25% and 3.08% respectively. The demise of several United States regional banks including PacWest has come amid the rise of top banks – like Bank of America, and JPMorgan – and Fintechs – like Binance, and Coinbase Global Inc (NASDAQ: COIN).
The real concern among most banking investors is the uncertainty of future growth prospects. Moreover, the public remains less informed on the real happenings in the banking sector.
“Nobody knows where these banks should be trading because what we saw with Silicon Valley Bank is that the fundamentals can change so quickly. This normally would have been a great opportunity to buy banks with premier regional presence and it may be, but the real concern is nobody knows what the rules are and what they are valued at,” said Tom Plumb, portfolio manager at Plumb Balanced Fund in Madison, Wisconsin.
During the first quarter, PacWest reported adjusted earnings of $89.4 million, reciprocating to $0.66 per diluted share. However, the company noted that it posted a net loss available to common stockholders of $1.21 billion, representing a loss of $10.22 per diluted share.