PacWest Bancorp is currently weighing strategic options, including a possible sale, which has caused the bank’s shares to plummet more than 50% in after-hours trading. According to sources, Piper Sandler and Stephens have been brought in to evaluate longer-term plans for the business. Many West Coast regional banks have been hit hard since the collapse of Silicon Valley Bank in March due to concerns that their customer bases are similar. First Republic Bank was also recently seized by regulators and sold to JPMorgan Chase. PacWest’s market cap is roughly $750 million and the stock is down by 72% this year. The bank’s shares declined nearly 2% during the regular session on Wednesday, marking their fifth straight losing day.
The recent collapse of First Republic Bank has sparked concerns about the stability of the U.S. banking system and its impact on the broader economy. With nearly $230 billion in assets, the bank’s failure marks the second-largest bank collapse in the nation’s history, highlighting vulnerabilities in the banking industry. Moreover, U.S. banks are facing unrealized losses of up to $1.7 trillion due to economic uncertainty. The commercial real estate industry poses a significant risk to regional banks, with small and regional banks accounting for 80 percent of the $3.1 trillion in commercial mortgages. As remote work gains popularity, office buildings have lost value, leading to an increased likelihood of defaults. Market selloffs and bank runs could further threaten the stability of the U.S. banking system, as evidenced by the 2.4 percent dip in the exchange-traded fund for regional banks such as First Republic. Meanwhile, JPMorgan’s stock rose 2.3 percent on Monday.
First Republic Bank Reports $100B in Deposits Pulled During Crisis as Large Banks Step in to Save the Day
Depositors at First Republic Bank pulled more than $100 billion in deposits out of the bank during last month’s crisis, according to the bank’s first quarter results. Fears swirled that it could be the third bank to fail in the wake of the collapse of Silicon Valley Bank and Signature Bank. However, a group of large banks stepped in to save the day by depositing $30 billion in uninsured deposits in First Republic. The bank’s profits fell 33% from a year earlier and revenues were down 13%, signaling the impact of the crisis. Nevertheless, with the help of other large banks, First Republic was able to prevent further damage and look to the future of the banking industry in the midst of uncertain times.