On Tuesday, PacWest Bancorp shares (PACW.O) recovered some of their earlier session losses as jittery trading in their equities was driven by investor uncertainty regarding the financial stability of US regional banks.
After dropping as much as 10% earlier in the day as a result of the Los Angeles-based lender’s decision to reduce its quarterly dividend in an effort to increase its liquidity, PacWest gained 2.3%.
Bank’s Stocks Increased
After a brutal sell-off that brought its stock to a record low last week, the bank’s stock has increased by more than 92% in the following three sessions.
According to Piper Sandler analyst Matthew Clark, who has an “overweight” recommendation on PacWest shares, “We think that PacWest and other banks have not been pricing in line with their fundamentals.
The shares of other locVolatility have returned. We had hoped that (First Republic’s) resolve would restore some composure and calmer heads to the market. Instead, it appeared to just re-intensify wild price swings, according to analysts at Piper Sandler led by Scott Siefers.
PacWest Bancorp Leads US regional banks Shares Lower
Rate-Hike Cycle
The head of the New York Federal Reserve, John Williams, stated on Tuesday that the US regional banking system was still strong and resilient and that the ongoing crisis’ acute phase was likely finished with the exception of a few banks. Western Alliance (WAL.N), Valley National Bancorp (VLY.O), First Horizon Corp (FHN.N), and Synovus Financial Corp (SNV.N) all had declines of 1.4%, 1.5%, 1.3%, and over 1%, respectively. However, Zion Bancorp (ZION.O) and Comerica Inc (CMA.N) saw gains of 0.39% and 0.66%, respectively.
After First Republic Bank failed and PacWest decided to look at its alternatives, the KBW US Regional Banking Index (.KRX) fell 0.72% on Tuesday and was trading close to its 30-month low.
Williams added that the Fed was considering ending its rate-hike cycle because of easing inflation pressures and the expectation that tighter financial conditions brought on by problems in the banking sector would further slow the economy.
According to data from S&P Global Market Intelligence, PacWest and Western Alliance, which have been at the center of the recent sell-off in regional banks, experienced the second-sharpest decline in deposits in the first quarter behind First Republic Bank.
