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PacWest Bancorp (NASDAQ:PACW) shares are in the spotlight Wednesday after the stock led regional banks lower on Tuesday on the heels of the third major bank collapse of 2023, which increased selling pressure on the banking sector.
What Happened: Following the collapse of SVB Financial Group and Signature Bank, several banks experienced elevated net deposit outflows, but First Republic Bank (NYSE:FRC) was impacted the most.
The regional bank pulled several levers in an attempt to instill confidence for depositors, but ultimately JPMorgan Chase & Co (NYSE:JPM) acquired a substantial majority of assets and assumed deposits and other liabilities of First Republic from the FDIC after winning an auction over the weekend.
The acquisition is expected to benefit JPMorgan as it further advances the bank's wealth strategy and complements JPM overall. However, lingering uncertainty about broader contagion in the banking system persists.
First Republic’s downfall marked the largest bank failure since the 2008 financial crisis. Broader concerns around the banking sector, combined with uncertainty surrounding the Federal Reserve's upcoming decision on rates has pressured the financials.
The Fed is due to make a rate decision Wednesday afternoon. Most expect the committee to opt for another 0.25% hike.
See Also: PacWest Bancorp Joins Regional Bank Selloff, Options Traders See Further Downside In Store
PACW Price Action: PacWest shares fell 27.8% on Tuesday after being halted for volatility several times. The stock was down another 1.07% at $6.48 Wednesday morning, according to Benzinga Pro.
Photo: Myfuture.com from Flickr.
