PacWest Bancorp’s Imminent Demise Shows Bank Turmoil Is Widening To Smaller Banks

Today we have reached the point when the tide has gone out, and we are seeing who has been swimming naked. A third Califonia-headquarted bank, in the less than two months, is looking like it is on the verge of collapse. As of today, PacWest Bancorp’s
PACW
stock has decreased 90% since March 7, the day before Silicon Valley Bank failed. That decline is far more severe than the 34% decline of the S&P Regional Banks Select Industry Index in the same period. And there is no respite in site for PacWest; today, when Bloomberg reported that PacWest was looking for a buyer, the stock plummeted over 55% in a matter of a couple of hours.

With the Federal Reserve’s tenth interest rate hike in fourteen months, PacWest and other banks are showing that they severely underestimated the impact of high interest rates. And even if the Fed pauses its rate hikes, PacWest showed today that the recent bank turmoil is now headed to smaller banks than the ones that have failed so far.