![]() But for investors who don’t want to roll the dice, it’s best to stay away from this stock until the dangers pass.įor more on PacWest, see this story from writer Josh Enomoto. PacWest could, of course, reward speculators handsomely if its board can engineer a timely sale. Heavy media attention also means virtually every PacWest customer is seeing commentators fret about their bank on live TV. The firm’s top 10 depositors represent 9.1% of total deposits, meaning that the actions of a handful of large businesses could deplete PacWest’s capital cushions within hours, if not minutes. The recent events at First Republic means that PacWest could now fall further in the ranks. It’s a risky strategy that places the firm squarely in the bottom quintile of American banks based on my risk metrics. ![]() The firm uses excess leverage to pump its below-average return on assets (ROA) into an above-average return on equity (ROE). In ordinary times, PacWest shares would have already seemed unattractive. Friday’s rebound still leaves the stock down over three quarters for the year. According to a poll by Gallup, almost half of Americans now worry that their bank deposits aren’t safe anymore, and the Los Angeles-based bank’s situation personifies these fears. Shares of PacWest sank another 40% on Thursday after the regional bank announced it was considering “all strategic options” for its survival. So, as the 2023 banking crisis continues to develop, here are five banks that look like they could fold next… The writers at – our free stock market news and analysis website – have been on the story all week long. It takes far more than a single-day rally to calm nerves. When investors bank stakeholders start getting skittish, even firms like Goldman Sachs (NYSE: GS) can require bailouts from the likes of Warren Buffett (as it did in 2008). It’s a self-fulfilling prophecy that can sink even the strongest of lenders. That risks forcing banks to raise capital to meet these requests, which could spook depositors, and so on. Even if these regional banks are 100% solvent, their slumping share prices are causing nervous bank customers to withdraw cash anyways. ![]() That’s because we’re seeing a crisis of confidence. However, today’s banking crisis runs deeper than pure numbers suggest. From an accounting standpoint, First Republic’s key rivals seem like they should muddle through. And Western Alliance Bancorp (NYSE: WAL) announced on May 3 that deposits had risen $1.2 billion since March 31. PacWest Bancorp (NASDAQ: PACW) was trading at roughly 0.3X tangible book value before Friday’s surge. ![]() First Republic rivals are now trading at value levels never before seen. This NYSE suspension quashed any hope of redemption and sent shares of other regional banks tumbling.Īt first glance, value investors might sense an opportunity. The stock had been hovering at $3.50 before the halt on the possibility of a white-knight takeover or a potential government bailout. On Tuesday, the New York Stock Exchange surprised markets by immediately suspending all trading in First Republic Bank shares. To get news like this delivered straight to your inbox, click here. This article is an excerpt from the InvestorPlace Digest newsletter. ![]()
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