• PacWest Bancorp’s stock (PACW) plummeted to an all-time low after the bank announced they are “weighing strategic options.”
• Despite the bank assuring of their strong fundamentals, investors panicked and its price dropped another 60% in 24 hours.
• Experts assume insolvency ahead due to panic despite the bank’s strong fundamentals.

PacWest Bancorp Price Plunges

PacWest Bancorp’s stock (PACW) plummeted to an all-time low of $3.17 in presale on May 5th, following their announcement that they were “weighing strategic options”. After the Silicon Valley Bank contagion hit middle-sized US lenders, PacWest representatives claimed deposits had increased since then but this was not enough to calm markets after the stock rout.

Depositor Angst Remains High

Despite PacWest’s assurances and Fed Chair Jerome Powell’s assessment of banking sector health, depositor angst remained high when they announced exploring strategic options. This caused PACW stock to drop another 60% in 24 hours as potential depositors ran away from the bank. However, those associated with the matter have asserted that the company has not started a formal auction process yet despite being open to a potential sale.

What Lies Ahead for PacWest?

Judging by the plunging stock price and depositors’ distrust of the bank, it is likely that PacWest will declare insolvency soon. Additionally, its balance sheet carries securities vulnerable to high-interest rates and a share of its deposits are uninsured which could contribute towards its downfall. Finance professors Greg Nini from Drexel University called these vulnerabilities “important ingredients” in predicting a possible collapse while Julian Vogel from San Jose State University disagreed with this outlook from an investor standpoint stating there may be some hope for them yet.

Expert Opinions on Possible Bank Sale

People associated with Pac West assure that no formal auction process has been set up yet although they remain open to a potential sale. Despite this assurance, experts still believe insolvency is on the horizon due to panicking investors despite their strong fundamentals and liquidity remaining solid and exceeding uninsured deposits according to Pac West officials themselves.

Conclusion

Although Pac West officials have assured potential depositors of their strength and liquidity remaining solid, investors have panicked causing PACW stock prices plummeting 80% since March and another 60% within 24 hours when they announced exploring strategic options leading many experts believing insolvency is inevitable despite no formal auction process being set up yet.

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