Regional banks rally after getting hammered last week

FAN Editor

Struggling banks cause unease on Wall Street

Struggling banks create uncertainty for Wall Street 02:10

Regional banks continued to rally on Monday and shook off the steep market losses they experienced last week.

PacWest shares shot up 20% in early trading on Monday, while Western Alliance and Zions rose 3%. The rebound comes after midsize lenders saw their shared nosedive following the sudden collapse of Silicon Valley Bank and Signature Bank, and more recently with JPMorgan Chase’s emergency takeover last week of First Republic Bank.  

Despite the recent turbulence in banking, PacWest “remains fundamentally sound,” CEO Paul Taylor said Friday in announcing that the $44 billion bank would cut its quarterly dividend. 

Shares of PacWest, Western Alliance and other regional banks slumped after California regulators seized First Republic on May 1 as customers rushed to withdraw $100 billion from the Los Angeles lender. The Federal Deposit Insurance Corporation then sold most of First Republic’s assets to JPMorgan. 

Nearly half of Americans are worried about their money in banks, survey shows 03:57

After the First Republic move, investors worried that other regional banks could suffer the same fate, fueling concerns about the companies’ prospects. With its stock price tumbling, PacWest said last week it was exploring a possible sale.

Still, Wall Street analysts noted that PacWest is in solid financial shape and does not share the same attributes that made SVB and First Republic vulnerable to a bank run. Notably, PacWest has far less in uninsured deposits — client funds in excess of the $250,000 account cap guaranteed by the U.S. — than SVB did when it capsized

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