PACW - Regional bank stocks still vulnerable as selloff continues at PacWest Western Alliance

2023-05-03 05:23:05 ET

Regional bank stocks closed at their lowest level since 2020 on Tuesday following the collapse of First Republic Bank ( FRC ). Investors are still debating whether the sector will see broader contagion ahead of an expected U.S. rate hike later from the Federal Reserve that could once-again rattle the banking sector.

Even recent developments and market movement are being debated, like the severe losses concentrated at PacWest ( NASDAQ: PACW ) and Western Alliance ( NYSE: WAL ), which tumbled 27% and 15% , respectively, on Tuesday . The selloff continued overnight, with PACW and WAL down another 11% and 8% in premarket trading.

Some say that there has been no change in the fundamentals, and the only reason why the stocks selling off is because of their venture-focused business models, which mirror those of recently failed lenders like Silicon Valley Bank.

While both PacWest ( PACW ) and Western Alliance ( WAL ) also posted earnings results in April that indicating their deposit bases had stabilized, others feel that shareholders and depositors running for the exit at the same time is a recipe for disaster, and could rekindle the regional banking crisis.

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