Traders work on the floor of the New York Stock Exchange on April 26, 2023 in New York City.
Michael M. Santiago | Getty Images
The rout in regional banks picked up steam again on Thursday morning, with several stocks poised to open trading with sizeable losses.
PacWest sank 40% in premarket trading. The slide began on Wednesday evening following news that the Los Angeles-based bank was exploring strategic options, including a potential sale.
Shares of PacWest were poised to open sharply lower on Thursday.
The bank said in a statement that it “will continue to evaluate all options to maximize shareholder value.” PacWest’s strategic review was first reported by Bloomberg News and later confirmed by CNBC.
Meanwhile, Tennessee-based First Horizon also fell 40% after the regional lender and TD Bank announced that they were terminating their merger agreement. The banks said in a press release that the move was due to uncertainty around when TD would receive regulatory approval for the deal and was not related to First Horizon.
Shares of First Horizon were under pressure after the lenders’ merger with TD Bank was called off.
Other notable declines included a drop of more than 13% for Western Alliance and about 11% for Zions Bancorp. The SPDR S&P Regional Banking ETF (KRE) was down 3.7%.
Thursday’s moves come less than a week after First Republic was seized by regulators and sold at a discount to JPMorgan Chase, marking the the third failure of a regional bank since the start of March.
First Republic had searched for weeks for a market solution to stabilize itself after massive deposit withdrawals in the first quarter, but none materialized and regulators stepped in.
Many regional banks saw deposit outflows in March around the collapse of Silicon Valley Bank, raising questions about the stability of their funding and the value of some assets on their books that were not marked to market. Expected regulatory changes have also clouded the long-term profit outlook for the group.
JPMorgan CEO Jamie Dimon and Federal Reserve Chair Jerome Powell expressed optimism this week that the initial wave of bank failures has passed, but the drops for the stocks show that investors still lack confidence.
