Bank stocks dove early Thursday, continuing their after-hours spiral Wednesday on Bloomberg reports that PacWest Bancorp is considering strategic options. The banking industry received another shock this week after drowning First Republic Bank failed and was sold to JPMorgan on Monday.
Gensler Statement
SEC Chair Gary Gensler issued a statement late Thursday on current market events. "As I've said, in times of increased volatility and uncertainty, the SEC is particularly focused on identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly," Gensler wrote.
He issued a similar statement on March 12 at the start of the banking panic. "We will investigate and bring enforcement actions if we find violations of the federal securities law," Gensler wrote at the time.
PacWest Update, Exploring Options
Beverly Hills, Calif.-based PacWest, another heavily battered regional bank, is weighing strategic options, including a possible sale, Bloomberg reported late Wednesday. PacWest has been working with a financial advisor and mulling a breakup or capital raise, according to sources familiar with the matter.
PacWest issued an update overnight detailing its strategy. The company moved its $2.7 billion Lender Finance loan portfolio to held-for-sale in the first quarter. And that planned sale remains on track, PacWest said.
PacWest noted it has been approached by several potential partners and investors and discussions are ongoing. The bank says it has not experienced out-of-the-ordinary deposit flows following the First Republic sale earlier this week.
Total deposits were $28 billion as of May 2, increasing from the end of the previous quarter. Insured deposits rose to 75% as of May 2, up from 73% on April 24 and 71% at quarter-end, respectively.
Western Alliance Denies Deal Talk, Explores Legal Options
WAL shares dove further Thursday after unconfirmed reports from the Financial Times that Phoenix-based Western Alliance hired advisors to explore strategic options, including selling part or all of its business.
In a statement following publication, Western Alliance called the Financial Times story "categorically false in all respects."
"There is not a single element of the article that is true. Western Alliance is not exploring a sale, nor has it hired an advisor to explore strategic options," the bank wrote.
Western Alliance bashed FT, saying they were spreading false narratives about "a financially sound and profitable bank." The company plans to explore legal options in response to the article.
Western Alliance announced Wednesday that its total deposits stood at $48.8 billion as of Tuesday, increasing from $48.2 billion as of Monday. As of May 2, more than 74% of its total deposits were insured, the company reported.
Bank Stocks
Financial stocks tumbled Thursday. Shares spiraled Tuesday following the First Republic sale and continued their descent Wednesday after the Fed rate hike and PacWest reports.
PACW stock dove more than 50% Thursday and trading was temporarily paused around 9:40 a.m. ET. Shares dropped more than 50% Wednesday night. Western Alliance shaved about 39% off its stock price.
Toronto-Dominion Bank and Tennessee-based First Horizon called off their $13.4 billion merger, citing regulatory concerns. Clearly, the deal faced a shifting bank environment as well. FHN stock tanked 33% Thursday, while TD stock rose modestly.
Zions Bancorp unraveled nearly 12% during trading. KeyCorp retreated 6.4% on the day. The SPDR S&P Regional Banking ETF slumped 5.6%
Among larger banks, JPMorgan edged lower, posting its third straight day of declines this week. Bank of America and Morgan Stanley also eased more than 2.5%.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
