A Pacific Western Bank branch in Los Angeles, California, US, on Friday, March 10, 2023.
Eric Thayer | Bloomberg | Getty Images
Regional bank stocks fell sharply Tuesday as the fallout from the third major bank failure this year continued to put pressure on the sector.
Shares of PacWest fell more than 36% on Tuesday and was on track for its fourth-straight negative session. The stock was halted for volatility multiple times.
PacWest’s stock fell again on Tuesday.
The California-based bank was not the only regional lender under pressure. Shares of Western Alliance dropped 24%. The SPDR S&P Regional Banking ETF (KRE) sank 6.7%.
The steep declines deepened losses in the sector from Monday. Over the weekend, regulators seized troubled regional bank First Republic and sold it to JPMorgan Chase.
First Republic is the third failure of a large regional bank this year, following Silicon Valley Bank and Signature Bank in March.
The reasons for Tuesday’s declines were not immediately clear. JPMorgan Chase CEO Jamie Dimon said Monday that the initial phase of the regional bank crisis was “over.”
First Republic reported a decline in deposits of about 40% during the first quarter, raising questions about how the bank could survive on its own.
Most other regional banks reported smaller deposits declines, however, and some like PacWest reported that deposits began rebounding in late March.
