The California-based PacWest Bancorp saw its shares plunge by 23% yesterday, after the bank revealed that its deposits had dropped by 9.5% in the week ending May 5. According to the Wall Street Journal, the decline was related to reports that PacWest had said it was considering a range of options, including a sale. Shares are now trading at 24% of book value, as customers fear for the safety of their deposits.
At the same time, bond investors are demanding higher yields to own the bonds of regional banks, which puts further pressure on lenders, the Journal explains. Since March 8, PacWest’s shares have lost almost 80%. Yet now, bank analysts are chirping that things are looking up and the worst may be over—even with the big drop in PacWest’s shares. What are they smoking?
