PacWest and Other Midsize Banks Tumble 📉

PacWest and Other Midsize Banks Tumble

Following weeks of uncertainty over the strength of the American financial industry, the fall and takeover of First Republic have continued to ripple throughout midsized firms and the consumer. At the end of Thursday’s trading day, the newest player to succumb to bankruptcy threats is LA-based PacWest Bancorp, plummeting 22.70% after announcing their recent deposit numbers. Last week, PacWest Bancorp lost 9.5% of their total deposits over fears of uninsured protection and financial instability, a growing consumer trend that caused the falls of Silvergate Capital, SVB, and First Republic. Since March 8th, PacWest stock has lost roughly 80% of its value, with losses seen throughout most midsized banks across the country.

In the current macro environment, banks and their shareholders have encapsulated the destructive power higher interest rates have had on several industries. In the case of banks, irrational pressures of fear have forced banks to realize loans that have been corrupted by higher borrowing costs, leading to a snowball effect known as a death spiral. With the newest readings of April’s inflation data showing a cooling CPI and PPI, there is a chance the Federal Reserve will take a dovish position on their fiscal policy and pause interest rates at the next meeting. Coupled with the higher-than-expected jobless claims for this week, there is growing anticipation for Federal rate cuts later this year. Nonetheless, several prominent investors such as Warren Buffett believe bank customers’ worry over the safety of their money is unwarranted, and in the case of any unfortunate event, the federal government will step in to protect all insured and uninsured deposits as was for the case of the previous collapses.

Want to learn how to invest? Download the Invstr app, where you can play Fantasy Finance and manage a virtual investment portfolio or open a brokerage account and invest for real. Take our interactive investing course on Invstr Academy and become a better investor today!

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

Share:
More Posts
The New Chip 💻

AMD has unveiled an AI-focused graphics processor, aiming to challenge Nvidia’s dominance.

Get your daily Invstr Crunch

Get the market news and updates you need, delivered to your inbox or available on our daily podcast.

Risk Disclosure:

Invstr is not a bank and banking services are provided by Vast Bank, N.A.

Brokerage and Banking services are currently only available to U.S. residents.

Invstr app and web services are provided by Invstr Ltd. Advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC) details of which can be obtained here. Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value.

Investing involves risk and can lead to losses. Past performance does not guarantee future results.

Invstr app and web services are provided by Invstr Ltd. Invstr+ advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC). Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value. Vast Bank N.A. a nationally chartered bank and member of the FDIC, provides the banking products, including the products and services related to digital asset accounts. As with any asset, the value of Digital assets can go up or down and there can be a substantial risk that you lose money buying or holding digital assets. You should carefully consider whether trading or holding Digital assets is suitable for you in light of your financial condition. Your digital account does not support wallet to wallet transferring of your digital assets (i.e. cryptocurrencies) outside the platform. Any Digital Assets in your digital asset account are not insured by any government entities, including but not limited to FDIC or SIPC. The Invstr Visa® Debit Card is issued by Vast Bank, N.A. pursuant to a license from Visa U.S.A Inc and may be used everywhere Visa debit cards are accepted. Invstr Ltd, Invstr Financial LLC and Invstr Securities Ltd are subsidiaries of Marketspringpad Holdings (collectively “Invstr”) and Invstr is solely responsible for the application services and website content.

Watchlists provided when users first access the service are not a recommendation to invest. Instead they are provided to help users better navigate the service. Users are free to edit and create their own watchlists. From time to time, Invstr will suggest instruments solely based on an individual’s interest and the interest levels of the Invstr community. The statistical and portfolio builder models generated by Invstr do not reflect actual investment results and are not guarantees of future results. Comments provided by Invstr leaders, influencers or members of the Invstr Community are not recommendations and should not be construed as such. Invstr does not endorse the content or the positions posted by them. Their investment approach, and that of the models provided by Invstr, may be different from yours and may not be appropriate for you.