Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
PacWest falls 50% after hours on report bank is weighing sale
”PacWest Bancorp shares tumbled 53% in extended trading on Wednesday following a report that the bank is weighing strategic options, including a potential sale. The regional bank has been assessing options, including a breakup or a capital raise, according to a Bloomberg report citing sources familiar. A formal sale has yet to start as PacWest does not have many potential buyers interested in the whole firm, the report said.”
I've been following this as a customer. Our HOA fees are processed by Pacific Western Bank.
We were supposed to have moved to a better (whatever that means) bank months ago. I don't know what the holdup has been; I'm just glad to have quit as Treasurer last year before this banking mess started.
First Jamie Dimon (after feasting on First Republic/FRC), and then Powell (yesterday), declared the end of regional banking crisis. Those pronouncements may have been very premature.
This AM, there are at least 3 banks on the verge of collapse - PACW, WAL, FHN (after the deal with TD fell through). The same issues remain - underwater HTM Treasuries/MBS and CRE holdings, fast bank runs.
As the deal collapse of TD + FHN shows, other banks may not step in now to buy shaky regionals because it may be better for those regionals to first go through the FDIC takeover, and then a fire sale.
There is talk/rumors on Twitter again that the Treasury is looking into extending the FDIC deposit insurance to contain this regional banking crisis/contagion.
Regional bank KRE remains under pressure although now I have a low-ball limit-order to BUY.
I’m looking for the Fed’s OMC (Open Mouth Committee) to kick into gear by week’s end - possibly today. Unfortunately for FRC, it fell over the cliff during the blackout period.
Also - Thanks @Catch for the linked chart of today’s regional bank declines. Umm … maybe best viewed sitting down with hand on a cold one.
Bloomberg is reporting that the Senate Banking Committee is meeting today and attempting to place the blame for this mess on bank management. Others may disagree, but to me that ignores the real elephant in the room - that being the overly restrictive Fed tightening.
More - What I read is that PACW doesn’t fit the same mold of SVC and FRC. It is much better capitalized. Likely short sellers are hard at work here.
FOR IMMEDIATE RELEASE ... The bank has not experienced out-of-the-ordinary deposit flows following the sale of First Republic Bank and other news. Core customer deposits have increased since March 31, 2023, with total deposits totaling $28 billion as of May 2, 2023 with insured deposits totaling 75% vs. 71% at quarter end and 73% as of April 24, 2023.
It's not in the same class. Facts rarely halt the thundering herds, however, once they get started.
Reuters: U.S. officials assessing possible 'manipulation' on banking shares
Increased short-selling activity and volatility in shares have drawn increasing scrutiny by federal and state officials and regulators in recent days, given strong fundamentals in the sector and sufficient capital levels, said the source, who was not authorized to speak publicly.
"State and federal regulators and officials are increasingly attentive to the possibility of market manipulation regarding banking equities," the source said. ... Short selling ... is not illegal and considered part of a healthy market. But manipulating stock prices, which the SEC has defined as the 'intentional or willful conduct designed to deceive or defraud investors by controlling or artificially affecting" stock prices, is.
According to Financial Times and Business Today, the three that had already fallen shared the same auditors, KPMG. Naturally, I checked on PacWest and they too seem to use KPMG which I assume means their bank side too. Financial Times (only let me through once without subscription) was trying to paint a picture where such failures fall on the head of auditors. On the other hand, KPMG is a major player and probably has a zillion clients that haven't produced good results prior to the rate increases that went sour after the increases. That's OK in FT's mind. They end the article saying auditors should be able to anticipate the future. I ended up glad that I wasn't an auditor.
Believe a lot of money has both been made and lost on this one. Makes one wonder what really moves these (regional banking) markets. And who has access to what information. Simply attributable to Charles Mackay’s “The Madness of Crowds? Pardon my skepticism.
Comments
We were supposed to have moved to a better (whatever that means) bank months ago. I don't know what the holdup has been; I'm just glad to have quit as Treasurer last year before this banking mess started.
This AM, there are at least 3 banks on the verge of collapse - PACW, WAL, FHN (after the deal with TD fell through). The same issues remain - underwater HTM Treasuries/MBS and CRE holdings, fast bank runs.
As the deal collapse of TD + FHN shows, other banks may not step in now to buy shaky regionals because it may be better for those regionals to first go through the FDIC takeover, and then a fire sale.
There is talk/rumors on Twitter again that the Treasury is looking into extending the FDIC deposit insurance to contain this regional banking crisis/contagion.
Regional bank KRE remains under pressure although now I have a low-ball limit-order to BUY.
https://www.nasdaq.com/market-activity/stocks/pacw
https://www.nasdaq.com/market-activity/stocks/wal
https://www.nasdaq.com/market-activity/stocks/fhn
Repeat after me … ”The U.S. banking system is sound and resilient.”
Google Finance, losers list, 5-4-23 @10:48
Several banks on this list again today.
Also - Thanks @Catch for the linked chart of today’s regional bank declines. Umm … maybe best viewed sitting down with hand on a cold one.
Bloomberg is reporting that the Senate Banking Committee is meeting today and attempting to place the blame for this mess on bank management. Others may disagree, but to me that ignores the real elephant in the room - that being the overly restrictive Fed tightening.
More - What I read is that PACW doesn’t fit the same mold of SVC and FRC. It is much better capitalized. Likely short sellers are hard at work here.
(I owned it for about 3-4 hours today.)
I agree this is crazy. Thundering herd for sure. Hopefully, they’ll find a buyer - soon.
Reuters: U.S. officials assessing possible 'manipulation' on banking shares https://www.reuters.com/markets/us/us-officials-assessing-possible-manipulation-banking-shares-source-2023-05-04/
BT
KPMG is common factor among 3 US bank failures in last 2 months; here's how
FT (subscription)
Three failed US banks had one thing in common: KPMG
Believe a lot of money has both been made and lost on this one. Makes one wonder what really moves these (regional banking) markets. And who has access to what information. Simply attributable to Charles Mackay’s “The Madness of Crowds? Pardon my skepticism.
@hank- Ask, and you may (or may not) receive-
Matt Levine answers hank's question