22. February 2024

• PacWest stock (PACW) has suffered a record low after a 60% decline following news that the company is considering strategic options.
• Despite the bank’s assurance of solid liquidity and deposits, investors remain concerned about insolvency.
• Experts disagree on the future outlook for PacWest, with some expecting collapse and others expecting an investor opportunity.

PacWest Plunges to Record Low

PacWest Bancorp (PACW) saw its stock plunge to an all-time low of $3.17 in presale on May 5, after the bank’s readiness to “explore strategic options” sent investors scrambling. The PACW price per share had already dropped 80% in early March due to banking sector woes. However, despite assurances from PacWest representatives and Fed Chair Jerome Powell, investor angst remains high leading to another 60% decline in 24 hours.

Exploring Strategic Options

PacWest representatives told Bloomberg they are “weighing strategic options” up to considering a possible sale which was enough to send potential depositors running. People associated with the matter confirmed that the company hadn’t started a formal auction process yet but were open to a potential sale.

Potential Insolvency

Judging by the plunging stock price and the depositors’ distrust, the bank is likely to declare insolvency in the coming days due to their vulnerability with high-interest rates and uninsured deposits according Greg Nini, finance professor at Drexel University who said “It sure sounds like collapse is possible.”

Opposing Outlooks

Conversely, Julian Vogel, a finance professor at San Jose State University disagreed with this grim outlook claiming there may be an investor opportunity instead.

Conclusion

In conclusion, PacWest Bancorp (PACW) has seen its stock drop significantly as investors remain worried about a possible sale triggering another run on deposits leading some experts predicting insolvency ahead despite strong fundamentals of the bank. There are opposing views on what lies ahead for PacWest however only time will tell if it will be able survive or not through these difficult times