Pacwest Bank, a regional bank based in Beverly Hills, California, experienced a sharp drop in its stock price following the release of its first-quarter earnings report. The bank’s shares plummeted by 35% on Tuesday at 11:00 a.m. Eastern Time, due to a “net loss available to common stockholders of $1.21 billion, or a loss of $10.22 per diluted share.”
Bank Failures in March
The upheaval at Pacwest comes after First Republic Bank’s recent collapse and three major bank failures that occurred in March. However, despite these failures, President Joe Biden reassured the public on Monday that the banking industry is on track toward “stabilization.”
Other Banks Also Affected
Pacwest is not the only bank experiencing losses on Tuesday. Western Alliance and Metropolitan Bank have also seen sharp declines in their stock prices during today’s trading sessions.
Cryptocurrencies and Precious Metals on the Rise
While conventional equity markets are down, cryptocurrencies and precious metals have experienced growth amidst the banking industry’s tribulations. The top two leading cryptocurrencies, bitcoin (BTC) and ethereum (ETH), increased by 1.1% to 1.5% in the wake of Wall Street’s turmoil. At the same time, the precious metals gold and silver have also surged in value against the U.S. dollar, with gains ranging between 1.4% and 1.54%.
CFRA analyst Alexander Yokum told Marketwatch that while taxpayers will not be responsible for these bank failures, financial institutions are likely to increase fees. “All the costs of bank failures will be borne by banks and not taxpayers, although we expect banks to indirectly pass along many of these costs to customers through higher fees and higher interest rates on loans,” Yokum stated.
After dropping more than 35% on Tuesday, Pacwest shares have rebounded slightly and are currently down between 22% to 27% against the greenback. It remains to be seen how the banking industry will fare in the coming weeks and months as it continues to grapple with the challenges of the current economic climate.