PacWest Bancorp Stock Rallied 36.5% on Upbeat Market Sentiment

The PacWest Bancorp (NASDAQ: PACW) stock price rallied 36.5%, extending the 81.7% gain made on Friday as the bank reiterated that its business remained sound. The regional bank also slashed its quarterly dividend payout to 1 cent to preserve its capital.

The rebound witnessed in most regional banking stocks on Friday seems intact as investor sentiment towards the bank turned positive despite its business conditions remaining unchanged. Nothing has changed in terms of the bank’s fundamentals since last week.

Other regional banks, including Zions Bancorp and Western Alliance Bancorp, also joined in the rally lifting the KBW Regional Banking Index higher after an 8% drop last week. The rally in the regional banks underlines the cooling of jitters about the health of the US financial system. 

However, broader industry trackers such as the S&P 500 financials are not painting an optimistic picture of the banking sector, given that the index is about to drop below its 2007 peak, which could signal tough times ahead for the financial sector. 

It remains to be seen if the positive investor sentiment towards regional banks and the banking sector in general will continue, given that we are just at the beginning of the week. If the positive sentiment persists, we will likely see banking stocks, including PacWest Bank rally higher over time. 

Still, PacWest is considering multiple options, including a potential sale to a much bigger rival or another financial bidder, such as a hedge fund or a private equity firm. The bank is currently working on shoring up its capital base, and we could see it issue new stock if its stock price remains elevated. 

Meanwhile, concerns about the broader financial industry will persist into the foreseeable future given the tough operating conditions facing the banking industry amid record-high interest rates and the Fed’s hawkish monetary policy stance. 

However, many would prefer to see PacWest on more solid ground, especially if it secures additional cash to boost its balance sheet. The bank is yet to make any announcements regarding the options it is exploring, which is much awaited. 

*This is not investment advice. 

PacWest Bancorp stock price. 

The PacWest Bancorp stock price was trading up 36.46% at $7.86, from Friday’s closing price of $5.76.