Shares of U.S. regional banks PacWest Bancorp (PACW.O) and Western Alliance Bank (WAL.N) plunged on Tuesday as the demise of First Republic Bank (FRC.N) triggered investor concerns about the financial health of other mid-sized lenders.
JPMorgan Chase (JPM.N) agreed on Monday to acquire a majority of First Republic’s assets in a $10.6 billion deal after regulators seized the lender, which became the largest U.S. bank failure since the 2008 financial crisis.
Investors fear the latest turmoil, which began with the failures of Silicon Valley Bank and Signature Bank in March, could spread to other regional banks.
“If a ‘confidence crisis’ can happen to First Republic, it can happen to any bank in this country,” said Jake Dollarhide, CEO of Longbow Asset Management.
“This is potentially a big deal, which hopefully won’t materialize to anything significant,” he added.
Los Angeles-based PacWest tumbled by more than 27%. It is ranked 53rd among U.S. lenders with $41.2 billion in assets as of the end of last year, according to Federal Reserve data.
Phoenix, Arizona-based lender Western Alliance, the No. 40 U.S. bank with $68 billion in assets, sank 15% while Cleveland, Ohio-based KeyCorp (KEY.N), the 20th largest bank with $188 billion in assets, fell 9%.
