The Regional Bank Selloff Visualized
A look at the health of six regional lenders
In a week that included another interest-rate hike by the Federal Reserve and a rescue of First Republic by JPMorgan Chase, the KBW Regional Banking Index, which tracks regional banks in the U.S., was down 28% this year, through Friday.
This comes after two months of turbulence in the banking industry that was triggered by the collapse of regional lenders Silicon Valley Bank and Signature Bank. Some banks have suffered more than others. PacWest Bancorp PACW 81.70%increase; green up pointing triangle has seen its market capitalization decline by 75% this year. Metropolitan Bank Holding’s MCB 16.21%increase; green up pointing triangle market cap shrank by 60% since the beginning of the year, while Western Alliance Bancorp WAL 49.23%increase; green up pointing triangle and First Horizon’s value waned by 53% and 55%, respectively.
Each bank experienced a reduction in deposits during the first quarter. As the Fed continued raising interest rates this year, many customers moved their money out of checking accounts and into products such as money-market funds and Treasurys, which are paying greater yields.
Short interest in regional-bank stocks has picked up since Silicon Valley Bank failed in mid-March. As of Wednesday, more than 18% of PacWest’s shares were sold short, according to data from S3 Partners.
Short sellers, often active institutional investors, sell shares that they have borrowed in hopes that they can buy them back at a lower price.