Battered regional bank stocks turned mixed Monday after rallying in the morning. Shares opened higher to continue their Friday rebound as they fight to claw back some losses that followed last week's failure of First Republic Bank. PacWest Bancorp led the charge early Monday, following its 82% rocket Friday. Meanwhile, Zions was among the S&P 500's top performers before the opening bell.
PacWest Slashes Dividend
Shares of PacWest Bancorp rose 3.7% Monday after surging 19% in early trading after the bank moved to preserve capital by slashing its dividend late Friday. PacWest cut its dividend to 1 cent per share late Friday from 25 cents per share in the previous quarter.
PacWest CEO Paul Taylor called the cut a "prudent step" given economic uncertainty, banking sector volatility and potential regulatory changes to capital requirements. "Our business remains fundamentally sound," Taylor said in the announcement.
PACW stock rocketed 82% higher Friday, trimming its loss for the week to 43%. The bank toppled Wednesday after reports that PacWest was exploring strategic options, including a potential sale. PACW stock ended Monday down about 74% so far this year.
Regional Bank Stocks
Most bank stocks made more modest moves Monday.
Western Alliance edged 0.75% higher, adding to its 50% spike from Friday. WAL shares dove roughly 60% Thursday after unconfirmed Financial Times reports the Phoenix-based bank hired advisers to explore its own sale. Western Alliance denied the story, calling it "categorically false in all respects." The bank said it plans to pursue legal options in response to the article.
On the S&P 500, Comerica cut its premarket advance and dropped about 0.8% in trade Monday, after jumping 16.8% to end the week.
Zions Bancorp shares followed PacWest higher. ZION stock rose 2.1% Monday and climbed 19.2% Friday.
KeyCorp shares reversed premarket gains and dropped 1.5% by the closing bell.
U.S. Bancorp also reversed lower Monday morning after rising 6% Friday.
The SPDR S&P Regional Banking ETF shed 2% during trading Monday after climbing premarket. KRE includes regional bank stocks like Regions Financial, Truist Financial, WAL and PACW.
Yellen Warns On Debt Ceiling
Elsewhere, SEC Chair Gary Gensler put bank stock investors on notice Thursday, vowing to investigate and prosecute "any form of misconduct that might threaten investors" after the American Bankers Association called for probes into short sellers profiting off the bank panic.
Meanwhile, the of a June 1 deadline to resolve the debt ceiling debate looms over the economy, a political threat amplified by banking sector fragility. Treasury Secretary Janet Yellen said Sunday that failing to suspend or lift the debt ceiling would lead to an "economic and financial catastrophe that will be of our own making."
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
