Shares of U.S. regional banks PacWest Bancorp and Western Alliance Bank plunged on Tuesday as the demise of First Republic Bank triggered investor concerns about the financial health of other mid-sized lenders.
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"Historically, once you see a resolution of one institution, the market tends to go after who they view as the next weakest link," said Goldman Sachs regional banks analyst Ryan Nash. Regional banks with up to $250 billion in assets held about $1.1 trillion of commercial real estate loans with maturities through 2027 as of the end of last year, according to real estate data analytics firm Trepp Inc.
"While we think this deal underscores all of JPM's key strengths, we can't help but try to read into what it means if our biggest bank is the government's first line of defense," analysts at Evercore ISI wrote in a note.
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