What happened

PacWest Bancorp (PACW) saw its stock price drop 10.3% this week, as of Friday at 11:45 p.m. ET, according to data provided by S&P Global Market Intelligence. The stock had been down as much as 13.3% during the week. PacWest is now trading at about $7.80 per share, down almost 66% year to date.

It was not a great week for the markets as the S&P 500 was down 2.4%, the Dow Jones Industrial Average dropped 2.2%, and the Nasdaq Composite fell 3%, as of Friday at 11:45 p.m. ET.

So what

It has been a brutal year for PacWest and this week saw more of the same. But it did not appear to be anything specific to PacWest, as the KBW Nasdaq Regional Banking index was down about 6% this week -- so most banks were down.

A major catalyst may have been a report from Fitch Ratings this week, which said several dozen banks could be headed for downgrades if the ratings agency is forced to lower its assessment of the industry. In June, it lowered the industry's rating from AA to AA- based on the operating environment of uncertainty regarding rate hikes, regulatory concerns, and pressure on the country's credit rating.

If Fitch were to lower it again, from AA- to A+, that would trigger reevaluations of some 70 banks and could lead to downgrades.

This sparked concerns about additional regulations on banks, stemming from the collapse of three major banks in March and April. This was the topic of a speech that Federal Deposit Insurance Corp. Chairman Martin Gruenberg gave on Monday about the risks of regional banks and potential regulatory fixes.

Among those potential remedies, Gruenberg cited strengthening bank resolution plans, enhancing supervisory attention to uninsured deposit concentrations, and adjusting risk-based pricing for deposit insurance. "Once implemented, these measures will mitigate these risks and enhance the stability and resilience of the U.S. banking system," he said.

Now what

PacWest has been executing on its plan to sell off its noncore loan portfolios by divesting its $2.6 billion construction loan portfolio, along with $2.3 billion of unfunded commitments; its $2.1 billion lender finance portfolio, including $0.2 billion of unfunded commitments; and a portion of its civic portfolio, including $521 million of loans and $24 million of unfunded commitments.

It also announced in July that it is merging with the Banc of California (BANC). The combined holding company will operate under the Banc of California name and is expected to have about 70 branches throughout California. It will have approximately $36.1 billion in assets, $25.3 billion in total loans, and $30.5 billion in total deposits.

Stay tuned for more on this. It's best to watch and wait on this stock for now.