PacWest Bancorp
plunged 40% in Thursday’s premarket after issuing a statement aimed at reassuring markets.
On Wednesday evening, the regional bank said deposits were rising. The statement followed a plunge in the bank’s stock price of as much as 55% in after-hours trading following a report the bank was weighing strategic options, including a sale. It was down 2% in Wednesday’s trading session.
Other regional lenders were also down. Western Alliance (ticker: WAL) fell 17.8% in the premarket. It also issued a statement Wednesday, saying it hasn’t experienced unusual deposit outflows in recent days and that its capital base remains strong.
Comerica
(CMA) slipped 7%, and Valley National (VLY) retreated 5.3%.
PacWest
(PACW), which has been under pressure along with others in the sector since the failure of Silicon Valley Bank, also said it was in discussions with partners and investors and that the talks were ongoing.
“Our message remains consistent with what was conveyed last week with earnings,” the Los Angeles-area lender said in a statement. “Recently, the company has been approached by several potential partners and investors—discussions are ongoing. The company will continue to evaluate all options to maximize shareholder value.”
Banks with high levels of uninsured deposits or higher risk loan books have seen a run on deposits. Earlier this week
JPMorgan Chase
said it was acquiring
First Republic
after recent turmoil.
PacWest also said: “The bank has not experienced out-of-the-ordinary deposit flows following the sale of
First Republic Bank
and other news. Core customer deposits have increased since March 31, 2023, with total deposits totaling $28 billion as of May 2, 2023, with insured deposits totaling 75% vs. 71% at quarter end and 73% as of April 24, 2023.”
In addition, the company recently paid down $1 billion of borrowings with its excess liquidity and said its cash and available liquidity remains solid and exceeded its uninsured deposits, representing 188% as of May 2.
Write to Rupert Steiner at [email protected]
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