Regional Lender PacWest Tumbles Again on Business Update
The embattled lender PacWest Bancorp (PACW:US) was seen trading as much as 25% lower on Thursday after the bank issued another business update.
In a 10-Q filing from Thursday morning, PacWest said its deposits were down 9.5% in a week that ended May 05.
“PacWest funded this decline in deposits with available on-balance sheet liquidity. As of May 10, 2023, immediately-available liquidity (on-balance sheet liquidity and unused borrowing capacity) was $15.0 billion, which exceeded uninsured deposits of $5.2 billion, representing a coverage ratio of 288%,” the bank said in a filing.
The bank was reportedly “exploring all of its options and having talks with potential investors and partners," which paved the way to a strong stock selloff. The company confirmed later that is holding discussions with several potential investors.
Moreover, PacWest said that the bank witnessed strong deposit outflows in subsequent days as the news headlines increased customer fears of the safety of their deposits.
“These recent events, and the ongoing news coverage of these events, has increased certain risks and uncertainties related to our business and future prospects.”
Similarly, Western Alliance Bancorp (WAL:US) said total deposits were $49.4 billion as of Tuesday, May 09. This is higher by around $600 million from $48.8 billion as of May 02.
“The increase in deposits amidst heightened market volatility and challenges at competitors exemplifies the strength and resilience of the Bank and its customer relationships,” Western said in the update.
WAL shares were trading about 4% higher on Thursday.
Congressman Daniel Goldman was selling PACW and WAL shares in early March.
