Shares of PacWest Bancorp (PACW) fell Wednesday morning after the company said it had $1.4 billion in new cash from a firm backed by Apollo, its deposits were down 20% since the start of the year and it had abandoned an effort to raise capital.
The regional lender, based in Beverly Hills, Calif., came under intense investor pressure following the failures of Silicon Valley Bank and Signature Bank. Shares have dropped 45% since Silicon Valley Bank’s seizure by regulators on March 10, and were trading down more than 10% Wednesday as of 12:25 pm ET. PacWest’s bank was the nation’s 53rd largest as of Dec. 31, with $41 billion in assets.
Shares of other regional lenders under scrutiny from investors were mixed ahead of a decision from the Federal Reserve this afternoon on the direction of interest rates. First Republic (FRC) was down roughly 5% at 12:25 am ET, as investors digest a flurry of reports about another attempted rescue of the San Francisco financial institution.
PacWest, founded in 1999, got bigger in the aftermath of the 2008 financial crisis by scooping up deposits and assets from several banks seized by regulators over a period of several years.
Its new financing of $1.4 billion announced Tuesday is from Atlas SP Partners, where Apollo is the majority owner. (Disclosure: Apollo Global Management is the parent company of Yahoo Finance.)
PacWest added that it has drawn $3.7 billion in loans from the Federal Home Loan Bank, $10.5 billion from the Federal Reserve’s discount window and $2.1 billion from a new Fed program that offers one-year loans to banks holding assets that are now worth less as a result of rising interest rates.
It said in a filing Wednesday that it had abandoned a separate effort to raise capital “in light of the current volatility in the market and depressed market prices for regional bank stocks, as well as the availability of other options to enhance capital.”
Pacific Western Bank CEO Paul Taylor said he was encouraged by recent comments from Treasury Secretary Janet Yellen that she was prepared to take additional actions to help bank depositors, if needed. She and other government officials agreed earlier this month to cover all depositors at the failed Silicon Valley Bank and Signature Bank, citing their systemic risk.
“We continue to be encouraged by the clear message from government officials, regulatory agencies, and industry leaders,” Taylor said.
PacWest has lost some of its deposits so far this year. Between the end of 2022 and March 20, customers withdrew $6.8 billion. The company said it has $11.4 billion in cash, exceeding the $9.5 billion in deposits that are currently above the $250,000 insurance level provided by the Federal Deposit Insurance Corporation. The company said its deposit levels were “stabilized.”
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