PacWest Falls 17% After Regional Bank Discloses Deposit Outflows, Additional Liquidity

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  • The bank said in a press release Wednesday that it had $27.1 billion in deposits as of March 20, which is down from $33.9 billion at the end of December and from $33.2 billion on March 9.
  • The change appears to have largely come from venture banking deposits, which accounted for a third of PacWest's deposits at the end of December and now stand at just 24%.
  • The failure of Silicon Valley Bank earlier this month has raised concern about banks with large deposits from companies and wealthy individuals that are above the $250,000 insurance cap

Shares of regional bank PacWest Bancorp dropped Wednesday after the company disclosed it had shed more than $6 billion in deposits during the recent squeeze on midsized banks, though PacWest said it did not plan to raise more capital.

The bank said in a press release Wednesday that it had $27.1 billion in deposits as of March 20, which is down from $33.9 billion at the end of December and from $33.2 billion on March 9. The change appears to have largely come from venture banking deposits, which accounted for a third of PacWest's deposits at the end of December and now stand at just 24%.

The stock extended its losses after the Federal Reserve's announced another rate hike. The company's shares closed Wednesday's trading down 17%.

The failure of Silicon Valley Bank earlier this month has raised concern about banks with large deposits from companies and wealthy individuals that are above the $250,000 insurance cap from federal regulators. PacWest said that more than 65% of its current deposits qualify for insurance.

The bank also said that it explored raising more capital but decided against doing so because it was not "prudent" given current market conditions. To help manage the deposit outflows, PacWest did borrow more than $16 billion from various government-related programs and received $1.4 billion in cash from a financing facility with Atlas SP Partners.

The company said it had $11.4 billion in available cash, which is above the amount of uninsured deposits on its books.

"We have continued confidence in the strength of PacWest and are encouraged by the stability we have seen in our deposits and liquidity over the past week," PacWest CEO Paul Taylor said in a statement.

PacWest's update comes after Treasury Secretary Janet Yellen said Tuesday that federal regulators would consider backstopping uninsured deposits at certain banks if there was risk of contagion from large withdrawals.

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