PacWest Bank shares tumble as crisis prompts customers to yank deposits
(CNN) — Shares of PacWest Bancorp tumbled Thursday after the regional bank reported that customers had recently drawn down about 9.5% of total deposits.
The bank’s stock briefly fell 30% before being halted for volatility Thursday. Shares resumed trading and finished down about 23%.
PacWest is one of several mid-size lenders that has been under intense scrutiny in the weeks since Silicon Valley Bank collapsed on March 10, setting off a panic around the financial stability of similarly positioned banks.
“PacWest is starting to look like the weakest link and some traders are wondering if they will fail or have a sale,” said Ed Moya, a senior market analyst at Oanda.
Although the deposit news is troubling, Moya said, “it might not mean the end, as they have a lot of cash on hand and currently seem positioned to weather this storm.”
The LA-based bank has about $15 billion in readily available cash and just $5.2 billion in uninsured deposits.
PacWest didn’t immediately respond to a request for comment.
Following the collapse of First Republic Bank last week, PacWest saw a rush of withdrawals of uninsured deposits, prompting it to pledge more of its assets as collateral to shore up its cash position, the bank said in a regulatory filing Thursday.
The update marked a notable change from a week ago, when PacWest said it had not experienced “out-of-the-ordinary deposit flows” after First Republic’s hastily arranged sale to JPMorgan Chase.
At the end of March, PacWest’s total deposits stood at more than $28 billion, down from about $34 billion at the end of 2022.
Other regional bank shares, including Western Alliance and Zions, were also down Thursday morning.
PacWest’s stock is down about 80% this year.