Another medium-sized bank faced a confidence crisis on Thursday, as Pacific Western Bank said it had lost nearly 10 percent of its deposits over the past week, sparking another drop in its already low share price.
The deposit flight, worth billions of dollars, was described in a filing filing that suggested new problems at the Los Angeles-based lender. Shares of the bank fell more than 20 percent in early trading, a much steeper drop than other banks that have been the focus of investor concerns following the recent collapses of Silicon Valley Bank, Signature Bank and First Republic Bank.
In its regulatory filing Thursday, PacWest said the repossession and sale of First Republic in early May “made the market and the customer more fearful of more bank failures, including PacWest.” Last week, the bank, with $44 billion in assets and branches mostly in California, confirmed it was looking to either sell itself or raise more money. That sent its shares plummeting, adding to its customers’ “fear for the safety of their deposits,” the bank said.
PacWest now has about $25 billion in deposits, compared to just over $28 billion at the end of March.
The new pressure on PacWest is a reminder that two months after the banking crisis triggered by the bankruptcy of the SVB, medium-sized lenders remain under pressure, largely because their battered share prices are leading to customer concerns.
In a departure from recent weeks, when the shares of medium-sized banks were massively whipped, PacWest took the brunt of the damage. Other stressed lenders, including Comerica, Western Alliance and Zions Bank, traded with small losses Thursday. The S&P 500 fell less than half a percent.
Western Alliance, a Phoenix bank that mainly focuses on businesses, said in a statement that its deposits had increased by $600 million, or 1 percent, to nearly $50 billion over the past week.
