PacWest Bancorp secured $1.4 billion in cash from a financing facility from Atlas SP Partners and abandoned a separate push to raise capital after its customers pulled more than 20% of total deposits this year.
(Bloomberg) — PacWest Bancorp secured $1.4 billion in cash from a financing facility from Atlas SP Partners and abandoned a separate push to raise capital after its customers pulled more than 20% of total deposits this year.
The shares dropped about 9.7% at 9:37 a.m. in New York.
About $4.9 billion of the $6.8 billion of total outflows this year came from its venture-banking segment, the company said Wednesday in a statement. Deposit levels have “stabilized,” it added. The bank has more than $11.4 billion of cash on hand as of March 20, which exceeds total uninsured deposits at the bank, which was about $9.5 billion.
“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, the company determined it would not be prudent to move forward with a transaction at this time,” the Beverly Hills, California-based lender said of raising capital.
The firm borrowed $3.7 billion from the Federal Home Loan Bank System, $10.5 billion from the Federal Reserve’s discount window and $2.1 billion from the bank term funding program as of March 20. The bank cited those liquidity-enhancing measures in deciding not to proceed with a different effort to raise money.
Atlas SP is an investment firm that is led by former Credit Suisse executive Jay Kim. It got its start as a standalone operation last month after Apollo Global Management closed the purchase of the Swiss bank’s securitized-products group. Kim previously was a managing director at the bank and head of securitized products. Apollo is the majority shareholder of Atlas SP.
In the wake of the collapse of Silicon Valley Bank, several regional banks have faced increased pressure from nervous customers yanking deposits. That has resulted in Los Angeles-based PacWest erasing 60% of its value in the stock market.
(Updates with additional information throughout.)
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