PacWest Bancorp said deposits stabilized after a flurry of withdrawals in March prompted concerns about the bank’s health and forced it to shore up liquidity.
(Bloomberg) — PacWest Bancorp said deposits stabilized after a flurry of withdrawals in March prompted concerns about the bank’s health and forced it to shore up liquidity.
Deposits totaled $28.2 billion at the end of the first quarter, down $5.75 billion from the end of last year and up from a previous update by the firm as of March 20, according to a statement Tuesday. The Beverly Hills, California-based bank also said it has transferred its $2.7 billion lender finance loan portfolio to held for sale.
“Deposits stabilized in the latter part of March and rebounded nicely in April, increasing approximately $700 million subsequent to quarter-end,” Chief Executive Officer Paul W. Taylor said in the statement.
The company’s shares surged as much as 21% in US premarket trading. They have more than halved this year through the close of regular US trading Tuesday.
PacWest has been taking steps to shore up liquidity following customer withdrawals amid regional banking turmoil that shuttered three rival lenders. Last month, the bank said it obtained $1.4 billion from a financing facility from Apollo Global Management-owned investment firm Atlas SP Partners.
The bank said it expects total assets to drop to about $35 billion within the next few months, from about $44 billion at the end of the first quarter, after the completion of certain asset sales and an effort to bring liquidity “to more normal levels.”
The bank posted a loss of $1.21 billion for the quarter, mostly driven by a goodwill impairment charge of $1.38 billion. Excluding that, adjusted earnings totaled $89.4 million.
Shares of PacWest and its regional lender peers have tumbled this year after rising interest rates depressed the value of bonds the banks bought when rates were low, and a sudden surge in customer withdrawals forced some of them to sell those assets at a loss. PacWest was cut to junk by Fitch Ratings earlier this month, with the decline in deposits cited as a key driver for the decision.
The bank said on March 10 that it had taken steps to get rid of non-core products and boost earnings.
PacWest had 2,438 full-time, part-time, and temporary employees at year-end, according to regulatory filings. It was established in October 1999 and focused on providing banking and treasury management services to small, middle-market and venture-backed businesses. The bank grew in part through 31 acquisitions since 2000, with offices in California; Durham, North Carolina; and Denver, plus loan-production offices around the country.
(Updates with Wednesday’s share surge in the fourth paragraph)
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