Shares of PacWest Bancorp tumbled more than 20% in early trade on Thursday after the regional lender said it faced a sizeable withdrawal of deposits last week, raising renewed concerns about financial difficulties following a spate of large loans bank collapses.
The sharp drop in PacWest stock halted trading in the company’s shares minutes after market open on Thursday morning, but trading later resumed.
PacWest called In a securities filing Thursday, the bank said the bank lost 9.5% of its deposits last week, marking a reversal after the company said earlier this month that deposits had remained stable.
While PacWest took note of the deposit flight, it said Wednesday it retained $15 billion in instant cash for further withdrawals if needed. The liquidity far exceeds total uninsured deposits, which total $5.2 billion, the bank said.
PacWest did not immediately respond to ABC News’ request for comment on the stock decline.
The Los Angeles-based mid-market lender called Last week, the company said it was reviewing “all options” as it weighed offers from potential investors and the sale of a $2.7 billion loan portfolio.
In last week’s statement, the company dismissed concerns about a sudden surge in deposits, saying it had “not experienced any exceptional deposit flows” following the seizure and sale of First Republic two days earlier.
The significant withdrawal of deposits occurred mostly in the days following last week’s announcement, PacWest said on Thursday.
Overall, PacWest stock is down more than 80% this year and has lost hundreds of millions of dollars in value.
PacWest’s financial distress follows collapse within weeks from three of the country’s 30 largest banks.
When the Fed aggressively hiked interest rates last year, the value of long-dated Treasuries and mortgage bonds fell, resulting in a hole in the balance sheets of some regional banks.
The Fail The creation of Silicon Valley Bank in March sent shockwaves through the financial system that contributed to the downfall of New York City-based Signature Bank days later. Last Monday, First Republic came under government control ahead of a sale to JPMorgan Chase.
While high interest rates contributed to the collapses, each of the banks also held a sizable chunk of uninsured depositors, who are panicking with no government backing for their funds.
Responding to concerns about deposits not being protected by the government, PacWest said last week that insured deposits make up 75% of its holdings, a sharp increase from the end of last year when only 48% of its deposits were insured .
Share prices of some other regional banks were flat or rising in early trade Thursday, suggesting the financial impact on PacWest was limited. Shares in Phoenix-based Western Alliance Bancorp are up about 5%; while Salt Lake City-based Zions Bancorp fell less than 1%.