PacWest Bancorp Lost 20% of Customer Deposits, Raises $1.4 Billion Cash

PacWest Corp (PACW) raised $1.4 billion in cash using a financing facility from investment firm Atlas SP Partners in a bid to shore up liquidity after losing almost 20% of customer deposits compared to the end of last year.

PacWest also borrowed $3.7 billion from the Federal Home Loan Bank system, $10.5 billion from the Federal Reserve Discount Window, and $2.1 billion from Bank Term Funding Program, as of March 20.

Investors doubt that the moves are enough to stabilize the bank, as the stock tumbled more than 10% in intra-day trade before making a slight recovery.

Beverly Hills-based PacWest serves small and venture-backed businesses. Venture capital deposit outflows were almost 72% of all deposit outflows for the bank, which stood at $6.8 billion this year.

PacWest said it continues to "benefit from solid liquidity and stabilized deposit balances, with over $11.4 billion in available cash as of March 20, 2023, which exceeds total uninsured deposits of $9.5 billion as of March 20, 2023."

The deal follows last week's $30 billion rescue of First Republic Bank (FRC) by the largest U.S. banks including Bank of America and JP Morgan Chase and Co.

Even as federal regulators and the largest U.S. banks seek to draw a line under the recent turmoil in the banking system, the so-called "too-big-to-fail" banks have seen a surge of retail investments and deposits in the last week as investors grow fearful of smaller tech-based lenders.

To allay fears over large, uninsured venture capital deposits, PacWest said that venture deposits were 24% of its total deposits as of March 22 and 82% of all venture deposits were insured.

Correction—March 22 2023: Corrected percentage of customer deposit outflows to 20%