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PacWest Bank shares tumble as crisis prompts customers to yank deposits

<i>Morgan Lieberman/Bloomberg/Getty Images</i><br/>Following the collapse of First Republic Bank
Bloomberg via Getty Images
Morgan Lieberman/Bloomberg/Getty Images
Following the collapse of First Republic Bank

By Allison Morrow, CNN

Shares of PacWest Bancorp tumbled Thursday after the regional bank reported that customers had recently drawn down about 9.5% of total deposits.

The bank’s stock briefly fell 30% before being halted for volatility Thursday. Shares resumed trading and finished down about 23%.

PacWest is one of several mid-size lenders that has been under intense scrutiny in the weeks since Silicon Valley Bank collapsed on March 10, setting off a panic around the financial stability of similarly positioned banks.

“PacWest is starting to look like the weakest link and some traders are wondering if they will fail or have a sale,” said Ed Moya, a senior market analyst at Oanda.

Although the deposit news is troubling, Moya said, “it might not mean the end, as they have a lot of cash on hand and currently seem positioned to weather this storm.”

The LA-based bank has about $15 billion in readily available cash and just $5.2 billion in uninsured deposits.

PacWest didn’t immediately respond to a request for comment.

Following the collapse of First Republic Bank last week, PacWest saw a rush of withdrawals of uninsured deposits, prompting it to pledge more of its assets as collateral to shore up its cash position, the bank said in a regulatory filing Thursday.

The update marked a notable change from a week ago, when PacWest said it had not experienced “out-of-the-ordinary deposit flows” after First Republic’s hastily arranged sale to JPMorgan Chase.

At the end of March, PacWest’s total deposits stood at more than $28 billion, down from about $34 billion at the end of 2022.

Other regional bank shares, including Western Alliance and Zions, were also down Thursday morning.

PacWest’s stock is down about 80% this year.

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