PacWest Bancorp Confirms Strategic Options But Says No Cause For Alarm

Los Angeles, California-based PacWest Bancorp (NASDAQ:PACW) confirmed early Thursday reports about the bank exploring strategic options and assuaged concerns regarding its health.

PacWest shrugged off the report by stating that it is normal practice that a company and the board continuously review strategic options. The bank said recently it has been approached by several potential partners and investors and discussions are ongoing. It confirmed that it will continue to evaluate all options to maximize shareholder value.

The regional bank said it is exploring strategic asset sales, including moving the $2.7 billion "lender finance loan portfolio" to be held for sale in the first quarter of 2023.

The proposed sale, according to the company, will increase its common equity tier 1, or CET1, capital ratio from 9.21% at the end of the first quarter to over 10%. The company said the sale is on track.

PacWest assuaged concerns by saying it has not experienced any extraordinary deposit flows after the First Republic collapse. Core deposits have risen since March 31, with deposits totaling $28 billion as of May 2. Insured deposits accounted for 75% of the total, up from 71% at the end of the first quarter, it said.

The bank also noted that it has recently paid down $1 billion of borrowings with its excess liquidity. "Our cash and available liquidity remains solid and exceeded our uninsured deposits, representing 188% as of May 2, 2023," it added.

PacWest shares tumbled 52.49% to $3.05 in after-hours trading, according to Benzinga Pro data. The negative reaction came after Bloomberg reported that the bank has been exploring strategic alternatives and a sale or breakup or capital raise could be on the horizon.

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