PacWest tumbles more than 35% as bank says it's considering 'all options'

Key Points
  • PacWest said it is exploring "all options" as its stock tumbles in the wake of the First Republic failure.
  • The California-based bank said it is in talks with several possible partners and investors.
  • PacWest said it had not experienced "out-of-the-ordinary deposit flows" after First Republic's collapse.

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A Pacific Western Bank branch in Encino, California, on Saturday, April 22, 2023.
Morgan Lieberman | Bloomberg | Getty Images

PacWest Bancorp shares tumbled more than 30% in premarket trading Thursday following news that the bank is weighing strategic options.

The regional bank is assessing options, including a possible sale, and bringing in advisors to evaluate longer-term plans for the business, CNBC confirmed, according to one person familiar with the matter. Piper Sandler and Stephens are the two firms advising PacWest, the person said.

PacWest later confirmed it was still in discussions with multiple potential investors and partners. "The company will continue to evaluate all options to maximize shareholder value," it said in a statement.

The shares of several West Coast regional banks have been hit particularly hard since the collapse of Silicon Valley Bank in March, in part because of concerns that their customer bases are similar. This week, First Republic Bank was seized by regulators and sold to JPMorgan Chase.

In its statement, PacWest said it had not experienced "out-of-the-ordinary deposit flows" after the First Republic collapse.

The Los Angeles-based PacWest has a roughly $750 million market cap, and is down by 72% this year through Wednesday's close after its shares notched their fifth straight losing day.

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PacWest shares 1-day

Other regional banks declined in following the PacWest news, with the SPDR S&P Regional Banking ETF shedding 4%. Shares of Western Alliance Bancorp dropped 20%, while Comerica slid 6.4%. KeyCorp shares fell 7%.

PacWest reported that total deposits declined more than $5 billion in the first quarter to $28.2 billion as of March 31. However, the company said that it saw a net gain of $1.1 billion in deposits from March 20 until quarter end.

PacWest also said that deposits grew by another $700 million from March 31 through April 24.

— CNBC's Jesse Pound contributed reporting.

Correction: A source familiar told CNBC that the regional bank's options include a potential sale – not a capital raise.