Shares of PacWest plunged 23% today after the Los-Angeles-based lender said its deposits declined and that it had posted more collateral to the US Federal Reserve to boost its liquidity.
PacWest deposits fell 9.5% or $1.5 billion last week, with the majority of those outflows occurring on May 4 and May 5 following news reports that the bank was exploring options to bolster its finances, including a sale.
PacWest is one of several US regional lenders whose shares have been hit this month by investor concerns over the health of the sector following the collapse of three banks since March.
"The news headlines increased our customers fears of the safety of their deposits," the bank said.
The bank said it had funded the shortfall in its deposits with cash from its balance sheet and then pledged $5.1 billion of its assets to the Fed to secure additional liquidity of $3.9 billion.
As a result, the bank said it had $15 billion of immediate liquidity, which is 288% higher than its $5.2 billion of total uninsured deposits.
"The deposit fall seems to have overshadowed things but overall it was a positive update," said Wells Fargo analyst Jared Shaw, who has assigned an "equal weight" to PacWest shares.
"It showed that they had liquidity and that they were still able to sell their loans," Shaw added.
PacWest shares, which have lost nearly 40% so far this month and plunged to a record low last week, dropped a further 23% on Thursday morning. Short sellers have made $123.76 million by betting against PacWest, according to data from analytics firm Ortex.
Western Alliance, meanwhile, reported that its total deposits rose by nearly $600 million to $49.4 billion and that its immediate liquidity was almost double its uninsured deposits. The bank's shares, which also slumped last week on investor worries over its health , were up 0.5%.
"It feels as if things are more stable at Western Alliance and they have been able to deal with the challenges," Shaw said.
Spokespersons for PacWest and Western Alliance didn't immediately respond to a request for comment.
Other regional lenders were trading lower on Thursday.
