Another bank failure? PacWest reportedly seeks buyers after stock drop

Bloomberg reported Wednesday that PacWest Bancorp is mulling those options. The California-headquartered bank has not seen an official process for an auction kickoff so far, according to the report.

In April, the bank said its total deposits had come in at $28.19 billion for the first quarter, marking a nearly 17% decrease from the fourth quarter and an approximately 15% decline from the first quarter in 2022. Deposits had risen from March 20 when they were at $27.1 billion, and CEO Paul Taylor described them as stabilizing and rebounding.

Taylor also said at the time that PacWest executives "took immediate steps to maximize liquidity, including the exploration of strategic asset sales, which has led to the transfer of our $2.7 billion lender finance loan portfolio to be held for sale."

In the quarter, the company recorded a $1.38 billion non-cash goodwill impairment "due to decline in our stock price as a result of recent market volatility." The charge, which affected first-quarter results, "has no impact on [PacWest’s] regulatory capital ratios, cash flows, or liquidity position," the bank said in its earnings release.

The report of PacWest’s strategic option exploration comes not long after the Federal Deposit Insurance Corporation (FDIC) accepted JPMorgan Chase’s bid to buy First Republic Bank.

This is starting to feel a bit like dominos falling...

Each of these followed the same pattern. Stock started to tank once the market realized they would have to sell their long dated bonds to meet depositors. Then more people try to withdraw as word gets out. Turns into a death spiral.
By market cap, we’ve now had more banks go under than the whole 2008 financial crisis.
The question now is… how many more regional banks will go under? And what about the national banks? If they keep buying the regional banks, will they be weakened?