**Here We Go Again: Troubled California Bank PacWest Craters 60% On Report It Is Seeking Buyers Or Capital Raise**
Here We Go Again: Troubled California Bank PacWest Craters 60% On Report It Is Seeking Buyers Or Capital Raise
Earlier today, when Jerome Powell openly lied to the American People during the FOMC press conference stating without a hint of irony that the US banking system is " **sound and resilient"...**
> Federal Reserve Chair Jerome Powell says that "the US banking system is sound and resilient."
>
> What do you think? 🤔pic.twitter.com/qDktlpOln4 (https://t.co/qDktlpOln4)
>
> — Human Events (@HumanEvents) May 3, 2023 (https://twitter.com/HumanEvents/status/1653864923955617792?ref_src=twsrc%5Etfw)
**...we balked:** how could this former lawyer lie so brazenly to the American people, the narrator wondered, when in just the past few weeks we had seen over half a trillion in bank failures, making the current bank failure episode even worse than the global financial crisis?
> POWELL: U.S. BANKING SYSTEM IS SOUND AND RESILIENT
>
> Narrator: we just had over half a trillion $ in bank failures in the past month pic.twitter.com/YvhloFIGIX (https://t.co/YvhloFIGIX)
>
> — zerohedge (@zerohedge) May 3, 2023 (https://twitter.com/zerohedge/status/1653830260431941632?ref_src=twsrc%5Etfw)
**Well, as usual, the narrator was right,** because while Powell's lies were still ringing in our ears, the next regional bank collapse was on its say.
Shortly after the close, Bloomberg reported that another regional, California-based bank (of course), PacWest Bancorp., **was weighing a range of strategic options, including a sale.**
The Beverly Hills-based bank - whose financial conditions it appears has been far worse than the Fed, which just hiked another 25bps, thought - has been working with a financial adviser and has also been considering a breakup or a capital raise, according to Bloomberg sources. While it is open to a sale, the company hasn’t started a formal auction process.
According to the report, "an outright sale has been hindered because there aren’t many potential buyers interested in the entire bank, which comprises a community lender called Pacific Western Bank and some commercial and consumer lending businesses, the people said." And similar to SVB and FRC, " **a potential buyer would also have to potentially book a big loss marking down some of its loans, the people said.**"
On Tuesday, PacWest tumbled 28% as investors retreated from regional bank stocks following JPMorgan’s deal on Monday for the failed First Republic Bank, a transaction which did nothing to ease concerns about regional bank viability, which was to be perfectly expected **since today's rate hike would only make the regional bank deposit run even bigger, something which was obvious to everyone...**
> But surely at 5.25% all shall be well https://t.co/VMZbvApokm (https://t.co/VMZbvApokm)
>
> — zerohedge (@zerohedge) May 2, 2023 (https://twitter.com/zerohedge/status/1653420114694242305?ref_src=twsrc%5Etfw)
**... except the Fed!**
And sure enough, following the Bloomberg report, PacWest - which had $28 billion in deposits at last check (far less as of this moment) and $44 billion in assets, **saw its stock plunge more than 60% after hours...**
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Bear in mind that just a week ago, PacWest shares surged 17% after the midsize lender said deposits stabilized toward the end of March and rose in April.
> _**“Importantly, deposits stabilized in the latter part of March and rebounded nicely in April, increasing approximately $700 million subsequent to quarter-end,”**_ President and CEO Paul Taylor said in the release
Tonight's dismal news comes six weeks after PacWest said it had shored up its access to cash by raising $1.4bn via a lending facility from Apollo-backed investment firm Atlas SP Partners.
According to its last public statement, PACW had **$29 billion in deposits** (significantly smaller than SVB and FRC), but more problematically, over three-quarters of its lending is to real estate, and **8% to venture capital (with its VC business representing $6bn in deposits at the end of March).**
It seems things 'escalated quickly' since then.
The broad Regional Bank index is tumbling after hours, now at its lowest since Oct 2020...
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... and is dragging down other regional banks with it, especially anything with "west" in its name:
Western Alliance is down 30%..
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