PacWest Drops Further on Reports of Potential Sale Amid Banking Crisis

Citing sources familiar with the matter, Bloomberg reported Los Angeles-based PacWest could also potentially break up or look to raise capital. The formal auction process has not started, but the bank is open to it. 

PacWest officials could not immediately be reached for comment, but the bank released a statement late Wednesday evening to calm investors after the stock dropped.

“The company has explored strategic asset sales, including moving the $2.7 billion lender finance loan portfolio to held for sale in 1Q23,” the bank said in a statement. “The company and its board of directors continuously review strategic options. Recently, the company has been approached by several potential partners and investors — discussions are ongoing.”

“The bank has not experienced out-of-the-ordinary deposit flows following the sale of First Republic Bank and other news. Core customer deposits have increased since March 31.”

Regional banks and lenders have been hamstrung by a run on deposits that led to the collapse of other regional banks in California and New York. News that PacWest is considering such drastic actions comes after it lined up $1.4 billion from Apollo Global Management’s Atlas SP Partners to bolster finances, along with infusions from federal programs, after a spike of $6.8 billion in customer withdrawals — equal to 20 percent of its total — just in the first quarter of the year.

But Bloomberg’s sources said there aren’t many potential buyers interested in the entire bank, which includes the community lender called Pacific Western Bank with about 70 branches, and some commercial and consumer lending businesses, as well as about $44 billion in assets. A buyer would also have to potentially book a big loss marking down loans.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.