Small Banks Rush to Reassure Investors as Shares Plunge

[BumRushDaShow]

Last edited Thu May 4, 2023, 02:22 PM - Edit history (1)

Source: New York Times

A pair of banks whose shares have been hammered rushed to address investors’ concerns as the spiraling crisis for smaller lenders entered a new phase — one that pits the banks against investors who are betting against their viability.

The effort came as shares of PacWest Bancorp and Western Alliance Bancorp, along with several other regional banks, skidded on Thursday, drops that reflect skepticism that the lenders are on sound financial footing after the collapse of three of their larger peers since March.

After its share price suddenly dropped late Wednesday, following a Bloomberg News report that it was evaluating its strategic options, PacWest said it was continuing to look to sell assets to shore up its finances. It said that it had not seen an “out-of-the-ordinary” outflow of deposits in recent days. In a statement issued shortly after midnight, the Los Angeles bank said that it was planning to sell a $2.7 billion loan portfolio, that it was reviewing other options after being approached by potential “partners and investors,” and that deposits stood at $28 billion as of Tuesday, compared with roughly $29 billion that it held in late April.

Western Alliance, in Phoenix, also tried to reassure investors, saying late on Wednesday that it was not seeing deposit outflows. As of Tuesday, the bank said, deposits stood at $48.8 billion, compared with $47.6 billion at the end of March. In a second statement, on Thursday, the bank also denied a report that it was considering a sale, describing that as “categorically false in all respects.”

Read more: https://www.nytimes.com/2023/05/04/business/pacwest-stock.html

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I had wondered if any other "regional banks" were teetering after First Republic was seized and sold to JP Morgan, and now I know...

Article updated.

Original article/headline -

PacWest Says It's Exploring Options After Shares Plunge

PacWest Bancorp, a midsize lender that has been under pressure after three of its larger peers failed this year, issued a statement overnight, after its share price suddenly dropped, saying it was continuing to look to sell assets to shore up its finances.

PacWest said that it was planning to sell a $2.7 billion loan portfolio, and that it was reviewing other options after being approached by potential “partners and investors.” The bank also said it had not seen an “out-of-the-ordinary” outflow of deposits in recent days. Deposits stood at $28 billion as of Tuesday, compared with roughly $29 billion that it held in late April.

The bank released the updated details after its shares had plunged more than 50 percent in late trading on Wednesday. That drop came after Bloomberg News reported that the bank was working with advisers to explore options, including a sale.

In early trading on Thursday, PacWest, based in Los Angeles, was down more than 40 percent. Western Alliance, a regional lender based in Phoenix, fell more than 20 percent. Western Alliance also tried to reassure investors, saying late on Wednesday that it was not seeing deposit outflows. As of Tuesday, the bank said, deposits stood at $48.8 billion, compared with $47.6 billion at the end of March.

[Zincwarrior]

1. Regional Bank difficulties seem focused on West

This Bank, SVB, Republic, seem focused on the West Coast. Same Fed Reserve area?

[BumRushDaShow]

2. Part of the reason

is the same as that with the others that failed - lots of wealthy (tech) management and employees - Silicon Valley stuff - (although mixed in with regular folk). And because they were higher paid, their deposits easily went over the FDIC's $250,000 insurance threshold.

Once they saw some danger signs in the offing, they started pulling their money to go elsewhere. That in turn triggered "worry" and investors started selling the bank's stock (which is what is happening with this bank now and is like what happened with First Republic).

One of the "danger signs" has apparently been the bonds they hold based on those low interest rates that they wouldn't be able to offload now because new buyers will go for those that offer higher interest returns at maturity.

[Warpy]

3. All of them lending money to startups

which isn't a bad thing, itself, it's just that their high risk lending depended on free money from the Fed when it didn't pay off.

I wonder which billionaire pulled out of this bank. Peter Thiel pulled out of SVB just before it crashed..

The SEC needs to stop being a paper collection agency and start to look into this stuff, along with stock trades at the top before the bust. My guess is that the C-level managers unloaded all their own stock within the last few weeks.

[Backseat Driver]

5. All I know is that Powell, Yellen, and Gensler better get their

banking shit together. These organizations must stop wealthy banking customers and bank stakeholder owner investors from both overshooting their deposits above insured levels and more competently and nimbly manage banks' stakeholder obligations of lesser portfolio makers on Wall Street. Hear that SEC? Their failure to do so without stress tests or high penalties for failures and allowances made to vulture capitalists has for too long enabled corrupt greedy shameless theft of our nations productivity, savings, and safety net programs. At an uncertain point of desperation, donation-addicted leaders "feed dark monied laundries, chaos agents, collude and hunt with a bought and sold robed judiciary with life-long career terms, and that empower our ideological enemies while we hold blameless top-appointed deep-pocketed "corporate personhoods," bloody-handed appointed executives that mumble rhetoric, provide disingenuous c.v.'s and promises, and cop a plea that are forwarded to the court by their finest representative members of the bar intent on just making a name for themselves. What's that definition of insanity?

The USA MUST pay it's bills per the Constitution! End of discussion; we must defend truths -- not unfettered agression, corruption, greed, and willing ignorance that has been infused into our ROL by high-level, minority self-interest! We surely don't need crystal balls to see our future as a nation if we don't!

[Miguelito Loveless]

4. They continue consolidating the banks into bigger banks

One day there will be only one bank with no buyers when it goes bust.

[Backseat Driver]

7. Within our country, that has already happened in small

family groups. While I can no longer defend the "willful ignorance" of vain pride, the fundamentally religious, or unrealistically delusionally hopeful, I worry about the future where laws decide which families will thrive or die for want of the opportunities democracy might afford, now so important to live happy and relatively "free" lives. We are becoming ever more criminally aggressive and delusionally, "it won't happen to me and mine" no matter my choice in this present moment.

[hamsterjill]

6. Are credit unions still safe?

I use a local credit union because I didn’t want to deal with a JP Morgan Chase or a Wells Fargo type.

Are credit unions better - still???

[Backseat Driver]

8. Did'nt take a second - A: It depends, hehehe.

https://www.investopedia.com/credit-unions-vs-banks-4590218