PacWest Bancorp in Los Angeles briefly explored raising capital before deciding that doing so “would not be prudent.”
The $41.2 billion-asset company said in a press release that it secured $1.4 billion in fully funded cash proceeds from ATLAS SP Partners through a new senior asset-backed financing facility. The move unlocked liquidity from “unencumbered, high-quality assets in an expeditious manner.”
Overall deposits are down 20% from Dec. 31, including a 43% decline in venture banking deposits. Still, PacWest said it has opened 130 new venture banking accounts since March 9.
While PacWest said it discussed raising capital with investors, “current volatility in the market and depressed market prices for regional bank stocks” convinced it to scrap the move. The company said it has other options to enhance capital.
The company said in the release that deposit balances remain stable, adding that it has $11.4 billion of available cash – compared to $9.5 billion of uninsured deposits.
PacWest said it has drawn on available federal facilities, including $3.7 billion of FHLB borrowings, $10.5 billion from the Federal Reserve Discount Window and $2.1 billion from Bank Term Funding Program.
PacWest estimated that, as of Feb. 28, it had net income of $48.9 million, including $8.2 million of severance expenses tied to restructuring a lending unit. Its accumulated other comprehensive loss fell to $704 million on March 17 from $791 million on Dec. 31.
“I am proud of the efforts the entire PacWest team has taken in these challenging times to enhance our liquidity and preserve franchise value,” said Paul Taylor, PacWest’s president and CEO, said in the release.
“We have continued confidence in the strength of PacWest and are encouraged by the stability we have seen in our deposits and liquidity over the past week,” he added. “We continue to be encouraged by the clear message from government officials, regulatory agencies and industry leaders.”