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Pacific Western Bank gets $1.4B from Atlas after 20% decline in deposits

Pacific Western also explored a capital raise with private investors but determined it wasn't 'prudent' at this time

The current bank crisis hit California-based Pacific Western Bank, a community bank owned by PacWest Bancorp that has a focus on real estate and commercial loans. 

Following the collapses of Silvergate Bank, Silicon Valley Bank and Signature Bank over the last few weeks, deposits at the financial institution had dropped to $27 billion as of March 20, a decline of 20% compared to the end of December. 

Pacific Western Bank has acted to guarantee more liquidity via private and federal facilities but excluded the possibility of raising capital at this moment, it announced on Wednesday. 

The company secured $1.4 billion in fully funded cash proceeds from the global investment firm Atlas SP Partners through a new senior asset-backed financing facility. In addition, it has drawn $3.7 billion from the Federal Home Loan Banks, $10.5 billion of borrowings from the Federal Reserve Discount Window, and $2.1 billion in Bank Term Funding Program borrowings.

Pacific Western Bank also explored a capital raise with potential investors. However, amid volatility in the market and depressed stock prices, “it would not be prudent to move forward with a transaction at this time,” the bank said. 

PacWest Bancorp’s shares were trading at $10.94 on Wednesday afternoon, down 10.4% from the previous closing. 

“We continue to be encouraged by the clear message from government officials, regulatory agencies, and industry leaders, including Secretary [Janet] Yellen’s recent remarks regarding the protection of smaller bank depositors,” Paul Taylor, the bank’s president and CEO, said in a statement.  

Pacific Western Bank reported $11.4 billion in available cash as of March 20, higher than the $9.5 billion in uninsured deposits. 

The bank’s loans and leases for investments rose by $950 million to $28.6 billion in the fourth quarter of 2022. The increase was due primarily to the residential and real estate mortgage and construction portfolios, consisting of 70% of the total portfolio in Q4 2022.  

In 2021, the bank acquired Civic Financial Services, a private money lender that caters to real estate investors, a strategic move into specialized areas of the non-QM market. Wedgewood, a real estate investment firm that focuses on distressed properties, was the seller. 

In February, PacWest Bancorp announced a restructuring at Civil Financial, eliminating 200 job positions effective in the second quarter of 2023. It will bring the company $30-40 million of annualized savings.   

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