Pacific Western Bank raises $1.4 billion, says deposits have stabilized

(Reuters) -Pacific Western Bank said on Wednesday it had raised $1.4 billion from investment firm Atlas SP Partners as regional banks rush to contain the fallout of a recent collapse of two mid-sized lenders.     Shares of the bank, which have lost nearly 47% of their value so far this year, fell about 9% in early trading even as it tried to assuage investor worries by saying it had more than $11.4 billion in cash as of March 20.     “Any time that you know a bank talks about having considered a capital raise, especially in this environment where there’s so much skittishness from the markets, it’s bound to have a negative impact of the stock,” said Gary Tenner, analyst at brokerage D.A. Davidson & Co. 

The bank said deposits insured by the Federal Deposit Insurance  Corporation, including accounts eligible for pass-through insurance, exceeded 65% of its total deposits, as of March 20.

Total deposits at the bank fell 20% to $27.1 billion from $33.9 billion as of Dec. 31.

“The update that put out today versus the update that put out last Friday, the read on it is a little bit more negative,” Tenner said.

Regional banks, whose stocks have been battered since the collapse of two mid-sized U.S. lenders this month, have scrambled to assure customers their deposits are secure after the two bank runs whipsawed the global financial ecosystem.

The Federal Reserve’s relentless interest rate hikes to rein in inflation have been blamed in part for sparking the biggest meltdown in the banking sector since the 2008 financial crisis.

“We will continue to see flows away from regionals and into systemically important banks that are too big to fail,” said Thomas Hayes, chairman and managing member, Great Hill Capital.

(Reporting by Jaiveer Shekhawat and Manya Saini in Bengaluru; Editing by Pooja Desai)