Profitability Was the Next Shoe to Drop at Banks Like PacWest
The lender doesn’t share the problems faced by Silicon Valley Bank or First Republic, but pressure on its net interest margins could be as deadly.
Seeking the weakest link.
Photographer: Timothy A. Clary/AFP
PacWest Bancorp has a problem — that much is evident from the pummeling its shares have taken in recent days after the US banking crisis was supposed to be over. But it doesn’t have the same sort of problems that failed lenders Silicon Valley Bank or First Republic Bank had.
The Beverly Hills-based bank doesn’t have a big homogenous group of mostly uninsured depositors. As of Tuesday, 75% of its deposits were fully insured and it has even attracted a little new money since the first wave of panic hit regional banks in mid-March. It also has cash and other liquidity sources amounting to nearly twice the value of its remaining uninsured depositors.