Backwest said potential partners and investors have reached out to her and she has been reviewing strategic options as the California swing lender becomes the latest midsize US bank to seek a financial lifeline amid the worst industrial turmoil since 2008.
The bank said in a statement that it was studying “all options to maximize shareholder value” after its shares fell by 50 percent in after-hours trading on Wednesday.
Earlier, two people briefed on the matter said the bank had instructed small investment banker Piper Sandler to help him explore strategic options including selling. People said that no official sale had been initiated yet and that the bank was also considering raising new capital.
PacWest’s decision to seek a buyer or new capital, first reported by Bloomberg, comes days after Federal Deposit Insurance Corporation acquired First Republic and sold its deposits and assets to JPMorgan Chase.
It comes six weeks after PacWest announced that it had boosted its access to liquidity by raising $1.4 billion through a lending facility from Apollo-backed investment firm Atlas SP Partners.
Shares of Western Alliance, which has also become a focus of investor concern after US regulators have taken over three banks since March, fell by more than a quarter in after-hours trading. Zion Bancorp and Comerica shares fell about 10 percent.
As with other regional banks, PacWest has drawn negative attention due to its similarities to a Silicon Valley bank, which collapsed in March. These include relationships with the technology community, large amounts of uninsured deposits and paper losses in its portfolio of securities.
BackWest, the Beverly Hills-based company, reported late last month that it lost more than $5 billion in deposits during the first quarter, but said it had halted outflows and had more than $1 billion in inflows since March.
In an update on Wednesday, it said deposits totaled $28 billion as of May 2, making it much smaller than SVB or First Republic. “Our cash flow remains strong,” the bank said.
It said 75 percent of deposits are covered by federal insurance, compared to 71 percent at the end of the quarter.
Shares of the bank are down 77 percent since the start of March, and short interest in BaQuest shares has risen from less than 1 percent at the end of January to 25 percent this week.
The bank, which was turning a small profit, reported a net loss of $1.21 billion in the first quarter. It also reported unrealized losses of $860 million on its securities portfolio.
More than three-quarters of its loans are to property, another area of concern in a period of high interest rates, and 8 percent to investment capital. Its business had $6 billion in deposits at the end of March.
Piper Sandler did not immediately respond to a request for comment.