Shares of the regional banks PacWest and Western Alliance soared this week, after they'd slumped following the collapse of three U.S. banks.
At last check shares of PacWest (PACW) rose 5% to $5.84 while Western Alliance's (WAL) shares added 0.2% to $34.87. Those figures would bring their respective increases this week to 24% and 30% as investor confidence in these regional banks rebounded.
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The collapse and regulatory takeovers of Silicon Valley Bank, Signature Bank and First Republic Bank in March and April sent investors fleeing regional-bank stocks on concern that others might fail.
Background on PacWest and Western Alliance
Los Angeles-based PacWest had reported that its deposit base declined 9.5%, or $1.8 billion, during the week ended May 5.
In March, PacWest abandoned plans to raise capital since bank stocks were pummeled in the wake of Silicon Valley Bank's collapse.
PacWest had said in April that 75% of its $28.2 billion deposit base fell within the FDIC's protection threshold. The FDIC insures $250,000 in deposits per account, but recently recommended increasing the threshold to avoid future bank runs.
The bank said it had $15 billion in "immediately available" liquidity, which was set against the $5.2 billion of deposits that weren't covered by the FDIC's $250,000 threshold.
"On the afternoon of May 3, 2023, PacWest was featured prominently in the financial news headlines with reports that PacWest was 'exploring all of its options and having talks with potential investors and partners,'" the bank said in a filing with the Securities and Exchange Commission.
"The news headlines increased our customers' fears of the safety of their deposits," the bank said in the filing. "During the week ended May 5, 2023, our deposits declined approximately 9.5%, with a majority of that decline occurring on May 4th and May 5th after the news reports on the afternoon of May 3rd."
Western Alliance's shares slumped early this month, but investors have become more confident.
The Phoenix lender on May 10 reported a $1.8 billion boost to its deposit base, taking it to $49.4 billion.
Investors supported regional-bank stocks after the Federal Reserve published data indicating that most of the lending from its emergency facilities was directed toward First Republic before it was sold to JPMorgan Chase on May 1.
Banks borrowed $5.3 billion from the Fed's main discount window over the seven-day period ended on May 3, according to Fed data, a decline from the $73.9 billion handed out over the prior period.
