Pacific Western Bank may be up for sale.
Pacific Western Bancorp, a struggling Beverly Hills-based bank and commercial real estate lender, has looked at a range of strategic options that include a sale, Bloomberg reported, citing unidentified sources.
The regional bank has worked with a financial adviser and has considered a breakup or a capital raise, said the sources, who asked to remain anonymous because the matter isn’t public.
While it’s open to a sale, the company hasn’t started a formal auction process, the sources told Bloomberg.
An outright sale has run into a ditch because there aren’t many potential buyers who want the entire bank, which includes a community lender known as Pacific Western Bank and some commercial and consumer lending businesses, the sources said.
A buyer would also have to potentially book a big loss marking down some of the bank’s loans, they added.
A representative for PacWest declined to comment.
PacWest shares plunged 44 percent at 4:52 p.m. in late New York trading. Its shares had slid 28 percent on Tuesday as investors fled regional bank stocks after JPMorgan Chase’s purchase Monday of the failed First Republic Bank.
PacWest is smaller than First Republic Bank with about $41 billion in assets, according to an analysis by The Real Deal. However, almost 80 percent of its loan book is dedicated to commercial real estate-backed loans and residential mortgages.
Last quarter, PacWest had $3.8 billion in commercial loans, $5.5 billion in multifamily loans and $15.4 billion in residential mortgages, it disclosed in a first-quarter earnings report.
It also held about $4.6 billion in construction loans for both commercial and residential properties.
After PacWest released its earnings, an analyst at Raymond James said the bank had survived “the worst of the recent banking crisis,” a reference to the collapse of Silicon Valley Bank and Signature Bank in March.
But the analyst noted that PacWest’s share price “will remain volatile until we gain more clarity on the bank’s future.”
During the quarter, PacWest lost about 10 percent of its deposits — a metric that was better than originally expected, and substantially better than First Republic Bank, which lost nearly half of its deposits in the same period.
PacWest plans to sell off some of its assets to boost liquidity. The firm has already marketed its $2.7 billion lender finance division for sale, CEO Paul Taylor said.
— Dana Bartholomew
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