SHAREHOLDER ALERT: Pomerantz Law Firm Reminds Shareholders with Losses on their Investment in PacWest Bancorp of Class Action Lawsuit and Upcoming Deadline - PACW

Taken together, the collapses of Silvergate, SVB, Signature Bank, and First Republic, all of which were smaller banks with excessive concentration in specific industries, highlighted the specific risks associated with banks with similar concentration and liquidity profiles—i.e., like PacWest, given its venture-focused business model and primarily small- to middle-market business deposit base. What is more, Silvergate and SVB specifically cited the Fed's aggressive interest rate hikes as being a contributing factor to their collapse. Accordingly, in response to the various bank failures, on March 10, 2023, PacWest issued a press release to reiterate the supposed strength of the Company's financial position, stating that PWB is a "well-performing, well-diversified, full-service commercial bank with more than twenty years of history."

The complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (i) PacWest had understated the impact of interest rate hikes on PWB, a smaller bank with excessive concentration in specific industries; (ii) accordingly, the Company had overstated the stability and/or sustainability of its deposit base; (iii) as a result, PacWest was exceptionally vulnerable to excessive deposit flows and/or a liquidity crisis; and (iv) as a result, Defendants' public statements were materially false and/or misleading at all relevant times.

However, on May 3, 2023, less than two months after PacWest reassured investors of its financial strength, Bloomberg published an article entitled "Regional Banks Sink as PacWest Weighs Strategic Options." According to Bloomberg, "PacWest Bancorp led a renewed slide in regional banks after a report that it's weighing strategic options including a sale heightened concerns that the turmoil engulfing smaller lenders is far from over[,]" and "[t]he sector has been under pressure as rising interest rates lowered the value of their longer-term investments while increasing the cost of funding and spurring depositors to move cash into higher-yielding money market funds."

Shortly thereafter, Forbes published an article entitled "PacWest Stock Falls 39% After Federal Reserve's Latest Interest Rate Hike." The Forbes article stated that "[h]igher interest rates intensify the spread of the latest bank failure virus that drives deposits out of vulnerable banks, tanks their stock prices, and ultimately prompts an FDIC-enabled rescue[,]" and "the big loss an acquirer would incur to mark down the value of some PacWest loans makes it unlikely a buyer will emerge for the entire bank."

Following the publication of the Bloomberg and Forbes articles, PacWest's stock price fell $2.84 per share, or 44.17%, to close at $3.59 per share on May 4, 2023.

Then, on May 11, 2023, PacWest disclosed in a Quarterly Report filed on Form 10-Q with the SEC that that it had lost a significant percentage of its deposits following the publication of the Bloomberg and Forbes reports. Specifically, the Company stated that "the news headlines increased our customers fears of the safety of their deposits. 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."

On this news, PacWest's stock price fell $1.38 per share, or 22.77%, to close at $4.68 per share on May 11, 2023.

Finally, on July 25, 2023, it was announced that PacWest had entered into an agreement to be purchased by Banc of California, Inc. ("Banc of California"). Under the terms of the agreement, PacWest stockholders were to receive 0.6569 of a share of Banc of California common stock for each share of PacWest common stock.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising. Prior results do not guarantee similar outcomes.

CONTACT:
Robert S. Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com
888-476-6529 ext. 7980

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SOURCE Pomerantz LLP