What happened

PacWest Bancorp (PACW) stock surged higher on Monday, up about 13.5% as of noon ET. It had been up as much as 22.8% in morning trading. The stock is trading at about $10.30 per share, down about 55% year to date.

The major indexes were mostly up on Monday. The S&P 500 was up 25 points (0.6%) and the Dow Jones Industrial Average had gained 319 points (1%). However, the Nasdaq Composite was down 3 points at the time of this writing.

So what

PacWest Bancorp was one of the banks that was hardest hit by the failures of SVB Financial's Silicon Valley Bank and Signature Bank. That's mainly because PacWest also caters to the venture capital community, like the other two banks, and has a significant amount of uninsured deposits. 

The stock price tanked last week after the news of the two bank failures broke. But the bank got a vote of confidence today as Piper Sandler issued a research note saying it is confident PacWest can get through this liquidity crunch.

PacWest issued an end-of-the week liquidity update last Friday afternoon, which seemed to appease the market. Officials assured customers and the market that it has solid liquidity, with over $10.8 billion in available cash, which exceeds total uninsured deposits.

Management said that the bank experienced elevated net deposit outflows following the bank failures, concentrated mainly in its venture banking business. But net outflows declined and stabilized as the week went on.

Further, officials said insured deposits currently exceed 62% of total deposits, while insured venture-specific deposits account for more than 77% of total venture deposits. Venture deposits represent approximately 25% of total deposits. They also cited the bank's diversified deposit base that includes commercial, community banking, homeowners associations, retail, and venture deposits.

Now what

PacWest leaders added the bank has experienced no significant asset quality changes since year-end, when its common equity tier 1 risk-based capital ratio was 10.61%, well above regulatory requirements.

Paul Taylor, Pacific Western Bank president and CEO, said:

After a challenging week, we are encouraged that much of the volatility seems to have calmed over the past several days. We have taken numerous steps, including leveraging available collateral, over the past week to enhance and fortify our liquidity during this time. Pacific Western Bank remains a diversified bank prepared to continue delivering for our customers.

PacWest is extremely cheap with a price-to-earnings ratio of 5.9 and a price-to-book ratio of 0.69. This looks like a stock you should keep an eye on. Things are too fluid and volatile for many regional bank stocks right now, but keep this one on your radar.