PacWest Bancorp reported a drop in deposits and Western Alliance Bancorp said its deposits grew, with investors continuing to scrutinize the levels amid tumult in the regional-banking industry.

Beverly Hills-based PacWest said in a regulatory filing Thursday that deposits fell 9.5% last week after Bloomberg News reported that the lender was in talks with potential investors. The bank didn’t specify its total deposit levels after the decline, but said it had total deposits of $28.2 billion as of March 31, and that it had immediately available liquidity of $15 billion as of May 10, exceeding uninsured deposits of $5.2 billion. Hours after the Bloomberg report last week, PacWest confirmed it was in talks with several potential investors.

Eoin Treacy's view

An inverted yield forces banks to offer higher deposit rates because of competition from money markets funds. The current situation is somewhat different because many banks are sitting on big losses on their bond portfolios and are technically insolvent. Hoarding deposits is the only way they can ensure they keep their leverage ratios in check. That’s an expensive source of funding for banks when long-term rates are so low.