Shares of several regional banks fell Wednesday after a decision by the Federal Reserve to raise interest rates, reassurances from Fed chair Jerome Powell that the banking system was sound and a denial by Treasury Secretary Janet Yellen that her department was considering "blanket insurance" for all bank deposits.

PacWest Bancorp (PACW) fell 17% on a day when the company also said it had $1.4 billion in new cash, its deposits were down 20% since the start of the year and it had abandoned an effort to raise capital.

First Republic (FRC) was also down more than 15% Wednesday, as investors also digested a flurry of reports about another attempted rescue of the San Francisco financial institution. First Republic said Wednesday that its executive officers would take no bonuses for 2023 and founder Jim Herbert will collect no salary effective March 12. Fitch Ratings downgraded the bank's credit rating three notches, following a downgrade last week.

Both of these California regional lenders as well as several others came under intense investor pressure following the failures of Silicon Valley Bank and Signature Bank. PacWest's shares have now dropped 49% since Silicon Valley Bank's seizure by regulators on March 10, while First Republic shares are down 87%.

PacWest, founded in 1999, got bigger in the aftermath of the 2008 financial crisis by scooping up deposits and assets from several banks seized by regulators over a period of several years. PacWest's bank was the nation's 53rd largest as of Dec. 31, with $41 billion in assets.

Its new financing of $1.4 billion announced Tuesday is from Atlas SP Partners, where Apollo is the majority owner. (Disclosure: Apollo Global Management is the parent company of Yahoo Finance.)

PacWest added that it has drawn $3.7 billion in loans from the Federal Home Loan Bank, $10.5 billion from the Federal Reserve's discount window and $2.1 billion from a new Fed program that offers one-year loans to banks holding assets that are now worth less as a result of rising interest rates.

It said in a filing Wednesday that it had abandoned a separate effort to raise capital "in light of the current volatility in the market and depressed market prices for regional bank stocks, as well as the availability of other options to enhance capital."

Pacific Western Bank CEO Paul Taylor said he was encouraged by recent comments from Yellen that she was prepared to take additional actions to help bank depositors, if needed. She and other government officials agreed earlier this month to cover all depositors at the failed Silicon Valley Bank and Signature Bank, citing their systemic risk. Yellen said Wednesday her department was not considering "blanket insurance" from the Federal Deposit Insurance Corporation for all deposits.

PacWest has lost some of its deposits so far this year. Between the end of 2022 and March 20, customers withdrew $6.8 billion. The company said it has $11.4 billion in cash, exceeding the $9.5 billion in deposits that are currently above the $250,000 insurance level provided by the Federal Deposit Insurance Corporation. The company said its deposit levels were "stabilized."

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