Why are these regional banks announcing decent/optimistic earnings reports and failing days later?

Hi guys,

As I have been analyzing the regional banks during this crisis to find some good deals for potential longs I have noticed the earnings reports for most of these banks have been relatively decent right before their collapse. I just want someone knowledgeable on the matter to explain why these banks are failing while almost misleading investors about their true financial position. How can a bank go from positive EPS, and a sustainable balance sheet, to then absolute collapse just days later? I know the cause of the collapses, which is primarily interest rate risk, but it's confusing to me how on paper these guys look fine and act like things are turning around and then the FDIC takes them over shortly after.

It started with FRC, which despite losing around $100 billion in depositors, it seemed their operation maintained profitability and the borrowed liquidity from the Federal Reserve covered more than the uninsured depositors. They also acted like outflow stabilized and they were committed to covering their short-term liabilities. They also maintained liquidity ratios above the regulatory requirements. Basically, in short, stating that the worst was over. Then just days later the FDIC took them into receivership and they were auctioned off to JP Morgan, completely wiping out shareholders.

The next more recent one which is new today is PACW. They had earnings last week that were promising. Stated deposits actually increased, remained profitable and also stated they stabilized. They didn't seem to mention if they would keep their dividend or not but things seemed like they were ready to turn around for PACW. Then now the speculation is they are looking for a buyer and potentially may get taken over by the FDIC too.

Both of these happened so quickly despite seeming fine in their earnings calls. I just want some sort of explanation of how even though the earnings call seemed decent these banks capitulated so quickly. Does it have to do with management misleading investors or is there something big I am missing? I know some of these banks held a bunch of toxic assets, such as the super low-interest rate mortgages First Republic locked in with rich clients, but it still seemed like the bank itself was profitable.

I appreciate any sort of insight you can provide for analyzing these banks in the future, and the main red flags to look for when diving into the filings.

Thanks!