According to Reuters, PacWest Bancorp (NASDAQ:PACW), a bank holding company, is in talks with Atlas SP Partners and other investment firms to boost liquidity. The company is also considering multiple options. However, a deal may not materialize.
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The move comes when investors are dumping bank stocks on liquidity concerns. The collapse of SVB Financial Group and Signature Bank, followed by the Credit Suisse (NYSE:CS)(GB:0QP5) crisis, has put the sector under scrutiny. Given the concerns, analysts stay sidelined on PACW stock.
PACW stock dropped about 59% month-to-date. To soothe investors, PACW announced that its deposit base is well diversified, including retail, commercial, homeowner associations, community banking, and venture deposits. Moreover, its total deposit stood at $33.2 billion as of March 9, 2023, compared to $33.9 billion as of December 31, 2022.
PACW’s CET1 ratio (risk-based capital ratio) has increased in the past three consecutive quarters. It stood at 10.61% as of December 31, 2022, higher than the regulatory requirements.
Highlighting its liquidity position, PACW stated that its balance sheet had a cash position of $1.9 billion as of March 9, 2023. It also had a Federal Reserve Discount Window availability of $2 billion and liquid securities of approximately $5.3 billion.
What’s the Prediction for PACW Stock?
While the financial institution’s management reiterated that the company is performing well, is well-diversified, and has excellent asset quality, the volatility in the banking industry in light of recent developments keeps analysts sidelined.
PACW stock has one Buy and four Hold recommendations for a Hold consensus rating. Analysts’ average price target of $29 implies 153.28% upside potential.
