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.
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.
