PacWest's stock soars again as part of a broad regional-bank rally
By Tomi Kilgore
PacWest stock has rocketed 67% in the past 5 days
Shares of PacWest Bancorp shot up in active trading toward a three-week high Tuesday, as part of a broader rally for the regional bank sector.
The Beverly Hills, Calif.-based bank's stock (PACW) climbed 11.9% in afternoon trading, putting it on track to close at the highest price since May 1. Trading volume swelled to 54.5 million shares, compared with the full-day average over the past 30 days of about 36.5 million shares.
That extended the stock's recent surge, which included Monday's 19.6% jump after the bank unveiled a plan to sell $2.6 billion worth of loans. It has now rocketed 67.6% over the past five sessions.
D.A. Davidson analyst Gary Tenner reiterated his neutral rating on the stock but boosted his price target by 167%, to $8 from $3.
Tenner said that while loans sale was part of a strategy to divest non-core, non-relationship assets put in place in early 2023, the recent deposit pressures experienced after the closing of several regional banks have increased the importance of asset sales as it relates to removing funding pressure.
"The transaction furthers [PacWest's] progress in refocusing on its core, relationship-based community bank segment, and away from non-core, non-deposit national transactions," Tenner wrote in a note to clients.
Meanwhile, the SPDR S&P Regional Banking exchange-traded fund (KRE) climbed 2.5%, also toward a three-week high, and with 139 of its 143 equity components gaining ground. That bucked declines in the broader stock market, as the S&P 500 index slumped 0.7%.
Among the regional banking ETF's other more-active components, shares of First Horizon Corp. (FHN) advanced 3.0%; Truist Financial Corp. advanced 2.9%; Huntington Bancshares Inc. (HBAN) were up 1.7%; and of Zions Bancorporation (ZION) rallied 6.7%.
Western Alliance Bancorp's stock slipped 0.2%, to reverse an earlier intraday gain of as much as 3.8%.
The regional bank ETF has dropped 29.4% year to date, while the Financial Select Sector SPDR ETF (XLF) has slipped 5.2% and the S&P 500 has gained 8.4%.
-Tomi Kilgore
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May 23, 2023 14:04 ET (18:04 GMT)
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