Shares of PacWest Bancorp (NASDAQ: PACW) ended more than 20% down on Thursday after the regional bank reported significant deposit outflows for the first week of May.
Analyst’s view on the PacWest stock
The California-based bank noted a 9.5% hit to deposits in the week of May 5th.
It’s clear that some of their uninsured depositors are being spooked by the stock price action last week after they were rumoured to be looking for potential strategic alternatives.
Still, his “hold” rating on PacWest stock comes with a price target of $11 that suggests it could more than double from here.
PacWest recently trimmed its dividend
On the plus side, PacWest Bancorp was able to cover the outflows with its available liquidity that now sits at $15 billion versus $5.2 billion in uninsured deposits. According to Chiaverini:
Good news is that 75% of their deposits are insured. We saw about 10% of First Republic insured deposits leave. So, if some insured deposits leave PacWest, that’s when it can become a real issue.
Those interested in buying PacWest stock on today’s decline should also know that the regional bank recently slashed its quarterly cash dividend to just one cent per share.
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