PacWest Bancorp (PACW)

Regional banks are bouncing back strongly after the spring meltdown. This has rallied 19% recently, instead of failing outright like so many on Wall Street predicted. Based on strong earnings by its peers, he expects a good quarter from PACW in tomorrow's report, but limited upside because it has run up so much already.

His highest exposure to US regional banks, though total exposure is only about 2.5%. Believes it will come through OK, but it depends on crowd mentality, as that's what's driving things at the moment.

(A Top Pick Jun. 21'17, Up 23%) They are a highly acquisitive regional bank. Regulation is being lifted off these companies by the Trump administration. They used to have a huge regulatory burdon. It is at about 15 times earnings. He thinks there is opportunity for consolidation in this area.

A regional bank in the California area with about 80 branches. This has been a serial acquirer. They’ve bought a number of small-cap banks ranging from $200 million-$800 million market capitalization. It is really a commercial lender, both on the real estate side and the business side. Net interest margins are quite healthy at more than 5%. Trading at about 17X earnings. Dividend yield of 4.2%. (Analysts’ price target is $56.)