Opinions
Gordon Reid
PacWest Bancorp
PACW-Q
PAST TOP PICK
Jun 07, 2018
Stock price when the opinion was issued
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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.)
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.
(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.