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Earlier this month, the bank had said it was exploring strategic
asset sales to sharpen focus on its core business segments as
the regional banking sector grapples with its biggest crisis
since 2008.
Brokerage firm D.A. Davidson & Co raised its price target on
PacWest to $8 from $3, saying the deal would help the bank build
its common equity tier 1 (CET1) capital - a core measure of a
lender's capital.
"While the strategy (to divest non-core assets) was put in place
in early 2023, recent events have increased the import of asset
sales as it relates to removing funding pressure from the
balance sheet and building CET1 capital," the brokerage wrote in
a note to clients.
Shares of PacWest were up 13% at $7.73 in premarket trading on
Tuesday.
On Monday, the Los Angeles-based bank's shares surged nearly 20%
on its announcement to sell 74 real estate construction loans
with an outstanding balance of $2.6 billion to property firm
Kennedy-Wilson Holdings Inc, at a discount of nearly $200
million.
Shares of Western Alliance Bancorp, Zions Bancorp and Fifth
Third Bancorp were also up nearly 1% each before the bell.
The KBW Regional Banking Index, however, is still down nearly
4.6% since First Republic Bank became the third U.S. lender to
collapse earlier this month.
(Reporting by Niket Nishant in Bengaluru; Editing by Shinjini
Ganguli)
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