- PacWest disappointed relative to Street expectations for revenue, pre-provision profits, and core earnings, with less positive leverage than expected from credit.
- Absent a single large charge-off, credit quality isn't really that far out of line with historical experience, but there are growing signs of strain, particularly in the CRE book.
- Between reserves and capital, I expect PacWest to get through this downturn, but it could take a little longer than for other banks.
- PacWest does look undervalued below the mid-$20's, but lingering concerns about credit losses and operating leverage will likely last a little while longer.
For further details see:
PacWest's Strong Core Profitability Overshadowed By Credit Concerns