Shares of PacWest Bancorp jumped after the troubled regional lender announced that it had agreed to sell $2.6 billion worth of real estate construction loans at a discount in a bid to improve its balance sheet, Reuters reported. PacWest’s stock rose nearly 20% on the deal, giving the Los Angeles-based bank breathing space to cope with a flight of deposits that followed the collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank. PacWest shares have rebounded in tandem with other regional banks in the past two weeks as investors increasingly believe the worst of the crisis was largely over and that many lenders were fundamentally sound. The bank’s stock has more than doubled from a record low hit in early May although its market value has fallen by nearly three-quarters since the onset of the crisis in March. PacWest’s share gain helped to buoy trading in other regional lenders, with the KBW Regional Banking Index adding 3%. Western Alliance Bancorp rose 10.3%, Comerica Inc (added 3.5%, and Zions Bancorporation gained nearly 5%. PacWest sold 74 real estate construction loans that have an outstanding balance of $2.6 billion to property firm Kennedy-Wilson Holdings Inc. for $2.4 billion — a $200 million discount, a regulatory filing showed. Kennedy-Wilson said that it will also assume $2.7 billion in potential funding obligations associated with the loans, and will take over, subject to clearances secured by PacWest, an additional six real estate construction loans with a balance of about $363 million. (Subscription required.)
