PacWest stock flash crash recovers after bailout merger with Banc de Cali

PacWest shares tumbled 27% before rallying in a bailout acquisition by smaller Bank of California.

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PacWest Bank flash shares tumbled 27% on July 25 to recover quickly in after-hours trading following news of its merger with Banc of California.

PacWest Bancorp shares fell from $10.33 to $7.50 in late trading on July 25, sparking concerns within the financial and crypto community, with some wondering if "the next banking meltdown" was beginning.

The stock price rallied after the July 25 close and stood at $10.10 at the time of writing, according to Google Finance.

$44 billion bank PacWest Bancorp $PACW collapsed more than 25% today

Is the next banking meltdown starting now? pic.twitter.com/lOopnmCXvB

— Crypto Rover (@rovercrc) July 25, 2023

The rapid recovery was spurred by PacWest's July 25 merger with its smaller rival, the Banc of California, as both banks reportedly seek consolidation after the banking industry turmoil in early 2023.

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The all-stock merger was backed by two private equity firms, Warburg Pincus and Centerbridge, which will provide $400 million in equity, giving them an approximate 19% stake in the combined company.< /p>

The combined banks are expected to have approximately $36 billion in assets and over $25 billion in total loans.

PacWest's market cap is about $1.2 billion, while Banc of California's was about $764 million, for a combined market cap of about $2 billion, according to Reuters ...