California's Third-Largest Bank Takes Shape: Banc of California Finalizes PacWest Bancorp Integration with $400M Capital Infusion

Banc of California has officially closed its landmark combination with PacWest Bancorp, marking a strategic consolidation that reshapes California’s business banking landscape. The deal, which became effective on December 1, 2023, brings together two established financial institutions under the Banc of California banner, creating what executives describe as a powerhouse in relationship-driven commercial banking across the state.

Strategic Capital and Market Positioning

The integration came with substantial institutional backing—$400 million in fresh equity capital sourced from funds managed by Warburg Pincus LLC and investment vehicles associated with Centerbridge Partners, L.P. This financial reinforcement signals confidence from major investors in the combined entity’s operational strategy and market opportunity in a region experiencing a pronounced shortage of mid-market business banks.

Following the merger of PacWest into Banc of California, and the subsequent integration of Banc of California, N.A. into Pacific Western Bank, the organization emerges as California’s third-largest banking operation headquartered within the state. With more than 2,200 employees and a footprint exceeding 70 California branches plus locations in North Carolina and Colorado, the combined bank positions itself to capture share in an underserved segment.

Balance Sheet Recalibration and Asset Strategy

Management executed a deliberate portfolio restructuring ahead of and immediately following the merger close. The combined entity divested approximately $1.9 billion in assets as part of a broader balance sheet repositioning initiative. Pacific Western Bank alone sold roughly $1.5 billion from its securities holdings, including agency commercial mortgage-backed securities, collateralized mortgage obligations, treasury instruments, municipal debt, and corporate bonds. Separately, Banc of California, N.A. completed roughly $447.4 million in securities sales covering agency mortgage-backed securities, CMOs, and municipal obligations.

A forward sale arrangement covering the $1.8 billion single-family residential mortgage portfolio was targeted to close by December 1, 2023. Proceeds flowing from these transactions—combined with anticipated additional repositioning activity through Q1 2024—are earmarked primarily for reducing wholesale borrowings and refinancing higher-cost funding sources, a critical move in the current high-interest-rate environment.

Operational Integration and Client Focus

Jared Wolff, serving as Chief Executive and President of Banc of California, framed the combination as addressing a real market gap. “We’ve merged two respected institutions to build one of the nation’s leading relationship-focused business banks,” Wolff stated, emphasizing client service and community commitment as central to the post-merger identity.

The combined platform offers comprehensive commercial and real estate lending, with specialized expertise spanning healthcare and education finance, venture banking, HOA services, small business lending, warehouse lending, and entertainment and media operations. An in-house subsidiary, Deepstack Technologies, extends full-stack payment processing capabilities—a competitive differentiator in modern business banking.

Forward Outlook

The newly combined organization operates from Los Angeles headquarters and maintains deep roots across California while extending into adjacent markets. Management anticipates completing additional balance sheet repositioning through the quarter, with strategic implications for funding costs and net interest margin trajectory entering 2024. The integration represents not merely a consolidation of assets but an intentional reconfiguration of market presence in a competitive landscape where relationship banking and specialized industry expertise drive institutional client retention and growth.