PacWest Bank, which by no means totally recovered from its hammering throughout this 12 months’s banking disaster, might be absorbed by a smaller lender, Banc of California, the banks introduced on Tuesday.

The growth was a humbling finish for the 24-year-old PacWest, a as soon as fast-growing Los Angeles financial institution whose clients fled amid turmoil for regional lenders this 12 months. The PacWest identify might be retired, and the mixed banks will function underneath the Banc of California identify. Jared Wolff, the chief govt of Banc of California, will run the brand new entity.

In a sign of how weakened PacWest has turn into, the mixed financial institution may have simply $30.5 billion in deposits — significantly lower than the $34 billion that PacWest had firstly of the 12 months.

The banks stated the mixed firm “will have the strength and market position to support the banking needs of small and medium-sized businesses in California.” The private equity firms Centerbridge and Warburg Pincus will make investments $400 million within the deal, the banks stated.

Regional banks have been underneath strain since March, when Silicon Valley Bank’s collapse put a highlight on midsize lenders. Many such banks say it has become increasingly difficult for them to compete with the nation’s largest establishments as depositors prize the relative stability that large banks can provide.

PacWest has been probably the most imperiled regional banks. It has been quickly shrinking this 12 months, partially by promoting off loans to rivals. Its inventory was not too long ago buying and selling round $10 a share, one-third of its peak in August.

The transaction, which is topic to approval by regulators, turns the standard mergers-and-acquisition playbook on its head; usually it’s the bigger firm that buys the smaller one. Banc of California had 27 full-service branches, whereas PacWest had double that. (The new entity might be planning to shut some; Tuesday’s announcement guarantees “more than 70” branches in California.)

PacWest traders appeared disenchanted by the event. Its shares cratered 27 p.c in afternoon buying and selling on Tuesday, after The Wall Street Journal reported {that a} deal was imminent.

Banc of California shares rose 11 p.c.