California banking competition reshaped by large failures, M&A

Large bank failures and big bank deals have drastically reshaped California's competitive landscape over the past four years.

Despite an 18.0% decline in total deposits in the Golden State between June 30, 2022, and June 30, 2025, several banks were able to buck the trend and grow deposits and market share through M&A. Of the eight banks in the top 20 deposit holders in California that grew deposits during that time period, five struck bank deals. Another two banks struck deals that landed them in the top 20 after previously being unranked, according to the Federal Deposit Insurance Corp.'s June 30, 2025, Summary of Deposits.

The top three banks by deposit market share have remained the same since 2022, with Bank of America Corp. and Wells Fargo & Co. atop the list, followed by JPMorgan Chase & Co. However, while total deposits shrunk since 2022 for Bank of America and Wells Fargo, JPMorgan grew deposits by 0.5%. The company also posted the second-highest market share increase, at 294 basis points.

In May 2023, JPMorgan assumed substantially all the deposits and assets of failed San Francisco-based First Republic Bank.

The failure of Santa Clara, California-based Silicon Valley Bank helped boost First Citizens BancShares Inc.'s total deposits, up 92.8% since 2022, bumping it to seventh in deposit market share from 12th. First Citizens acquired nearly all the deposits and certain assets of Silicon Valley Bridge Bank NA.

Aside from failed bank deals, traditional bank M&A helped other banks rise in the rankings or establish a new presence in the state.

Bank of Montreal recorded the largest increase in deposits, shooting to the top 10 list from being unranked. The Canadian bank acquired San Francisco-based Bank of the West in February 2023, rocketing to No. 9 in deposit market share. More recently, previously unranked Fifth Third Bancorp bought Dallas-based Comerica Inc., bringing it to 18th, with $14.91 billion in California deposits.

U.S. Bancorp recorded the largest market share increase, up 388 basis points, and the second-largest total deposit increase, up 110.5%. The company jumped to No. 4 in deposit market share from No. 10, partly thanks to its acquisition of San Francisco-based MUFG Union Bank NA in December 2022.

Meanwhile, Columbia Banking System Inc. posted the largest deposit market share spot jump for a previously ranked bank to No. 11 from No. 29 and the largest increase in total deposits, at 185.6%. Since 2023, Columbia has closed its reverse merger with Umpqua and subsequent acquisition of Pacific Premier Bancorp Inc.

More M&A on the way

Bank buys are set to continue reshaping the state's market in 2026 as buyers and sellers play catch-up on slow years, marked by purchase accounting issues and slower regulatory approval, Piper Sandler Co-Head of Investment Banking and Managing Director David Sandler said in an interview. Out-of-state buyers are increasingly eyeing the territory, he added.

Of the past 20 deals in the state, just seven had out-of-state buyers, but the tide could shift as banks eye economic growth opportunities in the region, Sandler said.

"Non-California banks are looking at California and saying, 'This is a place that it makes sense to compete to try and buy something.' But mostly, I think they're looking at the economics of the territory and saying, if 'We're going to enter here, we got to do it soon,'" Sandler said.

One bank eyeing a potential West Coast bank buy is First Hawaiian Inc., which said on its fourth-quarter 2025 earnings call in January that it is open to acquiring a bank west of the Rocky Mountains, with a good management team and between $2 billion and $15 billion in assets. Currently, the bank only has branches in Hawaii, Guam and the Northern Mariana Islands, but it has mortgage originations in several areas of California.

California community bank, M&A stats

California has several larger community banks, with eight banks measuring between $5 billion and $10 billion in assets, and 11 holding assets between $3 billion and $5 billion.

Among the 20 largest community banks in the state, Poppy Bank recorded the highest ratio of nonperforming loans (NPLs) to loans, at about 2.64% among the top community banks. This represents 235 basis points above the 0.30% median for California community banks.

River City Bank had the lowest ratio with no recorded NPLs. The bank also had the lowest efficiency ratio among the top 20 California community banks, at 30.51%, compared with the peer median of 63.08%.

Fremont Bank's efficiency ratio was the highest, at 73.16%, followed by Bank of Marin Bancorp. with 68.37%.

The state's community banks grew deposits 5.4% for the 12 months ended Sept. 30, 2025, with West Coast Community Bancorp.'s deposits rising the most among the top 20, up 59.6% year over year after it acquired 1st Capital Bancorp Oct. 1, 2024. The bank's net interest margin was also the highest among the selected banks, at 5.35%.

California BanCorp.'s deposits shrank the most among the group, down 7.1% from the prior year.

In the past 20 deals, eight sellers had over $5 billion in assets, boosted by 2023's two failures.

With the failures accounting for $399.94 billion in assets, assets sold in 2025 fell dramatically behind 2023, just 6.45% of the total, even as more deals were struck last year.

California notched seven deals in 2025, the second-most deals per year since 2018.