* Combined bank to have total loans of $25.3 bln

* Warburg Pincus, Centerbridge buy new shares

* PacWest shares soar 34%, Banc of California up 9%

(Adds details on regulatory approval in paragraph 12, CEO quotes in paragraphs 13 and 17, analyst comment in paragraphs 21-22)

July 25 (Reuters) - Banc of California and PacWest Bancorp will merge in an all-stock deal to create a bank with $36 billion in assets, the companies said on Tuesday, coming together just months after the regional banking sector was mired in crisis.

To help fund the combination, the lenders have also agreed to sell $400 million of new shares to private equity firms Warburg Pincus and Centerbridge Partners.

The combined bank will have $25.3 billion in total loans and more than 70 branches in California. It will be based in Los Angeles and led by Banc of California CEO Jared Wolff.

PacWest was among the lenders that were rocked by the collapse of three regional banks earlier this year, prompting the worst industry turmoil since the 2008 financial crisis.

"Both the banks are in the same geographies, are focused on commercial assets and so this could be seen as a marriage of convenience," Timothy Coffey, an analyst at Janney Montgomery Scott, said before the deal was announced.

Shares of PacWest surged 34% after the market close, while Banc of California jumped 9%.

PacWest stockholders will receive 0.6569 Banc of California shares for each PacWest share they currently own. Meanwhile, the two private equity firms will be issued new Banc of California stock worth $400 million at a price of $12.30 per share.

Treasury Secretary Janet Yellen said in May that more mergers among midsize U.S. banks could be necessary after a series of bank failures.

PacWest has been signing deals to shed some assets and strengthen its balance sheet. Last month, it said it would sell a $3.54 billion lender finance portfolio to asset manager Ares Management.

While the turbulence at regional banks has abated and lenders have stemmed deposit outflows, there remain concerns that some lenders may still be struggling.

RARE DEAL

The deal marks a rare transaction in the market after several months of government-negotiated sales of failed banks. Bank mergers have also been held up for months or scrapped awaiting regulatory approval.

Securing regulatory clearance for bank mergers on a timely basis has been a key concern of industry figures in recent times. However, two sources familiar with the transaction said the announcement showed confidence among the parties of achieving necessary sign-offs.

Wolff said regulators were aware of the merger process from a "very early phase."

The merger is expected to be completed by late 2023 or early 2024.

PacWest had a market capitalization of $1.24 billion as of Monday, almost 63% higher than that of Banc of California, according to Refinitiv data.

PacWest had total assets of $44 billion at the end of March, while Banc of California had assets of $10 billion, according to separate company filings.

"Over the past 18 months, the competitive environment in California has changed dramatically," Wolff told analysts on a conference call. "We've seen many other banks either completely exit or significantly pull back from California. As a result, there's a sizable opportunity."

He previously served as president of a PacWest subsidiary, Pacific Western Bank, and oversaw more than 20 acquisitions in his time there.

A spokesperson for the Office of the Comptroller of the Currency, which regulates the Banc of California, declined to comment. The Federal Deposit Insurance Corporation, which oversees PacWest, did not respond to a request for comment.

The recent banking crisis has underscored predictions for a round of industry consolidation, analysts said, but uncertainty over changing capital rules has deterred transactions so far.

Accounting rules present further hurdles, because they require banks to mark their securities portfolios to current market values in an acquisition, and take losses upfront, said David Smith, an analyst at Autonomous Research.

Under the merger agreement, Banc of California's balance sheet will be marked, while PacWest will avoid such marks as it is the "accounting acquirer."

The U.S. currently has more than 4,700 banks, government data showed. It is likely that only half may survive in a decade's time, Nomura believes.

The global financial crisis of 2008 also contracted the size of the banking sector. From 2007 through 2013, the number of independent commercial banks operating in the U.S. shrank by 14%, or 800 institutions, government data showed. (Reporting by Niket Nishant in Bengaluru and Nupur Anand and David French in New York; additional reporting by Pete Schroeder, Tatiana Bautzer, Megan Davies and Lananh Nguyen; Editing by Arun Koyyur, Lananh Nguyen, Jonathan Oatis and Sonali Paul)