After more than a dozen years as L.A.’s biggest bank, City National Bank has lost its grip on that title.

CIT Bank took the crown after its parent, Livingston, N.J.’s CIT Group Inc., snapped up OneWest Bank in August, combined the acquisition with its existing bank and placed the headquarters for the new entity into the Pasadena office of OneWest. Now boasting $43.6 billion in assets, the reconstituted CIT Bank has pushed City National and its $35.3 billion to the No. 2 spot.

In the lending industry, being the biggest bank in town carries significant bragging rights.

But Wade Francis, president of Long Beach bank consulting firm Unicon Financial Services Inc., said the practical significance of that honor will depend on how CIT deploys its might.

“Does CIT plan on getting into more commercial lending? Will it have a strategic change in focus?” said Francis of important questions to ask when determining whether the newer, larger entity will have a big impact on the area. “Size alone does not matter.”

CIT Group Chief Executive John Thain previously said that his firm is building a leading commercial banking franchise serving small and middle-market businesses. Of course, it remains to be seen how that might affect the L.A. economy.

Of course, it’s ironic that City National was edged out of its No. 1 position because of a merger. City National itself was bought this year by Toronto’s Royal Bank of Canada and is now part of a much bigger institution with about $800 billion in assets. But City National, still headquartered in downtown Los Angeles, remains a separate unit so it cannot count Royal Bank’s assets as its own.

City National executives declined to comment.

Bust to boom

OneWest has come a long way since it was forged from the wreckage of IndyMac, a savings and loan association and big mortgage lender that collapsed in 2008 after an old-fashioned bank run in which customers lined up to yank out their deposits. Regulators took over, eventually selling the thrift to a group of investors that christened it OneWest Bank and grew it to 73 retail branches in Southern California offering commercial and residential mortgage loans. Along the way, the old OneWest changed from a savings and loan association to a bank.

Commercial lender CIT Group, which itself went bankrupt in 2009 despite getting $2.3 billion from the federal Troubled Asset Relief Program, announced the acquisition of OneWest’s parent company, IMB Holdco, more than a year ago.

The merger faced fierce community opposition led by San Francisco nonprofit California Reinvestment Coalition, which criticized OneWest’s foreclosure record and alleged lack of investment in lower-income communities. Others also bemoaned generous government assistance given to OneWest and CIT after the 2008 market meltdown.

Meanwhile, City National had reigned as the largest locally headquartered bank since 2002, with the exception of one quarter in 2010 when Pasadena’s East West Bank claimed that honor.

City National lost that title possibly for good this summer when regulators finally blessed the CIT Group’s acquisition. CIT combined OneWest and its existing bank, headquartered in Salt Lake City, and then moved the headquarters of that entity to OneWest’s former Pasadena office. (Third-quarter assets and other figures for L.A.’s banks were released earlier this month by the Federal Deposit Insurance Corp.; the chart of L.A.’s biggest banks is on page 22 of this issue.)

Big deal?

But the significance of that passing of the torch for Los Angeles remains to be seen. CIT executives were not available for an interview, possibly because the parent has been reorganizing its management team.

That shuffle included letting go former OneWest Chief Executive Joseph Otting, who became co-president of CIT Group and chief executive of CIT Bank, according to recent regulatory filings. He was replaced as CIT Bank chief executive this month by CIT Group Vice Chairman Ellen Alemany, who also will replace Thain as chief executive of CIT Group in the spring.

Bank consultant Francis said CIT Bank’s new status as L.A.’s largest needs to be viewed in the context of other major players in town, even if they’re based elsewhere.

“I don’t think it means a whole lot,” he said. “You have a lot of other banks not headquartered here that dominate the market like New York-based Chase, North Carolina-based Bank of America and San Francisco-based Wells Fargo. So from that standpoint, I don’t see it affecting consumers in any way, shape or form.”

Francis added that the big question is whether CIT plans on expanding services or adding new ones in Los Angeles. He also noted that OneWest’s assets doubled because of money coming from other parts of the country, not local deposits.

“For example, if I’ve got a bank in Los Angeles growing but growing outside of L.A., let’s say Phoenix or Texas, does that really impact L.A.?” Francis asked. “You may have more of an impact buying somebody locally here and pushing into new areas or offering new products.”

CIT Group noted in recent regulatory filings that in the wake of the OneWest deal, it has prioritized integrating existing banking operations and expanding the combined commercial banking franchise.

But if CIT plans to focus on commercial lending in Los Angeles, having an even bigger local bank could be good for the area’s medium-size businesses. They could benefit from having a larger institution that can service needs of their scale while being more familiar with its customers than a bank based across the country, said Morningstar Inc. analyst Daniel Werner, who’s based in Chicago.

Werner also views both OneWest and City National’s acquisitions – deals made by two banks already over the $10 billion-asset threshold many think is now needed to handle compliance – as the product of larger banks feeling pressured to grow revenue in a low-interest-rate environment.

“The yields banks receive on loans and securities have been pushed down while deposit costs can’t get any lower,” he said. “Margins have been pressed.”

Even though comments made by Federal Reserve Chairwoman Janet Yellen earlier this month caused many to think the Fed will soon raise interest rates for the first time in years, that hike will likely be modest, he said.

“If it’s just 25 basis points, it’s not going to do a whole lot,” Werner said. “It’ll help, but it certainly doesn’t completely solve the issue of tighter spreads.”

– Research Director David Nusbaum contributed to this story.