California regulator cites mismanagement for closing Nano Banc
Nano Banc in Irvine, Calif., was closed by California’s Department of Financial Protection and Innovation.
The Federal Deposit Insurance Corp., appointed as receiver, entered into a purchase and assumption agreement with Sunwest Bank in Sandy, Utah, to assume substantially all of Nano Banc’s $686 million of deposits and acquire $476 million of assets.
The DFPI, in its release, said it closed Nano Banc after years of executive mismanagement, a series of board-level compliance failures, and severe financial losses.
Founded in 2018 by alumni of California Republic Bank, Nano Banc grew quickly around commercial real estate lending, reaching roughly $1.3 billion in assets by mid-2026. Along the way, it drew a Federal Reserve written agreement over governance and risk management, plus a rare DFPI C&D order after the bank reshuffled its board and executive team without required advance notice.
The $736 million-asset Nano Banc’s nonperforming loan ratio climbed from roughly 1.8% in early 2025 to over 28% in the first quarter of this year.
Worth watching: DFPI is at odds with federal regulators over a proposed overhaul of the CAMELS bank rating system, the confidential framework used to grade bank safety and soundness. The state agency made a vague reference to the issue in its release announcing Nano Banc’s failure.
The FDIC estimates that the failure will cost the Deposit Insurance Fund about $114 million.