California Seizes Nano Banc, Ending Years-Long Struggles Culminating in Significant Financial Loss

California regulators shut down Nano Banc on Thursday, closing the book on a years-long saga of management turmoil at the Irvine-based lender and handing control of the institution to federal authorities.

The California Department of Financial Protection and Innovation said it seized the bank and named the Federal Deposit Insurance Corporation as receiver, according to a DFPI announcement. State officials pointed to Nano Banc's worsening finances and its failure to satisfy a recent DFPI directive as the immediate triggers for the takeover, though the agency said the roots of the collapse stretch back several years.

Nano Banc opened its doors in 2018 after Nano Financial Holdings acquired Commerce Bank of Temecula Valley, according to DFPI. Trouble began surfacing in 2020, when state examiners flagged serious lapses in risk oversight, including unapproved shakeups of the board and top leadership along with instances of executives benefiting themselves at the bank's expense, DFPI said.

Regulators responded with a string of enforcement measures over the following years. DFPI barred two former bank executives from ever working in the industry again and ordered Nano Banc to give regulators advance warning before adding anyone to its board or executive ranks. That order was soon violated, according to DFPI, when the bank sidelined executives, installed a new chief executive and chairman, and swapped out directors without giving the required notice. DFPI said at the time it warned such moves risked further destabilizing the bank, prompting a cease-and-desist order.

Financial pressures mounted further. After the bank posted a net loss of about $75.3 million, DFPI in March ordered Nano Banc to bolster its capital reserves, requiring it to hold tangible shareholders' equity equal to at least 9.5 percent. Regulators said the bank also had the option of winding down voluntarily or arranging a sale or merger with another institution, but it did neither.

Instead, DFPI said the bank's equity ultimately sank below the legal floor of 3 percent, leaving Nano Banc undercapitalized and operating in what regulators described as an unsafe manner. That breach led directly to Thursday's seizure and the appointment of the FDIC as receiver, the agency said.

Nano Banc held roughly $690 million in total assets at the time of its closure, according to DFPI. The FDIC said it accepted a bid from Sunwest Bank, based in Sandy, Utah, to take over all of Nano Banc's deposits, including those exceeding standard insurance limits, along with the bulk of its assets.

The bank's troubles also drew scrutiny from federal regulators. The Federal Reserve took its own enforcement action against Nano Banc in 2022 over concerns tied to governance, compliance, and the risk of insider dealing, before lifting that action in April 2025, DFPI said.

DFPI framed the closure as evidence of its resolve to prevent mismanagement from harming Californians and the broader state economy. The agency noted it recently pushed back against a federal proposal that would loosen oversight of bank leadership, and said it is weighing further steps to address risks tied to uninsured deposits and to hold accountable executives who mismanage state-chartered banks.

Customers of Nano Banc will automatically become customers of Sunwest Bank, DFPI said, with uninterrupted access to their funds through debit cards and checks. Deposits insured by the FDIC remain protected up to the standard limit of $250,000 per depositor, per ownership category, at each insured institution. DFPI directed consumers with questions about coverage to the FDIC or its own website for further guidance.