California regulators seized Irvine-based Nano Banc on Monday, Sept. 28, putting the Federal Deposit Insurance Corp. in charge of its deposits and assets, a first seizure of its kind in more than three years for the state.
Action from the California Department of Financial Protection and Innovation comes after the commercial bank failed to comply with the financial department’s enforcement order related to its “deteriorating financial condition, as well as a multi-year pattern of executive mismanagement and regulatory violations.”
State regulators said in a statement provided to Southern California News Group that the bank was operating with inadequate capital and in an unsafe and unsound manner. “The bank could have voluntarily liquidated or sold to or merged with another institution — but Nano Banc failed to successfully take any of the available actions,” a DFPI spokesperson wrote.
Starting in 2020, DFPI said it discovered significant risk management weaknesses and law violations at Nano Banc, including repeated unauthorized changes to the board and executive self-dealing.
The FDIC, which insures the nation’s bank deposits, entered into a purchase agreement with Sunwest Bank of Sandy, Utah, which subsequently acquired substantially all deposits and acquired certain assets of Nano Banc.
An FDIC spokesman was not immediately available for comment.
The privately held Sunwest said it reopened Nano Banc as a branch of its institution on Monday. Sunwest holds $5 billion in assets.
The former Nano Banc at 7755 Irvine Center Drive joins three other Sunwest branches in Orange County in Irvine, Tustin and San Clemente. Sunwest also has loan offices in El Segundo and Glendale.
Sunwest has no other offices in California.
Nano Bank was formerly Commerce Bank of Temecula Valley in Murrieta and had $76 million in assets when it was acquired for $23.3 million by Nano Financial Holdings. Commerce Bank effectively left Murrieta when Nano Banc bought the institution in 2018.
Carson Lappetito, president and chief executive officer of Sunwest, said in a statement provided to the SCNG that his institution is known for its “strength and security” and has been serving Orange County since 1969, when it was originally founded in Tustin.
“We are a well-known brand in the Orange County market, and we have already heard a sense of relief from the Nano Banc customers we have spoken with,” Lappetito said. “As of this morning (Sept. 26), deposit clients are doing business as usual with Sunwest Bank.”
Sunwest’s banking footprint also covers Arizona, Colorado, Florida, Idaho and Utah.
The collapse of Nano is the first since a trio of major banking institutions were seized in the spring of 2023.
The CDFP seized San Francisco-based First Republic Bank in May that year, and Silicon Valley Bank in Santa Clara and Silvergate Bank in San Diego in March.
The First Republic collapse marked one of the largest bank failures in U.S. history. Regulators stepped in after a massive bank run exposed vulnerabilities linked to declining asset values amid rising interest rates. JPMorgan Chase bought its deposits and assets.
The FDIC said in a statement that customers of Nano Banc will have immediate access to their deposits. Checks drawn on Nano Banc will continue to be processed. Loan customers of Nano Banc should continue to make their payments as usual.
As of June 30, 2026, Nano reported total assets of $736 million and deposits of $686 million. It will also buy roughly $476 million of the failed bank’s assets. The FDIC will retain the remaining assets for later disposition.
The FDIC preliminarily estimates the failure will cost the agency’s deposit insurance fund about $114 million.
Two years ago, Nano initiated a leadership change with Mary Lynn Lenz as president and chief executive, and Lynn McKenzie-Tallerico as board chairwoman.
Regulators didn’t say whether the executive mismanagement fell under Lenz and McKenzie-Tallerico, their predecessors — or both.