Embattled California bank is latest to fail

• Key insight: Nano Banc’s failure is the sixth of 2026, a significant uptick compared with two failures each in 2024 and 2025.
• Supporting data: The Federal Deposit Insurance Corp. estimates the failure will cost the Deposit Insurance Fund $114 million, adding that it will retain roughly $260 million of Nano Banc’s assets for later disposition.
• Expert Quote: “Sunwest Bank agreed to assume substantially all deposits at the time of closing. It will also purchase approximately $476 million of the failed bank’s assets,” the agency wrote in a release.  “The FDIC will retain the remaining assets for later disposition.”

The Federal Deposit Insurance Corp. on Friday announced the failure of a California community bank Nano Banc of Irvine, California. 

Processing Content

Substantially all of Nano Banc’s deposits were bought by Sunwest Bank of Sandy, Utah, according to the FDIC’s Friday announcement. The firm’s CEO noted the bank’s history of acquiring failed firms in a release.

“We are honored to once again be selected by the FDIC as the acquiring institution of an FDIC-assisted acquisition, marking the sixth time Sunwest Bank has completed such a transaction,” said Carson Lappetito, President and CEO of Sunwest Bank in a press release. “This opportunity reflects the financial strength, disciplined management, and stability that have defined Sunwest Bank for more than five decades.”

The failure of the $736 million-of-assets bank marks the sixth failure this year, a notable pickup in the pace of failures from recent years. Still, according to the FDIC, the overall number of distressed “problem” banks decreased by seven to settle at 47 institutions, or 1.1% of the industry, well within the FDIC’s “normal range,” in the second quarter. Only two banks failed in both 2025 and 2024. The FDIC recently proposed lowering deposit insurance assessments for small banks, which could see their assessment rates decrease by two basis points under a June proposed rule.

“Sunwest Bank agreed to assume substantially all deposits at the time of closing. It will also purchase approximately $476 million of the failed bank’s assets,” the agency wrote in a release.  “The FDIC will retain the remaining assets for later disposition.”

The defunct Irvine lender had only a single branch, which will reopen on Monday as a Sunwest branch. Sunwest describes itself as “a privately held commercial bank with more than $4 billion in assets,” according to its Linkedin. Those with deposits at Nano will automatically become Sunwest customers and will have access to their funds without interruption. 

The FDIC estimates the failure will cost the Deposit Insurance Fund $114 million, though that number is subject to later adjustments. 

The Federal Reserve in February 2021 issued an enforcement action against Nano Banc concerning its concentration risk in commercial real estate lending. Its parent companies, Allegiant United Holdings and Nano Financial Holdings, were directed to submit plans for improvements to the bank’s commercial real estate lending strategy under the agreement with the Fed. As of December 31, 2020, more than half of the bank’s then-$886 million of loans were backed by commercial properties, according to FDIC data analyzed by American Banker at the time.

Read more:

In December 2021, California’s Department of Financial Protection and Innovation issued a cease-and-desist order against Nano Banc alleging that it had violated a prior order by appointing a CEO without notifying state regulators. The February 2021 state order had required the bank to provide 30 days’ advance notice before appointing or employing executive officers and obtain the commissioner’s non-objection.

In January 2022, the Fed ordered Nano Banc and its parent companies to make sweeping changes to their compliance and governance practices through a cease-and-desist order. The order focused on improving oversight of lending to bank insiders, strengthening the bank’s leadership and board, and addressing deficiencies involving “insider transactions” and corporate expenses, including personal expenses paid through corporate credit cards. It also required enhanced underwriting standards for commercial real estate loans and other categories of lending.

Nano’s interim CEO and co-founder Anthony R. Gressak III was fined and banned from banking in 2024 after allegedly obtaining $15.5 million in pandemic relief funds fraudulently.