California bank hit with C&D order tied to board shakeup

Nano Banc in Irvine, Calif., has been issued a cease-and-desist order after replacing several directors and hiring a new CEO without securing approval from California’s Department of Financial Protection and Innovation. 

The state regulator issued the C&D order against the $1.2 billion-asset bank on Dec. 15. The order states that Nano Banc violated a February consent order requiring the bank to provide notice to the state regulator before making any senior management changes. 

Nano was also required to reduce its concentration of commercial real estate loans and improve its capital levels. 

The Department of Financial Protection and Innovation said in the C&D order that it recently found out that Nano’s shareholders had removed six directors and placed a pair of executive officers on administrative paid leave. The bank appointed five new directors and a new chairman and CEO without notifying the regulator, the order claimed.

“The commissioner finds that the acts described … may weaken the condition of the bank,” the C&D order said. 

The new order instructs Nano to cease operating under the new CEO and board until it receives a non-objection letter. Ignoring the order could put the bank at risk of facing civil penalties. 

Nano Financial Holdings, a fintech, obtained a bank charter in May 2018 when it bought Commerce Bank of Temecula Valley. The bank’s website makes no mention of the board shakeup or the appointment of a new CEO.