California bank disobeys enforcement order by hiring new CEO

California’s top financial watchdog has issued a cease-and-desist order against Nano Banc, saying the $1.2 billion-asset bank violated a consent order signed earlier this year by replacing a slate of board members and appointing a new CEO without notifying state regulators. .

The state’s Department of Financial Protection and Innovation issued an order in February that required the bank to improve its capital position and reduce its concentration of commercial real estate loans. The order also said that the Irvine, California, bank must obtain the regulator’s approval before announcing any senior management changes.

The Federal Reserve also raised concerns in March about elevated concentrations of CRE loans, according to a March enforcement action from the agency.

The regulator said it was notified on Dec. 13 that Nano Banc shareholders removed six directors and put two executive officers on administrative paid leave, according to the Dec. 15 cease-and desist-order. Five directors were elected to the board, and a new chairman and CEO was installed as well.

The order did not name the directors, the executives who were put on leave or the name of the new chairman and CEO. Nano Banc has made no public mention of the decisions and a spokesperson for the company did not reply to a request for comment.

Nano Banc was co-founded by Mark Troncale, Mark Rebal and Anthony Gressak as a fintech company focused on ridding the wire transfer business of fraud. In 2018, the company leaped into commercial banking by acquiring Commerce Bank of Temecula Valley in Murrieta, California.

Rebal had been the bank’s CEO.

The February order required the department be given at least 30 days notice before the company could announce any changes. And no new executives could be appointed without a written approval from the commissioner in the form of a non-objection letter.

The California Department of Financial Protection and Innovation’s commissioner warned the moves made in violation of the February order “may weaken the condition of the bank.”

Nano Banc is required under the new order to cease operating under the new CEO and board members until receiving the non-objection letter.

Continued violation of the February order “will be deemed to be conducting business in an unsafe or unsound manner” and put the company at risk of facing civil penalties, according to the Dec. 15 order.

A spokesperson for the California Department of Financial Protection and Innovation declined to comment.