CEO of Tustin-born Sunwest Bank sees ‘economic uncertainty’ creeping in

Sunwest Bank hasn’t forgotten the Southern California roots that fueled its financial beginnings.

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The bank’s headquarters moved in 2021 to Sandy, Utah, leaving its Tustin digs for the promise of a better regulatory and compliance environment for a state-chartered institution.

Carson Lappetito, president and chief executive officer of Sunwest, never left Orange County, and continues to make the trip to Utah to handle the typical C-suite matters for a bank with nearly $5 billion in assets.

“Part of the reason for moving the headquarters was that it became very difficult to hire good people here in California,” Lappetito said. “We experienced a difficult employment environment because basically the cost of living became so expensive that there were certain functions you couldn’t economically operate here.”

The bank has stepped up its acquisitions this year after a hiatus of a dozen years — picking up branches in Colorado and failed banking assets in Irvine, close to Lappetito’s home in Tustin.

The business and commercial lender, founded by banking veteran James Engbarth as the Santiago Commercial Bank in Tustin in 1969, was renamed Sunwest Bank in 1980.

While Lappetito stayed in Orange County after the Utah move, the bank’s chairman is Eric Hovde, a Republican businessman who unsuccessfully ran for U.S. senator in Wisconsin in 2012 and 2024, and has never lived in the state.

Sunwest, which once was publicly traded, came into Hovde’s private equity portfolio over a dozen years ago and was taken private.

A pivotal moment in Sunwest’s history came during and after the financial crisis between June 2009 and January 2014, when the bank bought five failed banks (one in Irvine and another in San Clemente) from the Federal Deposit Insurance Corp.

Those acquisitions ended until Sept. 25, when California regulators seized Nano Banc, putting the FDIC in charge of its deposits and assets. The seizure was the first of its kind in more than three years in the state.

The FDIC, which insures the nation’s bank deposits, entered into a purchase agreement with Sunwest, which subsequently acquired substantially all deposits and assets of Nano Banc.

Today, Sunwest has three branches in Orange County, including Irvine, Tustin and San Clemente — and another 11 in all the states where it operates. The Nano Bank location along Irvine Center Drive is shutting down in the next few months, according to the 40-year-old Lappetito.

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. Regulators seized Silicon Valley Bank in Santa Clara and Silvergate Bank in San Diego, both in March of that year, and San Francisco-based First Republic Bank two months later.

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.

Lappetio said that Sunwest derives about half of its $3.468 billion in total loans from Orange County borrowers, and cited as an example real estate developer Dan Almquist, who financed $70 million to create River Street Marketplace in San Juan Capistrano.

Through last year, the bank’s assets — cash reserves, customer loans and securities — grew by $3 billion.

We asked Lappetio about the challenges today in the banking world. His answers have been edited for clarity and length.

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Q: Does Sunwest have a strategy of buying failed bank assets?

A:  There have been five failed banks in 2026. Nano was the first in California this year. There haven’t been many failed banks (59) since 2014. Denver branches we bought earlier this year were not a failure.

(The six bank failures in 2026 are the most since eight in 2017. The FDIC reported 492 bank failures from the Great Recession era from 2006 through 2013 — with 17 in 2014 when Sunwest bought its last failed bank.).

We’re always looking at opportunities. My background is in mergers and acquisitions. Our chairman’s background is in investment banking and M&A. We’ve done a significant number of transactions in our respective careers, but they need to make sense economically.

It was a very strategic decision to grow across  the Rocky Mountain West in states like Arizona, Utah, Idaho and Colorado. We strategically focused on acquisitions in those markets, and some of those failed bank acquisitions allowed us to expand our footprint, and then we kept growing from there.

Today, we have roughly half of our loan portfolio in California (mostly Orange County), and the other half in the Western U.S.

The bank nearly failed in the 1990s after going public in the 1980s. In 2009, the bank bought a number of failed banks, and we started diversifying outside of California.

Eric Hovde and his brother, Steve Hovde, bought a majority of the publicly traded shares of Sunwest in the mid-1990s and took it fully private in 2016.

Q: Why did Sunwest move out of Tustin to Utah?

A: We had team members commuting an hour-and-a-half to Orange County, and we could just see the writing on the wall that these cost of living issues weren’t going to get any better. As part of this relocation, we offered our team members here the ability to relocate to Utah or Idaho, and many of them took us up on it. We put relocation packages together for every one of them. We paid for their families to fly to Utah, to Idaho or Arizona, and tour them, help find a house. Many of them relocated, and they love it.

A big part of of changing the charter was we needed to figure out a way to continue to grow the business that accommodated our footprint. Utah is an exceptional banking market.

Every state courted us. We looked at every state we operated and asked where we should we move our headquarters, and we interviewed every one of them.

Q: What is Sunwest’s strategy when it expands into a new market?

A: I can’t tell you at what cadence or pace that will happen. I would say that we’re focused on continuing to grow in the Western U.S.  With our Colorado acquisition earlier this year, we built a small team in Colorado just about three years ago, where we do real estate and business lending in Colorado, and we wanted to get bigger in that market, and so we kept our eyes out for opportunities. We’re constantly looking for those kinds of acquisitions in the Western U.S.

We run a branch-light model. Our theory is you need one to two offices in every market you serve. You also need a big sign that people know where to go if they need to find you. Our view is we come to you. If you need to come to us, great. But we’ll come to you. (Sunwest is a commercial bank that focuses on lending to small-to-medium-sized businesses, entrepreneurs, family wealth offices, real estate developers and specialized industry lending).

Q: Any markets that you’d like to expand to?

A: Austin, Texas. It’s a strong growth market and it’s less banked than, say, Dallas — which has way too many banks. We’ve talked about opportunities in New Mexico. We’ve looked at expanding to San Francisco. The artificial intelligence story is creating an incredible revival in San Francisco. The new mayor (Daniel Lurie) has done an incredible job dealing with the safety issues that existed there during and immediately after the pandemic, and so you’re seeing all of the right things happening in San Francisco. We’ve talked about opening a loan production office there.

Q: Is the economy slowing down?

A: Something has changed in the last month.

What’s slowing down is consumer discretionary (non-essential goods and services that people buy when they have disposable income and feel confident about the economy). There’s also manufacturing slowing down. But defense technology is booming. If you look at Huntington Beach and all those historical defense companies locally, they’re doing exceptionally well. But you’re seeing dining out declining. People are moving from mid-tier restaurants down to more fast casual — which are seeing higher check sizes right now, which does tell you that there’s some trade down probably happening.

There is some concern I have that the slowdown in consumer spending is not just in the middle class, where certain pockets of wages are not keeping up with inflation. I think it’s creeping up even higher as you go through the economic ladder.

Economic uncertainty is creeping into people’s thinking.

Sunwest, by the numbers

Net income: $71.2 million as of Dec. 31, 2025, vs. $45.3 million in 2024.

Loans: $3.468 billion*

Deposits: $4.081 billion*

Assets: $4.884 billion*

Employees: 341 end of June 2026.

Source: Federal Financial Institutions Examination Council  *Includes Nano Banc acquisition in September 2026

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 Key acquisitions

• Nano Banc, Irvine. Sunwest bought $476 million of failed bank’s assets, and assumed $686 million in deposits, Sept. 25, 2026.
• Bank of Denver. Sunwest bought total loans of $402 million and deposits of $388 million, from Nicolet National Bank’s banking unit in Denver. Nicolet spun off the branches to Sunwest on April 21, 2026, as part of its February 2026 acquisition of MidWestOne Financial Group Inc.
• Syringa Bank, Boise, Idaho. Sunwest bought $153.4 million of the failed bank’s assets, and assumed $145.1 million in deposits, Jan. 31 2014.
• Westside Community Bank, University Place, Washington. Sunwest bought $97.7 million of the failed bank’s assets, and assumed $96.5 million in deposits. Jan. 11, 2013.
• Pacific Coast National Bank, San Clemente. Sunwest bought $134 .4 million of the failed bank’s assets, and assumed $130.9 million in deposits, Nov. 13, 2009.
• First State Bank, Flagstaff, Arizona. Sunwest bought $105 million of failed bank’s assets, and assumed $95 million in deposits, Sept. 4, 2009.
• MetroPacific Bank, Irvine. Sunwest bought $80 million of the failed bank’s assets, and assumed $67 million in deposits (except $6 million in brokered deposits), June 26, 2009.

Source: FDIC