Banking and Finance Law Daily Wrap Up, OVERSIGHT AND INVESTIGATION—Treasury IG expands review of Santa Anna National Bank failure, (Mar 13, 2026)
Organizations Mentioned:Office of the Comptroller of the Currency
By Jonathan Anderson
Citing the significant role of fraud in the failure, the inspector general concluded that an in-depth review was warranted.
On March 11, 2026, the Treasury Department’s Office of Inspector General (OIG) issued a memorandum, OIG-26-023, presenting the results of the OIG’s limited review of the failure of Santa Anna National Bank in Santa Anna, Texas. The OIG found that the primary cause of the failure was a breakdown in internal controls that allowed fraudulent activity to occur, which affected a substantial portion of the bank’s credit portfolio. Given the significant role of fraud in the failure, the OIG concluded that an in-depth review was warranted. The in-depth review will provide an opportunity to further evaluate the cause of the failure and supervision by the Office of the Comptroller of the Currency.
Santa Anna National Bank, chartered on Dec. 1, 1933, was an insured national bank without trust powers and no holding company. The bank reported total assets of $77 million as of March 31, 2025. However, on June 27, 2025, OCC closed the bank and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. As of Sept. 30, 2025, the FDIC estimated the loss to the Deposit Insurance Fund (DIF) to be $23.5 million.
Because the loss to the DIF is less than $50 million, the OIG conducted only a limited review of the bank’s failure. The review was limited to “(1) ascertaining the grounds identified by OCC for appointing FDIC as receiver, and (2) determining whether any unusual circumstances exist that might warrant a more in-depth review of the loss.” The OIG said it examined documentation related to the appointment of FDIC as receiver, and reviewed OCC reports of examination for the five-year period before the failure. OIG staff performed fieldwork from August 2025 through January 2026.
Appointment of FDIC as receiver. The OIG found that OCC appointed FDIC as receiver for six reasons: “(1) the Bank experienced substantial dissipation of assets or earnings due to unsafe or unsound practices; (2) the Bank was in an unsafe or unsound condition to transact business; (3) the Bank’s unsafe or unsound practices or conditions were likely to cause insolvency or substantial dissipation of assets or earnings; (4) the Bank’s unsafe or unsound practices or conditions were likely to weaken the Bank’s condition; (5) the Bank’s assets were less than the Bank’s obligations to its creditors and others, including members of the Bank, and (6) the Bank was critically undercapitalized.”
Cause of failure. The OIG determined that the primary cause of Santa Anna’s failure was a “critical breakdown in the Bank’s internal controls which allowed fraudulent activity to occur that affected a substantial portion of the Bank’s credit portfolio.” The OIG said deficiencies in oversight by the bank’s board of directors, internal controls, and other practices “masked weaknesses in the Bank’s loan portfolio, created excessive credit risk, and resulted in inaccurate representations of the Bank’s financial condition.” Consequently, because of “discrepancies in its books and records, the Bank had to recognize losses that exceeded the Bank’s capital, rendering the Bank insolvent and critically undercapitalized.”
The OIG concluded that an in-depth review was warranted because “fraud was a significant contributing factor to the Bank’s failure.” An in-depth review will allow for further evaluation of the cause of failure and OCC’s supervision to determine potential lessons from the failure. The OIG said it planned to review OCC bank examination work papers that substantiate the results reported in OCC’s reports of examination for 2017 through 2023, especially areas of asset quality, loan portfolio, and management. The OIG said it anticipates the in-depth review will be concluded no later than December 2026.
OCC response. The OIG provided a draft of its memorandum to OCC management, who said they took no exception with the conclusions.
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