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Driven by private credit, financial technology, cryptocurrency, and artificial intelligence, the U.S. banking system is changing rapidly. While the spring 2023 banking panic now feels distant, its lessons remain critical. A recent Federal Reserve Bank of New York white paper, reviewing data from 1863 (before FDIC insurance) to the spring 2023 banking panic, argues that bank failures are highly predictable and stem primarily from two drivers: (i) Solvency  and (ii) Liquidity .

Banks and bank holding companies issued $45 billion of subordinated debt in the short period from late 2020 through 2022 and a wave of sub debt refinancings is just beginning to reach the market. Are we ready?

Why does Nissan Motor Acceptance Company (NMAC) want a Utah Industrial Bank Charter? Congratulations to Nissan Motor Acceptance Company (NMAC) on its filing for a Utah Industrial Bank Charter and to the crack team led by Mike Nonaka at Covington & Burling for its expertise. It was such a pleasure partnering with them on this important initiative. Established in 1981, NMAC is an American company with consistently profitable operations. NMAC and its American parent, Nissan Nor

What happens to a fintech’s valuation if it becomes a bank? Periodically, Klaros nonbank clients ponder the potential impact on their enterprise valuation if they were to seek a bank charter. Klaros is an advisory and investment firm, so we leave valuation questions to our friends within the investment banking profession, but the following general parameters may be helpful for fintechs and others considering pursuit of a bank charter. 1. Business Model is Key Driver of Valu

Why are community bank mergers increasing? Brian Graham, Jonah Crane, and I attended Bank Director Magazine’s aptly named (and this year equally aptly timed) "Acquire or Be Acquired" Conference  last week - here are our observations and comments.  Given that AOBA is an M&A conference , it’s perhaps not surprising that all attendees believe the stars are aligned for more bank mergers, especially among community banks  - but there was little consensus on when that might happen.

Bank M&A, which hit a five-year low  in 2023, may finally be poised for a comeback. Atlantic Union Bancshares Corporation (NYSE: AUB) has...

Konrad Alt and Patrick Haggerty The Synapse bankruptcy is raising fresh concerns about the challenges of protecting depositors whose funds are held in FBO accounts when a critical partner fails. In this case, Synapse’s collapse is exposing issues that can surface when a fintech platform suddenly folds. But one need only think back to last year to remember that FBO accounts also present unique depositor protection challenges when a fintech’s bank partner fails.  In this post w

BY BRIAN GRAHAM The recent rescue of NYCB through the infusion of private capital comes almost exactly a year after the collapse of Silicon Valley Bank. In the intervening 12 months, sentiment has seemingly gyrated between “the sky is falling” (i.e. a lot of banks will fail) and “nothing to see here” (i.e. banks are fine). As is usually the case, the truth lies in the middle: the banking industry faces severe stress but, at least so far, it looks like few banks are insolvent

BY KEVIN STEIN AND BRIAN GRAHAM Industry results for the fourth quarter of 2023 were weak on average; the largest banks outperformed and the regional banks materially underperformed. This was in line with expectations, capping a very challenging year for the banking industry. Increased FDIC assessments for the Spring 2023 failures, one-time charges for staffing reductions, and idiosyncratic credit charges contributed to the weak results. But overall the fourth quarter earning

Banks are under intense pressure as nearly $1 trillion in unrealized losses loom, will rate cuts save them or simply delay the reckoning?

BY MICHELE ALT For years, scenes from “It’s a Wonderful Life” played on a loop in the FDIC’s public foyer, illustrating the romantic lens...

BY SIMON GILBERT In our meetings with clients, the three most common words are “a”, “the”, and “capital.” And it’s not surprising: some...

As the banking crisis continues to unfold, regulators who scrutinize banks, fintechs wondering if their banking partner is sound, and...

BY KEVIN STEIN FDIC Chairman Marty Gruenberg’s recent speech at the Brookings Institution Center for Regulation and Markets had some...

BY TOD GORDON Moody’s recent ratings actions impacting 27 U.S. banks reflects a belated recognition of challenges facing the banking...

BY PATRICK HAGGERTY In the aftermath of recent bank failures and subsequent deposit flight from several regional banks, the way banks...

BY ANDREAS WESTGAARD AND CHRISTINA HUNT-FUHR The much-anticipated guidance on third-party relationships issued in June by the Fed, OCC,...

BY KEVIN STEIN There’s a lot to like about the Banc of California/PacWest merger announced yesterday. The transaction creates a combined...

BY BRIAN GRAHAM The first half of 2023 has been chaotic for the banking industry: a spate of bank failures, fundamental restructuring of...

BY TOD GORDON Bank liquidity regulation and resulting practices were derived and honed from the learnings of the Financial Crisis. A...