Emre Hussein’s Post

Republic First seizure signals more bank failures to come, expert warns Fears of contagion reignited by first US bank failure of 2024. U.S. regulators have seized Republic First Bancorp and agreed to sell it to Fulton Bank, underscoring the challenges facing regional banks a year after the collapse of three peers. Philadelphia-based Republic First, which had abandoned funding talks with a group of investors, was seized by the Pennsylvania Department of Banking and Securities. The Federal Deposit Insurance Corporation (FDIC) , appointed as a receiver, said on Friday Fulton Bank Bank, a unit of Fulton Financial Corp will assume substantially all deposits and purchase all the assets of Republic Bank, which is the operating name for Republic First, to "protect depositors". Republic Bank had about $6 billion in total assets and $4 billion in total deposits, as of Jan. 31, 2024. The FDIC estimated the cost of the failure to its fund will be $667 million. Fulton said the deal almost doubles its presence in the Philadelphia market with combined company deposits of approximately $8.6 billion. As published by Reuters News Agency Read full article here: https://lnkd.in/dJi6CEzj #banking #bankingcompliance #usregulatorycompliance #financialregulation #assetliabilitymismatch #alco #federalreserve #sec #sarbanesoxleyact #republicfirst #fultonbank #depositinsurance

🚨 Industry Alert: Banking Sector Under Scrutiny Again 🚨 As we approach the one-year mark since a crisis rocked several midsize banks, another lender is drawing unwelcome attention to the industry. New York Community Bancorp, with approximately 400 branches nationwide operating under brands like Flagstar Bank and Ohio Savings Bank, has seen its stock plummet following an alarming earnings report. The bank's assets soared to over $100 billion after acquiring Signature Bank last spring, but recent revelations of unexpected losses on real estate loans have rattled investors. The decline in New York Community Bancorp's shares has sent ripples through the market, impacting other lenders with significant exposure to commercial real estate. The situation serves as a stark reminder of the interconnectedness of financial institutions. Key Takeaways: 🔍 Behind the Worries: The bank disclosed steep drops in the value of its real estate loans, prompting dividend cuts and reserve increases. 📉 Market Impact: Shares of similar-sized banks, like M&T Bank, have also taken hits, though larger banks remain relatively stable. 🔒 Regulatory Response: Federal Reserve Chair Jerome H. Powell has reassured that while challenges exist, a widespread crisis is unlikely. While concerns loom, it's important to note that standard deposit insurance protects customers, and banking operations remain unaffected. Stay informed as developments unfold in this evolving situation. #BankingIndustry #FinancialMarkets #EconomicOutlook #RegulatoryResponse #communitybanking

🏦 Industry Insight: The Continued Consolidation in U.S. Banking The recent seizure of Republic First by U.S. regulators, followed by its acquisition by Fulton Bank, signals ongoing consolidation in the banking industry—a trend mirroring Canada’s model where a handful of large institutions, known as the "Big Five," dominate the market. Drawing from my experiences with Canada's stable yet efficient banking sector, it's apparent that U.S. banks could glean significant lessons. For instance, Fulton’s acquisition, which nearly doubles its presence in Philadelphia, raises questions about the effects on competition and consumer services. As we witness U.S. banking inch closer to a Canadian-style consolidation, what could this mean for competition and consumer advantages? How can we strike a balance between banking stability and a competitive market landscape? Both aspects theoretically benefit consumers, but I’m keen to hear your thoughts: How might these trends reshape the banking industry and inform future business strategies? #banking #finance #regulation #businessstrategy #marketconsolidation #CanadianBanking

Zacks Investment Management Client Portfolio Manager Brian Mulberry shed light on the banking sector's resilience amid rising credit risk provisions in an interview with Rocio Fabbro of Quartz. He notes, "There's some strength in the banking sector that I don't know was totally unexpected, but I think it's certainly a relief." With interest rates at a 23-year high, banks are navigating the challenges well, focusing on managing potential defaults and bracing for a riskier environment. Learn more in Quartz (tag): https://lnkd.in/gyJ2veVK #CreditRisk #Banking #InterestRates

Republic Bank officially collapses and seized by regulators. Banking Crisis II begins… The Pennsylvania Department of Banking and Securities has taken control of Republic First Bancorp, with all assets and deposits being transitioned to Fulton Bank. This development comes after significant financial struggles within the regional banking sector. Key Figures: - Total Assets: $6 billion (as of Jan. 31, 2024) - Total Deposits: $4 billion - Estimated Cost to Deposit Insurance Fund: $667 million Republic Bank's operations across 32 branches will continue under Fulton Bank, marking a substantial shift in the regional banking landscape. This move aims to protect depositors and stabilize the bank’s operations following its challenges in improving profitability and managing higher costs.

The aftermath of NY Community Bancorp's massive loss has regulators taking a closer look at regional banks about their balance sheets. Here's what to be aware of and how to manage that risk. 🏦 The Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation (FDIC) have been taking an especially active look at regional banks in the wake of New York Community Bancorp, Inc.'s unexpected loss announcement and the reduction of its dividend on January 31. There is concern about potential contagion effects. 🔍 Focused Inquiries on Liquidity and Customer Sentiment Regulators have been specifically inquiring about banks' liquidity positions and any changes in deposit flows or customer concerns. Banking executives have responded by stating there is no unusual activity. "The conversations included regulators inquiring about liquidity at the banks and whether they had seen any impact on deposit flows or worries from customers," according to one executive. 📉 The Impact of CRE Loans The spotlight on NYCB's challenges, particularly its $552 million provision for credit losses largely tied to its commercial real estate (CRE) portfolio, highlights the sector-wide pressures exacerbated by persistent vacancies in office buildings post-pandemic. With small banks holding nearly 70% of all outstanding CRE loans, the industry's exposure to CRE-related risks is significant. And my research on the 2007-08 financial crisis shows that it doesn't take much to generate contagion effects. Foreclosures have the obvious direct effect, but also an indirect effect on local employment in non-durables sectors - see link in comments. 🏢 Response from Other Regional Banks Other lenders with substantial CRE loan concentrations, such as Valley National Bancorp, Axos Bank, WaFd, and Bank OZK, have come under scrutiny. "We remain comfortable with our diverse and granular commercial real estate portfolio. As always, we value and benefit from regular dialogue with our regulators," said Ira Robbins from Valley National Bank's CEO. 🛡️ Solutions and Risk Management Regional banks can signal confidence, but the question is a non-emotional one: what is the health of their balance sheet? Fortunately, that question can be answered with the right modeling capabilities, and answering it can not only address regulatory concerns, but also bank sustainability. If the balance sheet tanks, shareholders AND depositors lose! Follow Dainamic for more guidance on understanding and quantifying balance sheet risk. The continued dialogue between banks and regulators will be crucial in maintaining confidence and stability within the sector. #Banking #Regulation #CRELoans #FinancialStability #EconomicImpact https://lnkd.in/evqjkT7q

FIRST BANK FAILURE OF 2024...MORE TO COME? In 2023 "First Republic" Bank went into receivership. Now in 2024, "Republic First" Bank goes into receivership. So, the first lesson is: avoid using the words "republic" and "first" together when naming a bank... Other lessons from this first bank failure of 2024? * as with those in 2023--banks are sitting on assets (treasury bonds and similar) which have significantly declined in mark-to-market value, since these banks acquired them. This stresses the banks' balance sheets, and has a very negative effect on their regulatory equity ratios * many smaller regional banks were very active in financing commercial real estate in their regions. As these commercial real estate (especially office space) loans and mortgages roll over, the economics are very much upside down in many cases--crystallizing losses on these banks' books Bottom line--as commercial/office real estate loans/mortgages, and the leases they rely on, continue to roll off over the coming X years, expect more bank failures and bank consolidations. While this could be disruptive to parts of the economy, most strategists do not yet think this will lead to wider 'financial contagion'. The disruption also could means opportunities for non-bank lenders who can step in and continue to support the borrowers of weak or failing banks. Buckle up! #banks #FDIC #CRE For more information: https://lnkd.in/e4_jYtbp

Spotlight On: Daniel R. Sheehan, President, Vista Bank 4 min read December 2023 — In an interview with #Invest:, Daniel Sheehan, president of Vista Bancshares, discussed the bank’s recent successes, key industry trends, and future strategies. He highlighted the #bank’s growth amid industry challenges, opportunities arising from capital migration, and the bank’s unique position in #PalmBeach County. READ MORE: https://lnkd.in/efWFZN-i

The nation’s top six banks recently reported charges totaling $9.4 billion related to the Federal Deposit Insurance Corp.’s special assessment aimed at replenishing the agency’s deposit insurance fund after several bank failures last year. The fund was drained of roughly $16.3 billion after the agency agreed to backstop the uninsured deposits of Silicon Valley Bank and Signature Bank after bank runs led to their collapses last March. The agency announced in November that the largest banks would pay the majority of the fee. Lenders with less than $5 billion in assets are excluded from paying the special assessment. JPMorgan Chase & Co. paid the largest share, at $2.9 billion. The bank reported $49.6 billion in annual net income. Bank of America’s fee to help the FDIC replenish the funds came in at $2.1 billion, while Wells Fargo reported a special assessment charge of $1.9 billion. #FDIC #SVB #depositinsurance

Indeed, the contagion from collapse of Evergrande, China’s largest property developer, has thus far been contained. International financial institutions which heavily invested in Evergrande, watched in horror as $300 billion in funds was vaporised from International property markets. At the very least, this leaves more than a few balance sheets; with a gapping hole in collateral. Add to this:- -not only US Commercial Real Estate, but EU and UK maybe facing very similar, colossal write-offs in commercial property valuations. -Germany is in now deep recession, if not process of total de-industrialisation (due to their folly of cutting off cheap energy supplies from Russia). -EU is in serious economic decline. -UK has begun its recessionary cycle -Japan is deeply in the midst of both a currency / economic crisis, and complete denial. ie.Global downturn could have already begun ! Does Gold (see price go vertical this past week) - see something the market is too blind to see ?? Another round of exponential QE may soon be upon us.