Wednesday, October 12, 2022

Business First to raise $47M through stock offering

Business First Bancshares in Baton Rouge, La., plans to raise about $46.8 million from selling common stock. 

The $5.5 billion-asset company said in a press release that it intends to sell 2.5 million shares at $20 each.

Business First plans to use the offering’s net proceeds for general corporate purposes, which may include augmenting capital, supporting organic growth, funding potential acquisitions and redeeming certain subordinated debt. 

Stephens is the sole book-running manager. Raymond James is the lead manager. D.A. Davidson, Hovde Group, Janney Montgomery Scott and Piper Sandler are co-managers. 

Business First said it expects to close the offering around Oct. 17.

How First in Miss. got another shot at Heritage Southeast

First Bancshares in Hattiesburg, Miss., took advantage of a second window to buy Heritage Southeast Bancorp in Jonesboro, Ga. 

The $6 billion-asset First agreed on July 27 to buy the $1.7 billion-asset Heritage Southeast in a deal valued at $207 million. 

Hoppy Cole, First’s president and CEO, actually met with Leonard Moreland, Heritage Southeast’s CEO, in late January 2021 to discuss a deal, according to a regulatory filing associated with the pending merger. 

While they executives agreed to another meeting, it never happened because Heritage Southeast agreed on March 31, 2021, to sell to VyStar Credit Union. 

The filing provides a full assessment of how the VyStar and First deals came together for Heritage Southeast. 

VyStar initially reached out to Ken Lehman, a large Heritage Southeast investor, in October 2020 to indicate interest in buying the company’s bank. VyStar and Heritage Southeast began having more conversations.

While Cole and Moreland agreed to reconvene in April after each bank had completed their first quarter, the VyStar agreement derailed that talk. 

“Cole reached out to Moreland to congratulate him on the announcement, and both parties wished the other the best,” the filing said. 

As VyStar and Heritage Southeast struggled to gain regulatory approvals, they on several occasions agreed to extend the termination date for the deal. 

As delays persisted, various suitors, including First, approached Heritage Southeast to determine if the deal would receive regulatory approval and to indicate potential interest it did not close. Due to an exclusivity requirement with VyStar, Moreland indicated that his bank was continuing to work diligently to obtain the necessary regulatory approvals. 

By March 2022, VyStar and Heritage Southeast had reached an agreement to extend the deadline to June 30, allow either party to terminate the deal if regulatory approval didn’t happen by April 30, and let the bank seek interest in an alternative transaction. 

On April 1, Heritage Southeast contacted a few banks, including First. Heritage Southeast’s investment bank would subsequently reach out to 35 potential buyers in May. Eight, including First, signed non-disclosure agreements. 

Lehman and Cole met at First’s offices on May 18 to discuss an initial preliminary term sheet. 

Three banks submitted nonbinding indications of interest on June 6. First’s proposal valued Heritage Southeast at $206.9 million. A larger Southeastern bank proposed paying $178 million to $196 million, while a smaller suitor offered $202 million. Each proposal required an end to the VyStar agreement before executing an indication of interest. 

On June 8, Heritage Southeast’s board unanimously authorized management to terminate the VyStar agreement and negotiate with First. Heritage Southeast’s board asked First to submit its best and final proposal; First agreed to increase the fixed exchange ratio. 

Heritage Southeast and VyStar terminated their agreement on June 15. The next day, Heritage Southeast and First executed a non-binding indication of interest. 

From June 16 to July 27, Heritage Southeast and First prepared, exchanged drafts and negotiated the terms of the merger agreement. First’s board approved the merger on July 21, while Heritage Southeast’s special committee and board unanimously backed it on July 26. The deal was announced on July 27. 

The deal, which is expected to close in the fourth quarter or early next year, priced Heritage Southeast at 181% of its tangible book value. 

First said the deal should generate double-digit earnings accretion once cost savings kick in. It should take less than three years for First to earn back the less than 8% dilution to its tangible book value. 

First plans to cut about 30% of Heritage Southeast's annual noninterest expenses, or $48.5 million. The company expects to incur $26 million of merger-related expenses. 

Moreland will become First Bancshares' Georgia president. He will receive a $315,000 base salary and is eligible for a bonus of up to 10% of his base salary.

HomeStreet to buy three MUFG Union branches in Calif.

HomeStreet in Seattle has agreed to buy three branches in California from U.S. Bancorp and MUFG Union Bank. 

U.S. Bancorp and MUFG Union said in a press release that the $8.6 billion-asset HomeStreet will buy locations in Big Bear Lake, Hesperia and Yucca Valley. The branches include $490 million of deposits and $22 million of loans. 

The deal is expected to close in the first quarter. The price wasn’t disclosed. 

 U.S. Bancorp, which is looking to buy MUFG Union, is selling the branches under the director of the Justice Department. 

“The addition of these … branches will bring HomeStreet’s total number of branches in southern California to 20,” Mark K. Mason, the company’s chairman, president and CEO, said in the release. 

“This acquisition will increase our customer base by [about] 16,000 customer relationships, and the additional funding will support our strategic growth,” Mason added. “HomeStreet is committed to retaining all current Union Bank employees at the … branches upon the close of the transaction.”

Broadway Financial CEO joins Intrfi board

Intrafi, a fintech that provides cash and liquidity management services to financial institutions, has added the CEO of the nation’s biggest minority depository institution to its board. 

Brian Argrett, president and CEO of the $1.2 billion-asset Broadway Financial in Los Angeles, is one of two additions to the fintech’s 14-member board. 

Argrett was CEO of City First Bank of DC when it was acquired by Broadway in April 2021. 

Intrafi also added Erica Bovenzi, a former deputy counsel at the Federal Deposit Insurance Corp., to the board. Bovenzi also worked as the chief administrative officer for Promontory Financial Group.

Edward Jones scraps plan to open industrial bank

Edward Jones in St. Louis has abandoned a two-year quest to form an industrial bank. 

The company said in a regulatory filing that it had withdrawn its applications with the Federal Deposit Insurance Corp. and Utah Department of Financial Institutions. The broker/dealer referenced conversations with the FDIC and "the current environment." 

The company said it is exploring other ways to offer banking products to its clients. 

Edward Jones filed its applications for Edward Jones Bank in July 2020. Ray Dardano, who had been the CEO of Marlin Business Bank, was tapped to lead the effort with hopes of the bank opening by the end of 2021. 

"An affiliated bank would enable us to broaden our offerings for retail investors, while also supporting our approach to helping Edward Jones branch teams ensure our 7 million clients feel understood, informed, secure and in control," Ken Cella, an Edward Jones principal, said in a press release announcing plans for the industrial bank.

Second People's United exec leaves after sale to M&T

Another executive from People’s United Financial has found a new home following the company’s sale to M&T Bank.

Columbia Financial in Fair Lawn, N.J., said in a press release that it had hired Manesh Prabhu as its chief information officer. He is responsible for information systems and digital banking at the $9.8 billion-asset company. 

Prabhu recently served as chief technology officer at People’s United, where he led IT strategy and technology transformation. 

“Leveraging and investing in technology plays a critical role in improving processes, expanding services and ultimately, giving our team more time to do what they do best – servicing our clients,” Thomas Kemly, Columbia’s president and CEO, said in the release. 

The hiring comes weeks after Provident Financial Services in Iselin, N.J., hired Ravi Vakacherla, former chief transformation officer at People’s United, as its chief digital and innovation officer.

Proposed Colo. de novo gets conditional OCC approval

Battle Financial, the holding company for a proposed digital bank in Avon, Colo., has received conditional approval from the Office of the Comptroller of the Currency. 

Organizers said in a press release that they expect to open the bank early next year.

“I’m pleased to have accomplished this key milestone with the OCC and am excited to be even closer to the official launch of a brand-new digital bank that focuses on client experience, sophisticated solutions and better yields,” Frank Trotter, the proposed bank’s president, said in the release.

Trotter and Vincent Amato, former founders of Everbank, are behind the de novo effort. Everbank sold to TIAA in June 2017. 

Organizers said in their March 2022 application that their business plan includes dealing in precious metals and offering a deposit sweep service to registered investment advisers.

Tuesday, October 11, 2022

Capital Bank in Md. taps insider to oversee fintech business

Capital Bank in Rockville, Md., has tapped an insider to run its fintech business. 

The $2.2 billion-asset bank said in a press release that Karl Dicker had become president of OpenSky and fintech. OpenSky is the bank’s secured Visa credit card. 

“Karl has been instrumental in the development and growth of OpenSky,” Ed Barry, Capital’s CEO, said in the release. “Allowing him to narrow his attention to these lucrative growth opportunities is in parallel with our strategic plan.” 

Dicker previously served as the bank’s chief operating officer. 

Capital said that Steven Poynot had succeeded Dicker as COO. Poynot previously served as COO at F&M Trust. Before that, he was chief information officer at Howard Bank. 

“We are thrilled to have Steve join our senior management team,” Barry said. “His background and experience add to the depth and knowledge of our team and will serve our bank well as we continue executing on our strategic plan.”

Investment adviser team leaves Atlantic Union to form firm

Four investment advisers have left Atlantic Union Bankshares in Richmond, Va., to form their own firm.

Dover Advisors was launched in August after the adviser left the $19.7 billion-asset Atlantic Union’s wealth management division, according to Richmond BizSense

The firm’s president, Jess Ellington, had been the bank’s chief investment officer. He had led the bank’s registered investment adviser division, which was sold to Cary Street Partners. 

Ellington and the other investment advisers were at Middleburg Trust, which was sold to Access National Bank in 2017. Atlantic Union bought Access National two years later. 

Dover Advisers also said John Mason Antrim, who worked with the other advisers at Middleburg Trust, had also joined the team. 

The firm has around $100 million in assets under management.

State Street hires Google exec to handle global compliance

State Street in Boston has hired a former Google executive to serve as its global chief compliance officer.

The $300 billion-asset company said in a press release that Yvette Hollingsworth Clark will report to Brad Hu, its global head of risk. She will also be accountable to the board’s examining and audit committee.

Hollingsworth Clark will oversee compliance activities that include designing and implementing structures and processes to enhance governance and controls.

“Understanding and effectively managing risk in a dynamic environment is absolutely critical to achieving our business goals,” Hu said in the release. 

"Yvette is a respected professional in compliance risk management, with a strong record of building and leading effective AML and compliance frameworks at global financial institutions,” Hu added.

Hollingsworth Clark recently served as head of compliance in the consumer trust business at Google. She has also held leadership roles at Barclays Capital, Citigroup and Wells Fargo. She was also a bank regulator and supervisor at the Federal Reserve.

BNY Mellon forms platform to manage digital assets

Bank of New York Mellon has formed a platform to manage digital assets. 

The $438 billion-asset company said in a press release that its digital asset custody platform allows clients to hold and transfer bitcoin and ether. 

The move comes a year after BNY Mellon formed a unit to develop solutions for digital asset technology.

"Touching more than 20% of the world's investable assets, BNY Mellon has the scale to reimagine financial markets through blockchain technology and digital assets," Robin Vince, the company’s president and CEO, said in the release. 

BNY Mellon, which has been working closely with several fintechs, said it integrated technology from Fireblocks and Chainalysis to meet the security and compliance needs of the bank’s clients.

Prosperity Bancshares buying two Texas banks for $570M

David Zalman is back in the M&A game with two acquisitions.

Prosperity Bancshares in Houston has agreed to buy Lone Star State Bancshares in Lubbock, Texas, and First Bancshares of Texas in Midland, marking Prosperity’s first bank deals since it bought LegacyTexas Financial Group in 2019. 

The $37.4 billion-asset Prosperity will pay $228.7 million in cash and stock for the $1.3 billion-asset Lone Star. The deal, which is expected to close in the first quarter, priced Lone Star at 189% of its tangible book value.

Lone Star has five branches, $934 million of loans and $1.2 billion of deposits. 

Alan Lackey, Lone Star’s CEO, will join Prosperity as its west Texas area president. Melisa Roberts, Lone Star’s chief lending officer, will become west Texas area vice president. 

“We continue to look for opportunities to enhance our presence in the west Texas area,” Zalman, Prosperity’s senior chairman and CEO, said in a press release. Lone Star’s “locations in Lubbock, Midland/Odessa, Big Spring and surrounding areas are an excellent fit for us.”

Separately, Prosperity will pay $341.6 million for the $2.1 billion-asset First Bancshares. The deal, which is expected to close in the first quarter, priced First Bancshares at 162% of its tangible book value. First Bancshares has 16 branches, $1.6 billion of loans and $1.8 billion of deposits. 

Ken Burgess, First Bancshares’ CEO, along with Brad Burgess, Greg Burgess and Jeremy Bishop, will join Prosperity as regional presidents overseeing specific geographic markets in west Texas and central Texas. 

The acquisition “enables us to enter the desirable Wichita Falls and Amarillo markets and the Horseshoe Bay, Marble Falls and Fredericksburg markets in the high-growth central Texas area,” Zalman said in a separate release. 

Prosperity said it will cut about a quarter of each seller's annual noninterest expenses. It expects to incur about $27.1 million of merger-related expenses tied to both acquisitions.

About $1.5 million of aggregate annual interchange revenue from the selling banks will be lost due to the Durbin Amendment.

The deals should be about 5.9% accretive to Prosperity's 2023 earnings per share, and 8.9% the following year. It should take less than three years for Prosperity to earn back an expected 4.3% dilution to its tangible book value. 

Lone Star and First Bancshares were advised by Stephens and Fenimore Kay Harrison. Bracewell advised Prosperity.

Thursday, September 29, 2022

Evolve Bank resolves discriminatory mortgage pricing claims

Evolve Bank & Trust in Memphis, Tenn., will pay about $1.3 million to settle claims it engaged in lending discrimination on the basis of race, sex and national origin with mortgage pricing from 2014 to 2019. 

The Justice Department said in a press release Thursday that the $1.3 billion-asset bank will establish a $1.3 million settlement fund and pay a $50,000 civil penalty. 

“This settlement will provide deserved relief to thousands of borrowers who suffered discrimination due to Evolve Bank’s pricing policies,” Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division said in the release. 

“This case marks the Justice Department’s latest step to protect Americans from illegal lending practices, and shows that we will hold lenders accountable for the effects of their discriminatory practices,” Clarke added. 

The Justice Department, which opened an investigation after the Fed referred the matter, alleged that Evolve violated the Fair Housing Act and the Equal Credit Opportunity Act. 

The DoJ claimed the bank’s loan pricing practices resulted in black, Hispanic and female borrowers paying more in the “discretionary pricing” components of mortgage than white or male borrowers for reasons unrelated to creditworthiness.

Since being notified of the investigation, Evolve has revised its policies and practices, the release said. During the four-year term of a proposed consent order, Evolve will maintain policies to reduce loan officer discretion, employ a fair lending officer to work with the bank’s leadership and provide fair lending training to its personnel.

M&T Bank to sell insurance agency

M&T Bank in Buffalo, N.Y., has agreed to sell its insurance agency to Arthur J. Gallagher. 

The $204 billion-asset bank said in a press release that it will sell M&T Insurance Agency in a deal that is expected to close in the fourth quarter. The price wasn’t disclosed. 

The insurance agency specializes in property and casualty products, customized group benefits and surety solutions in the Northeast and Mid-Atlantic. Current leadership and direct employees of the agency are expected to join Gallagher. 

“When we started to discuss the possibility of this transaction with Gallagher, it became immediately clear that this was the optimal company for both our customers and our employees,” Jennifer Warren, head of M&T’s institutional client services business, said in the release. 

"Our goal was to create a seamless transaction with a world-class company that stresses excellence in everything they do,” Warren added. “We found that with Gallagher.” 

Piper Sandler and Hodgson Russ advised M&T.

Bank Five Nine in Wis. hires its next CEO

Bank Five Nine in Oconomowoc, Wis., will soon have a new CEO. 

The $1.5 billion-asset bank said in a LinkedIn post that Tim Schneider will also become its president in October. 

Schneider previously served as a senior vice president at Nicolet National Bank. 

Before that, he was the CEO of Investors Community Bank in Manitowoc, Wis., which was sold to Nicolet last year. 

“We conducted a national search for our next president and CEO, and Tim quickly rose to the top of a very competitive candidate pool,” Bob Snyder, the bank’s chairman, said in the post. 

“We are excited to have Tim lead our organization and I look forward to working with him," Snyder added.

Schneider will succeed Mark Mohr, who will remain with the bank until his retirement in 2023. Mohr will remain on the board.

Six big banks to participate in Fed climate-risk study

Six large U.S. banks will participate in a Federal Reserve pilot program designed to examine banks’ climate-related financial risks. 

The Fed said in a press release Thursday that Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo will participate in the program, which is expected to begin early next year. 

The pilot is will likely end around the end of 2023.

The banks will analyze the impact of various climate, economic and financial variables on specific portfolios and business strategies. The Fed plans to analyze the findings and engage with the banks to improve their ability to manage climate-related financial risks. 

Aggregate data, rather than bank-specific metrics, will be released.

The Fed said that, in coming months, it will provide more details on how the pilot will be conducted and the scenarios that will be used.

Brookline in Mass. promoting insider as next bank CEO

Brookline Bancorp in Boston will soon have a new bank CEO. 

The $8.5 billion-asset company said in a press release Thursday that William Tsonos will also become the president of Bank Rhode Island on Nov. 1. Tsonos, who joined Brookline in 2006, is the bank’s executive vice president of commercial lending. 

Tsonos will succeed Mark Meiklejohn, who was named the company’s chief credit officer. Meiklejohn, who joined the bank in 2006 and has been its president and CEO since 2012, will succeed M. Robert Rose, who is retiring. 

Rose, who joined Brookline in 2009, will remain with the company as an executive officer and assume a leadership position with board and management credit committees. 

“Bob’s long and successful career in credit risk management, as well as industry leadership, is well known and respected,” Paul Perrault, Brookline’s chairman and CEO, said in the release. “With this transition we look to maintain the strong credit risk management practices that he has put into place.”

M&T vows to compensate clients hurt by integration

M&T Bank said it is taking steps to compensate customers who were stung by the Buffalo, N.Y., bank’s conversion of People’s United Financial in Bridgeport, Conn. 

The $204 billion-asset M&T, which bought People’s United earlier this year, experienced glitches and other issues as part of the integration process. 

“For customers who were unable to access funds during the conversion, we will provide appropriate financial remuneration,” CEO Rene Jones wrote in a letter to legislators who have demanded action from the bank. 

M&T is reimbursing customers who incurred fees as a result of late credit card, utility and other payments, Jones said. The bank is waiving late fees through the end of October for consumer loan and mortgage payments. 

Bank employees have been authorized to waive other fees, as needed, he added.

Jones said about 0.6% of converted customers submitted complaints. Overall, M&T onboarded about a million new customers and more than 1.7 million accounts.

Several lawmakers who have demanded answers said the effort is a good start. 

The bank’s “commitment to compensate customers who were adversely impacted by the conversion – whether missing payments or denied access to their money — is a welcome step toward making things right,” Sens. Edward Markey (D-Mass.), Richard Blumenthal (D-Conn.), Patrick Leahy (D-Vt.) and Elizabeth Warren (D-Mass.), said in a press release.

“We are encouraged by M&T Bank’s prompt action in response to our letter, but will continue monitoring the situation to make sure M&T follows through with their promises,” they added. “Consumers need swift relief and remedy now for the hardships and stress the conversion failures caused.”

First Bank in N.J. to offer loans to PE firms

First Bank in Hamilton, N.J., has expanded its commercial lending operations to serve private equity funds and their portfolio companies.

The $2.6 billion-asset bank said in a press release that it will offer capital call lines of credit. Such loans are usually used to bridge gaps between the timing of an acquisition and the receipt of capital from investors. 

"As an entrepreneur myself, I understand the challenges that private equity groups encounter," Patrick Ryan, First Bank’s president and CEO, said in the release. "We're relationship-focused community bankers who know entrepreneurs are an important part of our economy." 

First Bank will also provide working capital lines of credit and acquisition financing. 

Ryan was part of an investment group that recapitalized First Bank with $20 million in late 2008.

Wednesday, September 28, 2022

Trade groups file lawsuit against CFPB

Seven trade groups have filed a lawsuit against the Consumer Financial Protection Bureau alleging the agency exceeded its statutory authority when it updated its exam manual. 

The lawsuit, filed in the U.S. District Court for the Eastern District of Texas, targets the CFPB’s recent update to the Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) section of its manual. 

 The lawsuit alleges overreach by claiming the agency is exceeding its statutory authority outlined in the Dodd-Frank Act and that the updated manual is “arbitrary” and “capricious.” The lawsuit also claims the action violates the Administrative Procedure Act’s procedural requirements because it constitutes a legislative rule that failed to go through notice and comment.

Finally, the litigation raises questions about the CFPB’s funding structure. 

"The CFPB's decision to dramatically expand its regulatory reach without any input from the public was not authorized by statute and has significant implications for consumers, banks and the broader financial markets," Rob Nichols, president and CEO of the American Bankers Association, said in a press release. 

"This is a step we did not want to take, but it was a necessary step given the extraordinary actions of the CFPB," Nichols added. 

The lawsuit was filed by the ABA, U.S. Chamber of Commerce, Longview Chamber of Commerce, Texas Bankers Association, Independent Bankers Association of Texas, Texas Association of Business and the Consumer Bankers Association.

Orrstown to shutter five Pennsylvania branches

Orrstown Financial Services in Shippensburg, Pa., plans to close five branches and adjust its staffing model. 

The $2.8 billion-asset company said in a press release Wednesday that the moves are “designed to drive long-term growth, focus … on a rapidly changing banking environment and improve operating efficiencies.” 

The branches, all of which are in Pennsylvania, are expected to close in the fourth quarter.

Orrstown expects to incur $3.1 million of one-time charges in the third quarter, including $1.9 million for building and fixed asset writeoffs and $1.2 million of early retirement and severance costs. 

The initiatives are expected to generate about $3.4 million of pretax annual expense savings once completed, including $2.7 million from staffing model adjustments and $700,000 from reduced facilities costs. 

Orrstown said it plans to use some of the savings to address ongoing wage pressures and make more investments in technology to become more efficient and enhance its digital offerings. 

The net annual savings are expected to be about $1 million. 

“The actions announced today serve as a critical step towards repositioning the franchise to focus on emerging delivery channels and digital solutions and maximizing our efficiency through continued automation,” Thomas Quinn Jr., Orrstown’s president and CEO, said in the release. 

“We will still seek to expand the franchise through strategic placement of brick-and-mortar locations along with providing best-in-class digital solutions,” Quinn added. “The savings generated will allow for expense control while also supporting the investments needed to achieve our long-term vision.”

Orrstown, which closed 11 branches in 2020 and 2021, has reduced the size of its branch network by 46% in the past three years. 

The job eliminations include early retirement packages for three officers.

Sterling in Mich. pays fine tied to defunct mortgage program

Sterling Bancorp in Southfield, Mich., will pay a $6 million civil money penalty as part of a formal agreement with the Office of the Comptroller of the Currency.

The OCC said in a press release it had freed the $2.5 billion-asset company’s bank from the June 2019 formal agreement after determining it had “implemented all corrective actions required … and is in compliance will all articles of the enforcement action.” 

The agency said the penalty, to be paid to the Treasury Department, is based on violations of law and “unsafe or unsound practices” tied to the company’s defunct Advantage Loan Program

The OCC had claimed that the bank originated numerous loans that were based on false or fraudulent loan information. The agency said it also found underwriting deficiencies and Bank Secrecy Act and anti-money laundering violations tied to the program. 

The OCC said it continues to review the conduct of institution-affiliated parties who were associated with the loan program.

Two de novo banks opened in September

A pair of de novo banks opened in September. 

Texas Traditions Bank in Katy opened on Sept. 6 after organizers raised the required $35 million in initial capital. 

Ryan Whitzel, a former market president for BancorpSouth, is the CEO. Keith Badough, who once was a community bank president at BancorpSouth, is the president. 

GS&L Municipal Bank opened in Gouverneur, N.Y., on Sept. 16. 

Gouverneur Bancorp had been seeking the charter because New York state law bars mutuals from working with municipalities. The company was required to infuse $2.5 million of capital into the de novo. 

A dozen banks have opened in 2022.

FDIC gives conditional approval for two de novos

Two proposed de novo banks have received conditional approval from the Federal Deposit Insurance Corp.

The FDIC signed off on Community Unity Bank in Birmingham, Ala., on Sept. 23. Organizers must raise about $23.2 million before the bank can open. 

Two former Talmer Bancorp bankers are behind the Community Unity effort. They filed their initial application with the FDIC in January. 

The proposed bank would offer commercial and residential mortgages, commercial and consumer loans and credit lines and construction and development loans. It would also provide online banking, commercial cash management services, wire transfers and mobile banking.

The FDIC approved Walden Mutual Bank in Concord, N.H., on Sept. 23. The organizing group will need to raise $22 million before opening the first new mutual in decades. 

Walden’s organizers said in August that they had secured $20 million of commitments. The effort had already received approval from the New Hampshire Banking Department. 

The FDIC has given conditional approval for 11 banks in 2022, including eight in the last three months.

Investor pitches buying big stake in Republic First

A investor group has proposed a transaction that would give it a large stake in Republic First Bancorp in Philadelphia. 

The group, which includes George Norcross and Gregory Braca, sent a letter to the $5.7 billion-asset company’s board on Sept. 22 proposing a transaction where the investors would invest $50 million in exchange for newly issued convertible preferred stock. 

The Norcross-Braca group also expressed an interest in buying stock from existing investors for $3.25 to $3.50 each that, when combined with the conversion of the preferred stock, could give them a stake as high as 45% in Republic First. 

Republic First said in its own letter that its strategic review committee will evaluate the investor group’s proposal. 

The company said it is in the process of completing non-disclosure agreements with parties that have expressed interest in buying the bank. The plan is to enter into several NDAs in coming days, though Republic First said the Norcross-Braca group refused to sign an NDA. 

The back and forth comes shortly after Republic First disclosed that it had begun a strategic review process after receiving “inquiries by multiple parties expressing interest in one or more potential strategic transactions.” 

The Norcross-Braca wrote in a Sept. 16 letter to the company’s board that it believes “a financially attractive proposal … is unlikely” due to the company’s financial position. The investor urged the company to avoid a “firesale.”

Lakeland in N.J. settles DoJ redlining claims

Lakeland Bancorp in Oak Ridge, N.J., will invest $12 million in underserved markets around Newark, N.J., to settle redlining claims from the Department of Justice. 

The $10.4 billion company, which recently agreed to be sold to Provident Financial Services in Iselin, N.J., agreed to the third-largest redlining settlement in DoJ history.

"Financial institutions that refuse to provide mortgage lending services to communities of color not only contribute to the persistent racial wealth gap that exists in this country, but also violate federal law,” Attorney General Merrick Garland said in a press release. 

The agreement “represents the Justice Department’s continued commitment to addressing modern-day redlining, and to ensuring that all Americans have equal opportunity to obtain credit, no matter their race or national origin,” Garland added. 

The DoJ claimed that, from 2015 to 2021, Lakeland failed to provide mortgage lending services to black and Hispanic neighborhoods in the Newark market. Most of the company’s branches were in majority-white neighborhoods, according to the complaint. 

Lakeland agreed to invest at least $12 million in a loan subsidy fund for residents of black and Hispanic neighborhoods in the Newark area, along with $750,000 for advertising, outreach and consumer education and $400,000 to develop community partnerships. 

Lakeland will open two branches in neighborhoods of color, including at least one in Newark, while ensuring that at least four mortgage loan officers are dedicated to serving all neighborhoods in and around city. The company will employ a full-time community development officer to oversee the continued development of lending in neighborhoods of color in the Newark area.

Lakeland, which agreed to settle the issue without contested litigation, cooperated with the DoJ “to remedy the redlining concerns that were identified,” the agency said.

Regions reaches $191M overdraft settlement with CFPB

Regions Financial will pay out $191 million as part of a settlement with the Consumer Financial Protection Bureau tied to an overdraft fee the Birmingham, Ala. company stopped charging in 2021. 

The $161 billion-asset company said in a press release that it will pay a $50 million civil monetary penalty and provide roughly $141 million of customer redress. The settlement will be reflected in Regions’ third-quarter results. 

Regions said that, although it disagreed with the CFPB’s characterizations, it cooperated and “is pleased to move forward.” 

The settlement “involves one type of overdraft fee that was previously charged when there was sufficient money in an account when a debit card or ATM transaction was authorized – but not when the transaction actually posted to the account, due to other transactions,” Tara Plimpton, Regions’ chief legal officer, said in a press release. 

“Over a year ago, Regions stopped charging this particular overdraft fee,” Plimpton added. “We took this action as part of a broader series of enhancements. These enhancements also include updating the bank’s posting order and transaction processing to give customers a clearer view of the money they have available for making purchases while avoiding fees.” 

Regions said it took more steps this year to further reduce overdraft charges and eliminate other fees. 

The CFPB, in its press release, characterized the charges as "surprise" fees. 

Regions "raked in tens of millions of dollars in surprise overdraft fees every year, even after its own staff warned that the bank’s practices were illegal,” CFPB Director Rohit Chopra said in the agency's release. 

“Too often, large financial firms make a calculation that continuing to break the law is more profitable than following it. We have more work to do to change this mentality,” Chopra added.

Regions in 2015 was fined $7.5 million by the CFPB for charging allegedly illegal overdraft fees on checking and payday-loan-like accounts. The company did not admit or deny wrongdoing.

Tuesday, September 27, 2022

PNC buys PoS firm with restaurant focus

PNC Financial Services Group in Pittsburgh has acquired Linga, a point-of-sale firm that serves the restaurant industry. 

The $540.8 billion-asset PNC said in a press release that the deal will help it better serve its hospitality and restaurant industry clients. The price was not disclosed. 

The acquisition “reflects our continued commitment to expanding our corporate payments capabilities, as well as investing in the solutions and tools our clients need to run their businesses more effectively," Emma Loftus, head of PNC Treasury Management, said in the release.

“Leveraging Linga's proprietary solutions and PNC's competitive treasury management platform, we will be able to provide our restaurant and retail clients with the tools they need to keep up with ever-changing consumer expectations,” Loftus added.

Linga, founded in 2004, serves clients in 48 countries. 

Linga will retain its founder and CEO, Onur Haytac, its existing management team, and U.S. and Canada-based employees.

Seattle Bank adds credit line to digital offerings

Seattle Bank has begun offering a personal line of credit through its digital channel. 

The $752 million-asset bank said in a press release that the product offers credit lines ranging from $15,000 to $150,000 with the ability to draw funds over time. 

"As the rate at which people digitally manage their money continues to accelerate, we see the opportunity to deliver more meaningful value for an expanded group of consumers," John Blizzard, Seattle Bank's president and CEO, said in the release.

"The launch of the [line of credit] as part of the digital direct suite underscores our position as a digitally driven boutique bank with a technology platform and business strategy to craft a better banking experience,” Blizzard added.

Crypto lender Nexo buys stake in Wyoming bank

Nexo, a Swiss cryptocurrency lender, has acquired a stake in Hulett Bancorp in Hulett, Wyo. 

Nexo did not disclose the size of its stake in the parent of the $96.4 million-asset Summit National Bank, or how much it paid. 

Nexo said the deal will allow it to offer U.S. retail and institutional clients services such as bank accounts, asset-backed loans card programs, and escrow and custodial solutions. 

Summit will also be repositioned to become a “modern digital fintech bank,” Nexo said in a press release.

“This investment marks another landmark in Nexo’s relentless drive to better serve our U.S. customers in compliance with the constantly evolving regulatory landscape,’’ Kalin Metodiev, Nexo’s managing partner, said in the release. 

“We care deeply about our customers and are thrilled that this development will grant them access to some of the most innovative products at the intersection of traditional finance and blockchain technology,” added Metodiev, who joined Summit’s board.

ICBA selects Atlanta for new fintech accelerator office

The Independent Community Bankers of America is bringing its fintech incubator in-house with a new office in Atlanta. 

The ThinkTECH Accelerator has operated primarily out of Little Rock, Ark., since its formation in 2019.

“Following four successful fintech accelerator programs and the tremendous interest in our accelerator program, the natural next step is to bring ICBA ThinkTECH’s full-time operation and expanded innovation content in-house," Charles Potts, the ICBA’s chief innovation officer, said in a press release.

“Our members have been vocal in their need for unified programming, and ICBA is paving the way with this new model to ensure that innovation remains an obtainable, strategic priority for the nation’s nearly 5,000 community banks,” Potts added. 

The ICBA will develop office space in Atlanta and hire more staff to build out year-round programming.

First State in Nebraska to buy Farmers and Merchants

First State Bank in Loomis, Neb, has agreed to buy Farmers and Merchants Bank in Axtel, Neb. 

The $191 million-asset First State expects to complete its purchase of the $11.5 million-asset Farmers and Merchants by the end of this year.

“We have always had a good working relationship with Farmers and Merchants and believe that the relationships we have developed over the years will pave the way for an excellent partnership that will benefit both communities,” Dave Dannehl, First State’s president, said in a press release. 

First State is part of the larger Lauritzen group of banks and affiliates.

Provident in N.J. to buy Lakeland for $1.3 billion

Provident Financial Services in Iselin, N.J., has agreed to buy Lakeland Bancorp in Oak Ridge, N.J. 

The $13.7 billion-asset Provident said in a press release Tuesday that it will pay $1.3 billion in stock for the $10.4 billion-asset Lakeland. The deal, which is expected to close in the second quarter, priced Lakeland at 154% of its tangible book value. 

“The scale and profitability of the combined organization will enable us to invest in the future, better compete for market share, and better serve our customers and communities,” Anthony Labozzetta, Provident’s president and CEO, said in the release. 

“We bring together a diverse group of employees who are committed to delivering exceptional service to our customers and the communities we serve,” Labozzetta added. 

Thomas Shara Jr., Lakeland’s president and CEO, will become Provident’s executive vice chairman. Lakeland will have seven directors on Provident’s 16-member board. 

Provident said the deal should allow it to scale its own insurance and wealth management businesses and Lakeland’s asset-based lending and equipment lease financing offerings. 

The deal is expected to be 24% accretive to Provident’s 2024 earnings per share, inclusive of interest rate marks. It should take Provident less than four years to earn back any dilution to its tangible book value. 

Provident plans to cut about 35% of Lakeland’s annual noninterest expense, or roughly $65 million. The company expects to incur $95 million of one-time merger-related charges. 

Piper Sandler and Sullivan & Cromwell advised Provident. Keefe, Bruyette & Woods and Luse Gorman advised Lakeland.

Friday, September 23, 2022

Provident in N.J. hires chief information security officer

Provident Financial Services in Iselin, N.J., has a new chief information security officer. 

The $13.7 billion-asset company said in a press release Thursday that it had hired Damiano Tulipani to fill the post. He will have a role overseeing Provident’s information and cybersecurity policies, procedures and practices. 

Tulipani “brings with him an impressive breadth and depth of experience helping to provide exceptional protection to organizations from cyberattacks and data breaches to ensure continuity of services across multiple business lines,” James Christy, Provident’s chief risk officer, said in the release. 

Tulipani previously served as head of cybersecurity at Investors Bank. 

Provident recently hired Ravi Vakacherla from People’s United Financial as its chief digital and innovation officer. The move was tied to Provident recasting the role of chief information officer.

Thursday, September 22, 2022

Union County Savings adds high-profile general counsel

Union County Savings Bank in Elizabeth, N.J., has hired a former state banking commissioner as its general counsel. 

The $1.8 billion-asset bank hired Michael Horn, who is currently a partner at McCarter & English, according to

“Mike’s legal acumen and experience in the banking industry is second to none,” Joseph Yewaisis, the bank’s chairman and CEO, was quoted on the website. “Mike brings a wealth of knowledge and expertise to the role.” 

Horn served as New Jersey’s commissioner of banking for two years in the early 1980s.

Three banks raise $72M via private placements

Three community banks recently raised capital through private placements. 

NexBank Capital in Dallas said in a press release that it brough in $50 million after selling nearly 200,000 shares of common stock. The $13.3 billion-asset company said it plans to use the net proceeds for growth capital and other purposes. 

KeyStone Bancshares in Austin, Texas, raised $18 million, while RiverBank Holding in Spokane, Wash., brough in nearly $4.4 million, according to data collected by Performance Trust Capital Partners.

KeyStone has $686 million of assets, while RiverBank is a $208 million-asset institution.

CNB Financial in Pa. raises $91M in stock offering

CNB Financial in Clearfield, Pa., has raised $91 million after selling common stock. 

The $5.3 billion-asset company disclosed in a regulatory filing that it sold about 4.3 million shares at $23.50 each. The offering included more than 550,000 shares issued under the underwriters’ overallotment option. 

CNB said it plans to use the net proceeds from the offering for purposes that could include funding of organic growth or acquisitions. 

The offering likely boosted CNB’s tangible common equity to 7.8%, Jake Civiello, an analyst at Janney Montgomery Scott, wrote in a research note.

Wednesday, September 21, 2022

BayFirst shutting down its nationwide mortgage network

BayFirst Financial in St. Petersburg, Fla, is shutting down its nationwide network of mortgage production offices.

The $922 million-asset company said in a Wednesday press release that the decision reflects “the precipitous decline in mortgage volumes and the uncertain outlook for mortgage lending over the coming quarters.” 

BayFirst will continue to originate mortgages in its local Florida markets. 

“This decision allows the bank to focus [its] resources on building a premier community banking franchise and capitalizing on our expertise in SBA lending,” Anthony Leo, BayFirst’s CEO, said in the release.

BayFirst said it will likely incur $3 million to $4 million in expenses tied to the closures, which should be completed by Nov. 24. 

Southern Missouri to enter K.C. with Citizens acquisition

Southern Missouri Bancorp in Poplar Bluff has agreed to buy Citizens Bancshares in Kansas City, Mo.

The $3.2 billion-asset Southern Missouri said in a press release Wednesday that it will pay $140 million in cash and stock for the $1 billion-asset parent of Citizens Bank and Trust Co. The deal, which is expected to close in the first quarter, priced Citizens at 150% of its tangible book value. 

Citizens has 14 branches, $465 million of loans and $879 million of deposits. 

"Citizens’ franchise covers excellent communities, including the Kansas City metropolitan area,” Greg Steffens, Southern Missouri’s chairman and CEO, said in the release. 

Citizens has “developed a strong deposit base and have a long history of serving their customers, which will be a great addition to our continued growth,” Steffens added. “A presence in Kansas City helps transform Southern Missouri into a more significant statewide player in Missouri as we continue to build long-term shareholder value.”

Southern Missouri plans to cut about 35% of Citizens annual noninterest expenses. The company expects to incur $8.6 million of merger-related expenses.

The transaction is expected to be 5% accretive to Southern Missouri’s earnings per share for the fiscal year ending on June 30, excluding merger-related charges. It should be 17% accretive the following year. 

Southern Missouri said it should take less than three years to earn back an estimated 8% dilution to its tangible book value. 

Piper Sandler and Silver, Freedman, Taff & Tiernan advised Southern Missouri. D.A. Davidson and Stinson advised Citizens.

Tuesday, September 20, 2022

Columbia, Umpqua to divest 10 branches

Columbia Banking System in Tacoma, Wash., and Umpqua Holdings in Portland, Ore., will sell 10 branches under an agreement with the Department of Justice. 

The $20.6 billion-asset Columbia and the $30.1 billion-asset Umpqua agreed to merge in October 2021 in a deal valued at $5.2 billion. 

The companies will sell fives branches in Oregon, three in California and two in Washington. 

Columbia said it does not yet have any agreements to sell the branches.

The merger is one of several large combinations that have progressed slowly while waiting on regulatory approvals.

Citizens in Okla. to launch military focused digital bank

Citizens Bank of Edmond in Oklahoma is planning to create a bank specifically designed for newly enlisted members of the military and their families.

The $350 million-asset bank is working with Nymbus on the digital bank, which is expected to launch next year. 

“Collaborating with a partner just as passionate about this mission as myself and the entire Citizens Bank of Edmond team was top of mind,” Jill Castilla, Citizens’ CEO, said in a press release. 

"The choice was easy, and we now have an opportunity to leverage a modern, scalable platform that includes best-in-class operational and go-to-market support,” Castilla added. 

“We are excited to partner with Jill Castilla, a leading voice in the financial industry, to launch meaningful digital banking services to an often overlooked and underserved segment of customers,” Jeffery Kendall, Nymbus’ chairman and CEO, said in a press release. “As the bravest members of our society, they face unique circumstances and extraordinary challenges, and financial services shouldn’t be one of them.”

Citizens in May created ROGER, a mortgage platform that focuses on VA lending. 

Castilla, a military veteran, decided to launch the product after she and her husband tried to use VA financing to buy a home last year. They eventually abandoned the process because it was taking too long.

Fifth Third forms mortgage warehouse finance division

Fifth Third Bancorp in Cincinnati has formed a mortgage warehouse finance business. 

The $207 billion-asset Fifth Third said in a press release that the business is being run by Donnie Martin, who was named group head of mortgage warehouse finance, and team of Dallas-based lenders. 

Martin previously served as director of warehouse lending at Texas Capital Bank, according to his LinkedIn profile

Warehouse lending is a financing arrangement between banks and companies that originate or aggregate residential mortgage loans. The division will provide financing that sets up interim liquidity until a loan is sold or securitized. 

“Our resources and focus on relationships position us to provide solutions to our clients’ most pressing business problems,” Kevin Lavender, Fifth Third’s head of commercial banking, said in the release. “We can collaborate to deliver value for today’s independent mortgage bankers’ business.”

Monday, September 19, 2022

Live Oak adds former First Horizon exec to its board

Live Oak Bancshares in Wilmington, N.C., has added a banking veteran to its board. 

The $9.1 billion-asset company said in a press release Monday that Yousef Valine became a director on Sept. 15. 

Valine recently served as chief operating officer, chief risk officer and merger executive at First Horizon in Memphis, Tenn. First Horizon is in the process of selling itself to TD Bank

Valine has also held leadership posts at Wachovia, where he once was chief operating officer of the risk management division and head of the institutional risk group. 

Valine “brings exceptional perspective and depth of experience in financial services and will be a valuable addition as Live Oak continues on its mission to be America’s small business bank,” Chip Mahan, Live Oak’s chairman and CEO, said in the release.

Investor urges Republic First to avoid 'firesale'

A large investor in Republic First Bancorp wants the Philadelphia company to avoid selling right now. 

A group including George Norcross and Gregory Braca wrote in a Sept. 16 letter to the $5.7 billion-asset Republic First’s board that it believes “a financially attractive proposal … is unlikely” due to the company’s financial position. 

The group in the past has proposed appointing Braca as CEO and focusing more on lending in urban markets. 

“A distressed firesale … at this time is not in the best interests of the shareholders,” the group said in its recent letter. “We … continue to believe a strategic proposal along the lines we have laid in out in prior communications is the better alternative for the company to pursue.” 

Republic First said last week that it had begun a strategic review after receiving “inquiries by multiple parties expressing interest in one or more potential strategic transactions.” 

Republic First said it had set up a strategic review committee to consider the inquiries and evaluate a range of potential transactions and alternative strategies.

Peapack-Gladstone taps leader for equipment finance unit

Peapack-Gladstone Financial in Bedminster, N.J., has a new president for its equipment finance unit. 

The $6.2 billion-asset company said in a press release Monday that Dennis Smith had accepted the post. He previously served as the unit’s chief operating officer. 

Peapack-Gladstone also said that Richard Johnston had been named national director of sales. Johnston previously served as the unit’s senior vice president of capital markets. 

Smith and Johnston, who joined the company in 2017, oversee a team of 16 bankers who work from offices in Bedminster and Northborough, Mass. 

Peapack Capital provides equipment and asset financing, ranging from $3 million to $30 million, to middle market and large corporate clients nationwide.

First National Bank of Syracuse is now Dream First Bank

First National Bank of Syracuse in Kansas has rebranded as Dream First Bank. 

The $444 million-asset bank said in a press release Monday that the family ownership, management and values remain unchanged. 

“We remain the same people our customers have come to depend on with a smile, a handshake and a way to help people reach their next goal,” Chris Floyd, Dream First’s president and CEO, said in the release.

GreenState Credit Union in Iowa cuts 42 jobs

GreenState Credit Union in North Liberty, Iowa, has cut about 5% of its workforce. 

The $10.7 billion-asset credit union eliminated 42 positions, citing lower loan demand. Most of the cuts came in GreenState’s mortgage lending and commercial banking operations. 

“This action was necessary due to the market corrections currently taking place that have a direct impact on GreenState’s operations,” Jim Kelly, the credit union’s chief marketing officer, wrote in an email to The Gazette

“The employees impacted by this move have been given a severance package, as well as extended insurance coverage,” Kelly added. 

GreenState recently scrapped plans to buy Premier Bank in Omaha, Neb., after the state regulator in Nebraska blocked the deal. Kelly told The Gazette that the layoffs were unrelated to the called-off acquisition.

Saturday, September 17, 2022

BCB in N.J. discloses quarrel with former director

BCB Bancorp in Bayonne, N.J., is facing claims of wrongfully removing a director. 

The $3.1 billion-asset company disclosed in a regulatory filing Friday that it had received a letter from a lawyer representing August Pellegrini claiming Pelligrini was removed after objecting to improper board practices. 

The letter claimed that, since April 2019, Pellegrini had observed “numerous irregularities in the manner in which the board carried out its audit oversight.” He also claimed that the chairman of the board’s audit committee “at times seemed unprepared” for meetings. 

Pelligrini’s letter also claims he was removed by the company’s chairman after voicing his concerns. 

“This letter is to bring the circumstances of … Pellegrini’s improper removal to the board’s attention, in a good faith effort to seek a resolution of his potential claims without further litigation,” the letter said. 

BCB said in the filing that Pelligrini gave no reason for his decision to retire in a July 8 email and there was no mention of any disagreement “on any matter relating to … operations, policies or practices.” The company added that it believes the claims in the letter “are totally without merit” and that it “intends to defend such claims vigorously.”

Business First to raise $47M through stock offering

Business First Bancshares in Baton Rouge, La., plans to raise about $46.8 million from selling common stock.  The $5.5 billion-asset company...