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.

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.

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.

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.

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 ROI-NJ.com. 

“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.

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. 

The company earlier this year closed three mortgage offices and laid off more than 60 mortgage employees.

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.

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.”

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.

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.”

Capital One freed from reg order tied to data breach

Capital One Financial in McLean, Va., has been freed from a 2020 consent order from the Office of the Comptroller of the Currency. 

The $435 billion-asset company was hit with the order after a 2019 data breach. The order, terminated on Aug. 31, required Capital One to form a compliance committee and pay an $80 million fine.

Capital One also had to provide progress reports detailing efforts to improve its risk management, board accountability and auditing issues. 

“The OCC believes that the safety and soundness of the bank and its compliance with laws and regulations does not require the continued existence of the order,” the agency said in its termination. 

A former Amazon Web Services employee was arrested for allegedly hacking Capital One’s customer data. The company had hired Amazon Web Services to help it migrate it IT operations to the cloud.

U.S. Bancorp moves termination date for MUFG Union

U.S. Bancorp in Minneapolis and Japan’s Mitsubishi UFJ Financial Group have pushed back the termination date for U.S. Bancorp’s proposed purchase of MUFG Union Bank. 

The companies said in a press release Friday that the date was moved from Sept. 30 to Dec 31. Both parties said they remain committed to completing the transaction, which still needs regulatory approval.

The announcement comes days after the $558 billion-asset U.S. Bancorp said it was bracing to complete the acquisition several months later than previously forecast. 

U.S. Bancorp executives said during a conference appearance Monday that they expect to complete the $8 billion acquisition, announced a year ago, later in the second half of 2022. 

With the timing pushed back, most of the expense savings will not be realized until after next year. That’s because the targeted conversion weekend has now been moved from President’s Day in February to Memorial Day. 

U.S. Bancorp, which had hoped to have three-fourths of the projected $900 million of annual savings achieved in 2023, now expects 40% to 50% of them to filter through next year. 

U.S. Bancorp originally projected that it would close the deal for the $125 billion-asset MUFG Union in the first half of 2022 but that was before regulatory scrutiny of large mergers intensified. By May, the timeline had been pushed back to the second half of 2022.

Banc of California entering payment processing via deal

Banc of California in Santa Ana has acquired payments platform Global Payroll Gateway. 

The $9.5 billion-asset Banc of California said in a press release that it will pay $24 million in cash and stock for Global Payroll and unit Deepstack Technologies. Based in Jupiter, Fla., Deepstack provides merchant processing, payments acceptance and disbursements, among other things. 

Banc of California said it would use Deepstack to market payment processing services to a range of business clients. 

The acquisition “expands our business into payment processing and furthers our strategy to grow fee-based income in a scalable and meaningful way,” Jared Wolff, the company’s president and CEO, said in the release. 

“Deepstack’s client-centric technology platform will enable us to offer existing and new clients a best-in-class transaction processing solution,” Wolff added. 

All of Deepstack’s employees joined the bank and its three executives entered into three-year employment agreements. Eight of the 11 employees are based in Southern California. 

Jayme Amirie, Deepstack’s president of Deepstack, retained that title.

Banc of California said it expects the transaction to be neutral to earnings per share in 2023 and accretive in subsequent years. The deal is expected to be about 2.7% dilutive to tangible book value per share. It includes a three-year earn out starting next year to be paid from the new unit’s operating profits. 

MJC Partners and Paul Hastings advised Banc of California. MAPP Advisors and Global Legal advised Deepstack.

Unity National in Houston ordered to improve processes

Unity National Bank of Houston has entered into a written agreement with the Office of the Comptroller of the Currency requiring the bank to improve its processes.

The OCC said in the order that it intervened after it found “unsafe or unsound” practices tied to strategic and capital planning, credit risk management, the loan-loss allowance methodology, corporate governance and internal controls. 

The $247 million-asset bank is required to form a compliance committee and provide regular written progress reports to the OCC. It must also ensure that effective and qualified management is in place.

Unity, the only black-owned bank in Texas, must prepare a series of reports, including a three-year strategic plan, a credit risk management program and a concentration risk management program. It must also establish an internal capital planning process, among other things. 

The bank must have “a sufficient process” in place to make sure that management appropriately responds to any audit, compliance and regulatory criticisms. 

Unity was also prohibited from entering into any new business transaction with bank affiliates until its board has established a written program that provides for effective policies and control systems over those relationships.

CFPB: BNPL should be enforced like credit cards

The Consumer Financial Protection Bureau Financial said financial institutions that offer Buy Now, Pay Later (BNPL) services should treat them similar to credit card products. 

The CFPB made that assessment as part of the release of its first comprehensive report on BNPL products. 

The agency, which obtained data from Affirm, Afterpay, Klarna, PayPal and Zip, noted that they originated 180 million loans totaling more than $24 billion in 2021 – a tenfold increase from two years earlier. 

The CFPB also observed that customers could receive "uneven disclosures and protections."

BNPL “is a rapidly growing type of loan that serves as a close substitute for credit cards,” CFPB Director Rohit Chopra said in a press release tied to the report. “We will be working to ensure that borrowers have similar protections, regardless of whether they use a credit card or a [BNPL] loan.” 

Most BNPL loans range from $50 to $1,000, the agency found. Apparel and beauty merchants, which led the way when BNPL debuted, accounted for 59% of originations in 2021 (down from 80% in 2019). 

The CFPB also found that:

• Loan approval rates rose from 69% in 2020 to 73% last year
• 10.5% of unique users were charged at least one late fee in 2021, up from 7.8% in 2020. 
• Profit margins fell from 1.27% of the total amount of loan originated in 2020 to 1.01% last year

The agency raised three concerns when it comes to the product: inconsistent consumer protections, data harvesting and monetization and debt accumulation and overextension. 

The CFPB said it plans to “identify potential interpretive guidance or rules” to ensure that BNPL lenders stick to the same baseline protections established for credit cards. The agency also plans to identify the data surveillance practices that BNPL lenders should avoid.

The report's release came on the same day that the Center for Responsible Lending and the Consumer Bankers Association sent a letter to Chopra urging the CFPB to create a rule to expand the agency's oversight to fintech lenders that make installment loans.

The CFPB, in its release, said it "has authority to supervise any non-depository covered persons, such as a [BNPL] provider, in certain circumstances."

Agility Bank in Houston exceeds fundraising target

Agility Bank in Houston exceeded the amount of capital regulators required it to raise. 

Organizers said in a press release that they brought in $41 million in capital – exceeding the $30 million they were instructed to raise. More than 350 investors, majority female, participated in the capital raise.

Bank of America was also among the investors.

Agility, which opened in May, is a minority depository institution formed to focus on women.

“This incredibly successful capital raise speaks to our investors’ commitment to address the gender gap by building more equity and access to capital for women and minority businesses,” Lauren Sparks, Agility’s founder and CEO, said in the release. 

“These investors truly believe in our mission of providing products and services, along with savvy bankers, to enable small and midsize businesses to thrive, particularly those owned by women,” Sparks added.

DLP Bancshares in Fla. buys Community State Bank

DLP Bancshares in St. Augustine, Fla., has acquired Community State Bank in Starke, Fla.

DLP, a consortium of private investors, said in a press release that it also made a “significant capital contribution” to the $225 million-asset Community State as part of the transaction. The price wasn’t disclosed. 

Community State "is a tremendous asset to its community, and we have plans to honor its rich history of quality and client service while at the same time contributing additional capital to position the bank for growth,” Don Wenner, CEO of real estate investment firm DLP Capital and DLP’s lead investor, said in the release. 

DLP said the capital contribution will allow Community State to increase its lending limit, make more loans and enhance the services it offers. The funds will also help the bank improve its internal controls, systems and policies. 

David Bridgeman will remain Community State’s CEO. 

DLP agreed in March 2021 to buy Sunnyside Bancorp in Irvington, N.Y., but another company swooped in and upended the deal. 

DD&F Consulting Group originated and assisted in negotiating the transaction. Ballard Spahr and The Kafafian Group advised DLP.

Neobank Majority brings in $37.5M of new funding

Majority, a Miami neobank that is focusing on U.S. immigrants, has raising more capital.

The company said in a press release that it had raised $37.5 million in Series B funding, consisting of $30 million in equity from Valar Ventures and Heartland Capital and $7.5 million in debt financing from a U.S. bank.

Majority had previously raised $19 million of seed funding in mid-2021 and $27 million of Series A funds a few months later. 

"Our mission, as a company of immigrants for immigrants, has always been to provide migrant communities with the resources they need," Magnus Larsson, Majority’s founder and CEO, said in the release. 

"This funding will help us refine our services and better support these underserved communities," Larsson added.

Fed approves Allegiance, CBTX merger

Allegiance Bancshares and CBTX have received approval from the Federal Reserve three weeks after moving the deadline for the Houston companies’ merger. 

The companies, which plan to rebrand as Stellar Bancorp, announced their merger in November. They disclosed late last month that they had pushed the termination date back from Aug. 2 to Nov. 1. 

The Fed noted in its approval that the companies had agreed to create an action plan for making more mortgages to African-Americans. The plan was required by the Federal Deposit Insurance Corp. as part of its approval last summer. 

Stellar will have more than $10 billion of assets when the deal is completed. The companies said they expect the deal to close on Oct. 1.

Republic First in Pa. exploring strategic options

Republic First Bancorp in Philadelphia has begun a strategic review. 

The $5.7 billion-asset company said in a press release that the decision came after “inquiries by multiple parties expressing interest in one or more potential strategic transactions.”

Republic First said it had set up a strategic review committee of the board to review the inquiries and to evaluate a range of potential transactions and alternative strategies. The committee will seek to enter into nondisclosure agreements with the interested parties. 

Keefe, Bruyette & Woods is one of the company’s advisers.

“There can be no assurance that the … review will result in one or more transactions or other strategic change or outcome,” the company said. There is no timetable for the conclusion of the review. 

The announcement comes a month after Vernon Hill II resigned as the company’s chairman and CEO. He was replaced with former CEO Harry Madonna.

SVB in California adds investment banker to board

SVB Financial Group in Santa Clara, Calif., has appointed an investment banker to its board. 

The $214 billion-asset company said in a press release Wednesday that Thomas King, an operating partner of Atlas Merchant Capital, had become a director. 

King, who was CEO of investment banking at Barclays from 2014 to 2016, will serve on the board’s compensation and human capital committee. 

“Over three decades, Tom has leveraged his global banking and corporate finance expertise, regulatory knowledge and keen relationship-building talents to build and transform businesses,” Greg Becker, SVB’s president and CEO, said in the release. “His strategic thinking and values-led leadership will be an asset to our company and our clients.” 

King was on the board of Leerink Holdings from 2017 to 2018. SVB bought Leerink in 2018.

The Bancorp in Delaware set to switch bank charters

The Bancorp in Wilmington, Del., is set to convert to a national bank charter. 

The $7.1 billion-asset company disclosed in a regulatory filing Wednesday that its bank will begin operating as a national bank tomorrow. 

The Bancorp plans to move its bank’s headquarters from Wilmington to Sioux Falls, S.D., early next year. The company’s payments operations and other core businesses are already in South Dakota. 

The Office of the Comptroller of the Currency, as part of the approval process, required the company to receive non-objection from the agency before significantly deviating or changing its business plan or operations.

First Seacoast raising up to $36M from second step

First Seacoast Bancorp in Dover, N.H., plans to raise up to $36.3 million from its second-step conversion from a mutual to a fully stock-owned company. 

The $510 million-asset company said in a regulatory filing that it expects to receive $26.5 million to $36.3 million of net proceeds as part of the conversion. 

First Seacoast said it plans to invest at least half of the net proceeds in its bank. A portion of the net proceeds would fund a loan to its employee stock ownership plan to finance its purchase of stock from the offering. 

The company could use its portion of the net proceeds to make acquisition, increase lending and introduce new products and services, among other things. There are no current agreements for an acquisition. 

Keefe, Bruyette & Woods is the company’s marketing manager.