Banking Crisis 2023

Banks in the U.S. tend to exist for about half the life span of the average human being. It doesn't have to be that way.

American Banker's annual reputation survey shows regional banks were hit hardest by this spring's bank failures. But there were a few bright spots, including digital-only firms and highly specialized firms.

Banking crises always recur. But time and again, bankers have been shown to operate on the assumption that good times are permanent.

Following reports that the Los Angeles bank was considering strategic options, its deposits fell by $1.7 billion in two days, according to a securities filing. The disclosures shed new light on PacWest's predicament before its merger agreement with Banc of California.

The Federal Reserve has issued a slew of private warnings to lenders with assets of $100 billion to $250 billion, including Citizens Financial Group, Fifth Third Bancorp and M&T Bank, according to people with knowledge of the matter.

The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency have until mid-2024 to finalize bank rules without risking a CRA nullification if Republicans run the table in 2024.

The Federal Deposit Insurance Corp. has issued proposals that would make banks with $100 billion of assets or more hold more long-term debt as a cost buffer in the event of a collapse and meet new planning requirements in case they ever have to be resolved in an emergency.

Azher Abbasi, executive vice president of the supervision and credit group at the Federal Reserve Bank of San Francisco, will retire on Oct. 31. Niel Willardson, a former Minneapolis Fed official, will replace him as interim executive vice president Oct. 1.

After the turbulence of the banking crisis, here are a dozen ideas experts have for keeping the financial system healthy, from American Banker's BankThink op-ed section.

East West Bancorp chief Dominic Ng long faced skepticism from analysts who had questioned his conservative approach to capital allocations — a strategy that has helped his Pasadena-based bank weather decades of ups and downs in the banking industry and survive amid the collapse of other California banks this spring.

Many depositors have "shifted their funds into higher-interest-bearing accounts, increasing banks' funding costs," S&P wrote in a note summarizing the moves.

The Pittsburgh company has tapped the U.S. blue-chip bond market for the second time since the banking crisis in the spring. Companies are hurriedly raising capital before the cyclical summer slowdown that typically kicks in toward the end of August.

During the recent banking crisis, both businesses and wealth management clients moved their money out of banks. Commercial deposits have since recovered, but those in wealth accounts continue to decline amid fierce competition from both inside and outside the banking system.

Goldman Sachs told Sen. Elizabeth Warren, D-Mass., that it made $60 million on the purchase and sale of part of Silicon Valley Bank's loan portfolio.

Banks locked in funding by offering more enticing rates on certificates of deposit last quarter, but rebuilding liquidity came at a cost. Competition isn't dying down either, with a couple of credit unions floating 6% CD rates.

Dream First Bank of Syracuse, Kan. is assuming all deposits and most of the assets of Heartland Tri-State Bank of Elkhart, Kan. following a purchase and assumption agreement with the Federal Deposit Insurance Corp., representing a $54.2 million hit to the Deposit Insurance Fund.

The Federal Deposit Insurance Corp. this week launched the sale of an $18.5 billion loan portfolio from the failed bank, a pool of debt tied to major private equity and investing firms. 

 The advance has helped the group pare its declines this year to roughly 10%, easing an earlier drop of as much as 33% following a string of regional bank collapses, including Silicon Valley Bank in March. 

Centerbridge Partners and Warburg Pincus said they would invest $400 million in Banc of California in conjunction with its purchase of PacWest. The private equity injection was made possible through reverse accounting, which used Banc of California's balance sheet to value the transaction.

Federal Reserve Board Gov. Phillip Jefferson joined three other board members in supporting a notice of proposed rulemaking, but expressed concerns about the economic impact of the changes.