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Regions Bank
After Regions Financial reported $135 million in check fraud losses during a six-month period last year, it hired new staff and installed technology to help prevent fraud. The bank has said that in 2024, it expects to incur fraud losses of roughly $25 million per quarter.
Gary Tramontina

Corrected: Regions Bank unwittingly invited a surge in check fraud last year

Article by Jordan Stutts
CORRECTION, JAN. 4, 2024 AT 9:26 P.M.: An earlier version of this story erroneously connected the surge in check fraud losses at Regions last year to a September 2022 change in the bank's funds availability policy. That policy change, which was made in connection with the rollout of the bank's Early Pay service, related to when funds paid to customers by electronic direct deposit would be made available. Regions says that the spike in check fraud losses was unrelated and grew out of a counterfeit check scheme and a separate stolen check scheme. Mentions of Early Pay and an outside expert's comment about Early Pay have been removed from the story.

Regions Financial, which reported $135 million in losses due to check fraud during a six-month period last year, inadvertently enabled the fraud surge through a change in the period of time that it holds deposits before making them available to customers.

In response to an analyst's question late last year about the spike in check fraud, Regions Chief Financial Officer David Turner said that the Birmingham, Alabama-based bank "tweaked something to try to become more customer-friendly in terms of the period of time that we hold a deposit. Because if you hold deposits too long, you start getting complaints."

"We opened the door too wide, bad people came rushing in, and we didn't close the door timely enough," Turner added in his comments at the BancAnalysts Association of Boston Conference in November. "That's on us."

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Truist Financial
Scott McIntyre/Bloomberg

Truist plans to shrink branch network by 4% in March

Article by Allissa Kline
Truist Financial has notified customers that it plans to close several dozen branches in March.

The Charlotte, North Carolina-based company said it will shutter about 4% of its branch network, which amounts to roughly 80 locations. As of Dec. 29, 2023, Truist operated 2,006 branches across 17 states and Washington, D.C., according to the Federal Deposit Insurance Corp.

The closures come amid Truist's $750 million cost-cutting initiative, which was announced four months ago. Under pressure to reset its strategy and reduce its expenses, the $543 billion-asset company has consolidated its commercial and community banking regions from 21 to 14, merged its consumer payments and wholesale payments businesses into a single operation and created a unified commercial real estate business from units that used to overlap.

It has also reduced the size of its board of directors, nearly doubled the size of its executive management team, named a new chief operating officer and hired a new chief legal officer.

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The Office of the Comptroller of the Currency contends that Industry Bancshares is "in troubled condition," citing outsize vulnerabilities to changes in interest rates and the company's reliance on "funding sources that may not be available in the event of further financial stress."

Fight between OCC and upside-down Texas bank boils over

Article by Polo Rocha
Few banks in the country are as upside down today as Industry Bancshares. But that isn't stopping the Texas company from fighting one of its regulators, which is pushing for fixes after the bank became heavily exposed to rising interest rates.

The spat spilled into public view on Jan. 17, when the OCC released documents arguing that the bank has fallen into "troubled condition" due to its flopped pandemic-era bond investments.

The bank plowed cash into ultra-safe bonds during the COVID-19 pandemic — only to realize those bonds weren't so safe after all when interest rates shot up sharply in 2022 and 2023.

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If a company with an existing bank relationship approaches Five Star Bank, "we need a pretty convincing story on why they want to leave that bank," said Abraham Rojo, head of digital banking and BaaS at Five Star, pictured at right. Curt Queyrouze, president of Coastal Community Bank (left), expects more fintechs to diversify their sponsor bank relationships, but points out it takes time to launch or wind down a relationship.

Fintechs contend with banking-as-a-service fallout

Article by Miriam Cross
When one child misbehaves, even innocent siblings can expect extra scrutiny when their parents come home.

"It doesn't matter if you're the problem child," said Jason Henrichs, founder and CEO of community bank consortium Alloy Labs Alliance. "You're all in trouble."

The same could be said of players in the banking-as-a-service space. Financial institutions including Blue Ridge Bankshares, Cross River Bank and First Northwest Bancorp have been forced by regulators including the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. to heighten oversight of their fintech partners, strengthen compliance and more in recent years; in fact, on January 26, the OCC hit Blue Ridge with a second consent order, while the FDIC published consent orders related to fintech partnerships formed by First & Peoples Bank and Trust Company and Choice Financial Group. A recent analysis by S&P Global Market Intelligence found that banks that provide BaaS to fintech partners accounted for 13.5% of severe enforcement actions issued by federal bank regulators in 2023, a disproportionately large number considering how few banks in the U.S. engage in BaaS, the analysis said. 

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Gamblers in 28 U.S. states can now make legal sports bets from their mobile phones, which has fed fears that a problem-gambling epidemic is building.

Why gambling addiction is suddenly a problem for banks

Article by Kevin Wack
When Rob Minnick needed money to fuel his betting habit, he often found it where a lot of gamblers do. He got a cash advance on a credit card.

Minnick was 18 years old when he started betting, convinced that his extensive knowledge of sports would make him a winner. The New Jersey native moved from daily fantasy sports to traditional sports betting to casino games. Eventually, he'd find himself sitting at an Atlantic City poker table while simultaneously peeking at his cell phone, where an online slot machine was spinning.

In late 2022, Minnick was in recovery from his gambling addiction when he had a relapse, which was fed by cash advances. It started with a sports bet, which led to a visit to Parx Casino in Bensalem, Pennsylvania.

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BofA CEO Says Bank Will Devote More Capital To Trading
Bank of America said that it will need to "de-designate" interest-rate swaps and reclassify how it accounts for them. Though the bank will take a noncash, pretax charge of $1.6 billion in the fourth quarter, it expects to regain that money as interest income over time.
Christopher Goodney/Bloomberg

Bank of America takes temporary $1.6B hit over use of short-lived rate

Article by Polo Rocha
Bank of America's support for a short-lived interest rate index from Bloomberg L.P. will lead the bank to take a $1.6 billion hit in its earnings report on Jan. 5, though it will earn that money back over time.

BofA was perhaps the leading backer of Bloomberg's Short Term Bank Yield Index, or BSBY, rate, which was designed to play a major role in replacing the once-ubiquitous London Interbank Offered Rate. Libor was used in loans across the world before a rate-rigging scandal caused its demise. Bloomberg had foreseen a window in which it could come up with its own benchmark for banks to use in loans.

But regulators were either skeptical of BSBY or openly combative about its adoption. After the rate failed to gain much traction in the banking industry, Bloomberg said in November that it would permanently discontinue BSBY this year.

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FiservWestOxford
Fiserv has added more merchant services in recent years.

Fiserv wants a special purpose bank charter. What does this mean?

Article by John Adams
In a tightly competitive payments market in a cost-conscious economy, Fiserv is trying to expand the amount of processing work it can do for merchants.  

The bank technology seller has applied for a merchant acquirer limited purpose bank charter in Georgia. That would allow Fiserv to control the entire payment process, including authorizing, settling and clearing debit and credit card transactions. Fiserv normally uses bank partners as part of payment processing.  

In an email on the night of Jan. 12, Fiserv's public relations office said the company is "taking this step in response to recent market changes, as third-party financial institutions that have traditionally provided access to the card networks as sponsor banks increasingly focus on other areas of their business." Fiserv's public relations office added that the company has no intention to become a traditional financial institution or regional bank, saying Fiserv will continue to partner with financial institutions that want to remain active in the market as acquiring sponsors. 

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Wells Fargo cuts about 50 investment bankers as deals slump
"I read it as a direct response to our union efforts," Joe Hertz, who works for Wells Fargo in Des Moines, Iowa, says of the one-time bonus the company will pay qualifying, lower-paid workers.
Justin Sullivan/Photographer: Justin Sullivan/Ge

Wells Fargo gives $1,000 bonus to its lower-paid employees

Article by Kevin Wack
Wells Fargo is awarding a bonus of $1,000 to many of its lower-paid employees — a one-time cash grant that comes amid a unionization push at the megabank.

The $1.9 trillion-asset company notified U.S. workers in January that they are eligible for the special cash award if they earned a salary of less than $75,000 last year, and their total cash compensation was less than $85,000. In addition, employees must meet certain criteria related to job performance and conduct.

Some international employees are also eligible, though workers based in India and the Philippines will qualify only if their salary is $25,000 or less.

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HSBC
HSBC is adding a new app to attract nonbank customers to cross-border payments.
Hollie Adams/Bloomberg

HSBC takes aim at Revolut and Wise

Article by John Adams
As the digital payment companies that offer cross-border payments are stacking on financial services to steal business from banks, HSBC is countering by adding a money-transfer app that could serve as a way to enroll new consumers.

HSBC on Jan. 2 announced Zing, a transfer app that will launch in the coming days in the U.K., with a wider rollout coming later. Zing is designed for users who do not have an HSBC account, enabling it to use the same approach as fintechs that are building "super apps," or using enrollment in payment accounts as a way to sell broader financial services. 

The launch of Zing places HSBC in a market that banks have largely conceded to companies like Revolut and Wise. But as these nonbanks add more traditional banking and payment services, large banks are more inclined to compete with them — both to defend their existing businesses and to find new audiences.

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Experts are criticizing a proposal from the Consumer Financial Protection Bureau to cut overdraft fees for the largest banks but not smaller banks as ignoring the firms that rely disproportionately on overdraft fee income.
Samuel Corum/Bloomberg

CFPB's overdraft proposal exempts the small banks that need it most

Article by Kate Berry
A plan by the Consumer Financial Protection Bureau to slash overdraft fees comes with a major omission: Small banks, which are more reliant on overdraft revenue as a profit center than larger banks. Several dozen small institutions are among the worst offenders in targeting consumers for overdraft charges, experts say. 

The CFPB's proposal released this month would allow large financial institutions with more than $10 billion in assets to charge a breakeven fee or a maximum overdraft fee of between $3 to $14, under a rubric to be set by the bureau. If banks charge a higher amount than their costs, the CFPB will consider an overdraft charge to be a line of credit subject to the Truth in Lending Act, which requires disclosures of annual interest rates. 

Given small banks' outsize role in overdraft, some experts are questioning the CFPB's rationale, especially considering research that shows small banks' overeliance on overdraft revenue. 

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Frank Gargano
Reporter, American Banker
Truist Financial HSBC Bank of America Wells Fargo Payments
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