Retail & Commercial

As regulators continue to scrutinize payday lending and associated products, a California startup thinks it has come up with a unique alternative for offering credit to those with lower credit scores — and some financial institutions are already signing up.

Joining the hunt for higher-yielding niche loans, the asset management unit of NewOak Capital has quietly launched a private fund to acquire nonqualified residential mortgages.

Banks like Cullen/Frost and BOK Financial say they have found one, in the form of higher energy-sector loan balances last quarter and the chance to finance consolidation among oil firms. But such spurts may only mask longer-term problems.

The Federal Deposit Insurance Corp. issued a letter Wednesday emphasizing that financial institutions should take a measured approach to banking relationships rather than cutting ties with entire lines of businesses.

Dumping entire categories of clients is a crude and inappropriate reaction to large fines, says Stephen Platt, author of Criminal Capital: How the Finance Industry Facilitates Crime." However, he says, regulators should hold a dialogue with banks and attempt to accommodate businesses that carry high risk but whose services are desperately required, such as remittances to war-torn Somalia.

The government has added further protections to reverse mortgage borrowers' spouses who are not named in the loan agreement, but placed conditions under which they are ineligible for older protections.

EverBank Financial in Jacksonville, Fla., reported higher quarterly results largely because of increased commercial originations.

Marketplace lenders are seizing on current investor enthusiasm after the December public listing of LendingClub. SoFi and Funding Circle have set new origination targets, and new capital markets deals may help replace bank credit lines for Blue Elephant Capital Management and perhaps others.

SimpleFi is working with a New Jersey bank to pitch its payday loan alternative and financial educational services to employers across the country come February 1. It represents part of the trend of disruptors rethinking payroll data.

Sun Bancorp's CEO made a bold forecast, telling analysts this week that the company should be profitable throughout the year. Not bad for a bank that has lost $350 million since 2008