10 Who Had a Rough Year

Prepaid Card Issuers

Prepaid card issuers had been under increased scrutiny even before it was revealed that the architects of the Paris terrorist attacks used prepaid cards to help stage their November operation. Here in the U.S., a Federal Deposit Insurance Corp. ruling that classified prepaid cards as brokered deposits has forced issuers to hold more capital against the deposits in prepaid accounts and one issuer, the Bancorp Bank, was recently slapped with a $4.3 million fine for apparently misleading consumers about card-related fees. Meanwhile, the Consumer Financial Protection Bureau in October opened an inquiry into Russell Simmons' Rush Card after customers were denied access to funds for days when its issuer switched payment processors. Now French authorities are promising strict new rules on prepaid cards after it was discovered that the attackers used the anonymous cards to rent hotel rooms in Paris on the night before the Nov. 13 attacks. Those rules are unlikely to affect cards issued here, but U.S. issuers should most certainly be bracing for more scrutiny now that prepaid cards have been exposed as a terrorist financing tool.

Antony Jenkins, Barclays

Antony Jenkins took over as Barclays CEO in 2012 and in his three years at the helm he won high marks for improving the bank's culture in the wake of the Libor-rigging scandal that cost predecessor Bob Diamond his job. But moves he made to improve the bank's performance and stock price shedding staff, shrinking the bloated investment bank and improving its capital position didn't go far enough for investors' liking and in July Jenkins was fired. In announcing the move, Chairman John McFarlane said he was seeking a more "decisive" leader who could make Barclays "leaner and more agile and more energetic." In October, the British banking giant named ex-JPMorgan Chase executive Jes Staley as its new CEO.

Energy Lenders (Again)

For most of the year, banks that lend to oil and gas firms had been downplaying the impact of falling energy prices on their portfolios, assuring investors that problems were largely contained and that they had set aside adequate reserves. But oil prices just kept falling and in mid-December, Hancock Holding in Gulfport, Miss., signaled that the problems were worse than it feared when it announced that it would more than double the size of its loan-loss allowance for energy credits in the fourth quarter. The very next trading day its stock fell to a 52-week low. BOK Financial, LegacyTexas Financial Group and Cullen/Frost Bankers are among other banking companies with sizable energy books whose shares have been hammered in recent weeks. With some experts predicting that oil prices could fall to as low as $20 a barrel, energy lenders' woes could get worse in 2016.

Regional Banks

Since the Dodd-Frank Act was enacted in 2010, CEOs of regional banks have chafed at the fact that the law views all banks with $50 billion of assets or more as "systemically important." They had a champion in Sen. Richard Shelby, R-Ala., who fought to include a provision in the yearend federal budget deal that would have raised the threshold to $500 billion, but that effort failed, leaving bankers to wonder what's next. There is some bipartisan agreement on raising the threshold few would argue that a $50 billion-asset bank could take down the economy if it failed but it's hard to imagine there being much movement on the issue in an election year. It could resurface in 2017, but odds are low unless a Republican wins the White House and/or the party retains control of the Senate.

C.G. Kum, Hanmi Financial

Financially speaking, the $4.2 billion-asset Hanmi Financial in Los Angeles has had a nice year. Profits are up on strong loan growth and credit quality is much improved. But it goes down as a rough year for CEO C.G. Kum because he failed in his bold bid to create the nation's largest Korean-American bank. When Kim got wind of the news that rival BBCN Bancorp was planning to acquire Wilshire Bancorp, he quickly swooped in and offered to buy the much-larger BBCN for roughly $1.6 billion. BBCN rejected the offer, however, and stuck with its plan to buy the $4.7 billion-asset Wilshire. The combined company would be nearly three times as large as Hanmi.

Jay Bray, Nationstar Mortgage Holdings

To be fair, the sharp drop in Nationstar Mortgage's shares this year isn't entirely the company's fault; persistently low interest rates triggered a wave of prepayments that has crimped the profits of all mortgage servicers. But CEO Jay Bray and the management team also bear some of the blame for the stock's drop of more than 50% since the beginning of the year. Nationstar has been slow to respond to requests for mortgage modifications, and the resulting scrutiny from regulators has scared off investors. Investors were also peeved that the company went out and raised $500 million in capital just weeks before reporting a $48 million loss in the first quarter and have been critical of management for failing to control spending at its tech subsidiary, Xome. Bray's strategy for boosting profits and winning back investors is to improve Nationstar's overall customer service. "We want to treat customers in the best way possible," he recently told American Banker. "If we can transform the customer's experience, we can conquer the world in this space."

Mariner Kemper, UMB Financial

UMB Financial has been a top performer for years, but the Kansas City, Mo., company hit a rough patch in 2015. Its fee income plunged in the third quarter after volatility in the equity markets suppressed profits from asset management and exposed overspending at the overall company. CEO Mariner Kemper has vowed to cut costs to bring its sky-high efficiency ratio more in line with industry averages, telling investors and analysts in late October that UMB is "laser-focused on being lean and mean." But Keefe, Bruyette & Woods analyst Chris McGratty said investors will need to be patient. "This is going to be a long haul," he told American Banker in October.

Santander Consumer

Talk about a crazy year. In terms of profits, Santander Consumer, a major subprime auto lender, has been knocking the cover off the ball. Its net income through the first nine month of the year rose more than 53% from a year earlier and its earnings per share in the third quarter blew away analysts' estimates. Its stock, though, has been up and down all year and in late December it was hovering near a 52-week low. The stock slide began in the spring when the company revealed that regulators were looking into its lending practices, but then started to rebound in the summer after Chairman and CEO Thomas Dundon (pictured above) resigned and Santander named Chief Financial Officer Jason Kulas CEO and brought in former JPMorgan Chase executive Blythe Masters as nonexecutive chairman. But the shares plunged again in late October when the company said it planned to exit the high-yielding personal lending business, focus exclusively on auto lending and alter its method for provisioning for loan losses. Investors also could be spooked by its 3.8% delinquency rate on auto loans at Sept. 30, which is nearly triple the delinquency rate of all U.S. auto lenders.

Organizers of Fourth Corner Credit Union

It seemed like a good idea at time. In Colorado, where marijuana is legal, organizers of Fourth Corner Credit Union filed paperwork in late 2014 seeking to become the first financial institution in the state to specifically cater to pot growers and distributors. The founders had hoped to open the credit union's doors in early 2015, but their application was repeatedly delayed and finally rejected in July. Among the reasons, according to the National Credit Union Administration, was that the credit union "has no historical data NCUA can use to make a decision in determining insurance risk." Organizers have fought back, filing a suit against the NCUA, as well as the Federal Reserve, claiming that regulators acted "arbitrarily and capriciously" in concluding that Fourth Corner's business plan was flawed. For now, though, legal marijuana businesses continue to struggle find banks or credit unions willing to accept their business.

Gordon Baird, Independence Bancshares

It's tough for a $100 million-asset bank to stay relevant these days, so in 2013, Independence Bancshares in Greenville, S.C., brought in former Citigroup executive Gordon Baird to reinvent the bank for the digital age. Baird's plan was to develop a real-time payments platform that it could then sell to other financial institutions. But it turned out to be overly ambitious and in October less than six months after it raised roughly $8.5 million for its tech expansion Independence scrapped the project and fired Baird.