The Banker Next Door

The new hedge fund Situational Awareness (“situational”) created by 24-year-old boy wonder Leopold Aschenbrenner managed to barely dodge a total collapse by working out a last-minute deal with Citadel. Situational managed to lose $30 billion in a matter of weeks. Situational had ballooned up to $45 billion in assets under management, more realistically $100 billion with the leverage piled on. This hedge fund almost collapsed because they never bothered to learn the lessons from Long Term Capital Management and multiple other examples of how concentration and leverage can kill you in the stock market. It is the perfect example of why you don’t give billions of dollars to a 24-year-old that has never managed money a day in his life. Situational got sunk because of a ‘Texas Hedge’ trading strategy that doubled down on exposure and had too much concentration (AI), too much leverage (loans from banks), and too many illiquid securities (pre-IPO stock, ex: Anthropic). Ultimately, Citadel came out great in the trade, Situational survives with $15 billion in assets, and the SEC had opened an investigation into the hedge funds trading activity. However, what are we to make of Mr. Aschenbrenner? He spent time at Jane Steet, FTX with Sam Bankman Fried, and OpenAI with Sam Altman, eventually leaving on bad terms with all of them. This episode reviewed multiple articles from The Wall Street Journal (subscription required) and CBNC.

Bank M&A had a good year in 2025 and got off to a slower start in 2026 but is looking to pick up through the rest of the year. Mergers of equals transactions or more to the point, mergers of healthy banks have really picked up steam. Capital is strong right now, the regulatory environmental is favorable, and closing times have returned to a strong average of 131 days. Technology is a major consideration. Institutions that defer technology planning until after signing consistently underperform on synergy capture. Scale is driving M&A activity especially if you are looking to get over the $10 billion asset hurdle. If you want to get in on the M&A game, capital is the price of entry. If you are looking to raise capital before year end, now is a great time for three reasons. 1) stock valuations have recovered, making equity raises less dilutive. 2) The M&A window is open. 3) Loan demand and spreads are good. This episode reviewed two articles from Bank Director titled “3 Reasons why your bank should be raising capital in 2026” and “Why scale is fueling more banking M&A deals than survival.”
Link: Why Scale Is Fueling More Banking M&A Deals Than Survival | Bank Director
Link: 3 Reasons Why Your Bank Should Be Raising Capital in 2026 | Bank Director

Bank News: Gulf Winds Credit Union agreed to acquire Madison County Community Bank. Terms of the deal were not disclosed. Valley National Bank agreed to acquire Providence Financial Corp. for $247 million. First Financial Corp. agreed to acquire First Illinois Corp. for $111.3 million. OCC and FDIC issued a final rule that formally defines “unsafe and unsound practices” and establishes uniform standards around matters requiring attention. Kevin Warsh pushes for a ‘quieter Fed’ in first Jackson Hole speech. VALT bank receives conditional approval for a bank charter from the FDIC. ICBA CEO says there is no middle ground on closing the loophole for stablecoin in the Clarity Act. RTP networking is getting ready for international payments with BNY. Trump lawyers not happy with Capital One. Cashmere Valley Bank names a new CEO. This episode reviewed multiple articles from Banking Dive.

Bank Director issued their Ranking Banking survey results for 2026. Finishing first in the top 25 banks category was Commerce Bancshares. For the $50 billion and above category Columbia Banking System finished first. For the $5 billion up to $50 billion category Commerce Bancshares finished first. For the less than $5 billion category Northeast Community Bancorp finished first. Outside of the categories, the report provides some interesting details on the banks. What are some of the metrics that separate the top ranked banks from the average banks in the Ranking Banking survey? Where is the cost of deposits currently at and how has the cost adjusted over the last 18 years? What regions dominate the Ranking Banking survey? This episode reviewed Bank Director’s Ranking Banking: The Best U.S. Banks 2026. A link to the report is included below.
Link: RankingBanking's Best Banks: Back to the Basics | Bank Director

The FDIC Quarterly Banking Profile shows the performance of the bank industry but also breaks down the performance of community banks for the quarter and the performance of the Deposit Insurance Fund or DIF. The banking had the following results for the second quarter: Net income rose, net interest margin increased, net operating revenue increased, noninterest expense increased, provision expense declined, asset quality metrics improved, unrealized losses on securities increased and remain an issue for the industry, industry assets increased, loan growth was broad-based, domestic deposits increased for the eight consecutive quarter, capital ratios declined, but are still strong, the number of problem banks decreased, and four banks opened in the 2nd quarter. The number of FDIC insured institutions decreased to 4,238. Community bank performance was equally strong. DIF increased by $3.7 billion to $161.1 billion. DIF reserve ratio increased to 1.48%. One institution failed in the 2nd quarter. This episode reviewed the FDIC Quarterly Banking Profile for the 2nd quarter of 2026. Links to the report and charts are included below.  
Link: FDIC Quarterly Banking Profile - Second Quarter 2026
Link: FDIC Quarterly Banking Profile Second Quarter 2026 | FDIC.gov

This video is a clip from BND: Strategy Room Live Stream on August 22, 2026. Stephen Miran and Nouriel Roubini wrote a research paper for Hudson Bay Capital titled “ATI: Activist Treasury Issuance and the Tug-of-War over monetary policy.” This research paper was originally published in July 2024. ATI, in a sense, was the Treasury Departments version of Quantitative Easing. ATI became a tool in the Treasury’s toolbox. Given what Scott Bessent is looking to do in the bond market, I thought this was a good time to go back and review ATI. A link to the research paper is included below.
Link:69e6aab714fc6f94b589fcc0_635102_ATI_-_Activist_Treasury_Issuance_and_the_Tug-of-War_over_Monetary_Policy.pdf

The Banker Next Door (BND) weekly live stream show. Strategy Room provides financial news, commentary, top stories in the business world, economic indicators, and all things banking for the week.

Bank News: Brazil’s Itau Unibanco Holding gets OCC conditional approval for a U.S. bank charter. Old Glory Bank is forced to scrap merger with SPAC. Flagstar Banks goes with Fiserv ‘s Finxact on new cloud-native core system. The SEC charged an ex-Bank of America Banker with insider trading. SouthPoint Bancshares is in trouble with the Federal Reserve and Alabama State Banking Department. CFTC bans ex-FTX execs Caroline Ellison and Gary Wang from trading for only five years. Democrats introduce anti-corruption bill because Trump backed World Liberty received a conditional bank charter. The OCC’s Jonathan Gould had some interesting comments at a blockchain symposium. SEC proposes crypto rules because The Clarity Act is stalled in the Senate. Bankers are seeking a clearer definition of ‘material financial risk’ in proposed CAMELS changes. This episode reviewed multiple articles from Banking Dive.

Mark Walter’s, CEO of Guggenheim Partners (big wall street player) and owner of the Dodgers and Lakers, received what amounted to a $20 billion-dollar regulatory margin call. This forced him to sell the Lakers very quickly and scramble for additional funds. This event shined a light on the ties between Private Equity, Private Credit, and Life Insurance companies, which led to major concern among state insurance regulators and federal regulatory authorities. Mr. Walter’s insurers apparently lent more than $20 billion of policyholder money to his own private entities without properly disclosing the affiliations. The problem here is that this is not a one-off or isolated incident. It is a peak behind the curtain into a much larger game on wall street that has been going on for a while now flying under the radar. The question is will the regulators be able to clean this up before another major blow up occurs. This episode reviewed a Substack article from Edward Dowd (subscription required) titled “Mark Walter’s $20 billion regulatory margin call: How Guggenheim’s insurance arm funded his empire.” You can follow Edward Dowd on X @DowdEdward.

Tioga-Franklin Savings Bank in Philadelphia becomes the fifth bank failure of 2026. The bank had $68 million in assets as of June 30th. The FDIC estimates that the failure will cost the Deposit Insurance Fund approximately $5.5 million. Second Federal Savings and Loan Association assumed all the single branch bank’s deposits and most of its assets. The FDIC acted as receiver. Tioga-Franklin Savings was founded in 1873 and was one of about 22 black-owned banks in the U.S. The bank was plagued by deficiencies that were identified starting back in 2023. Despite being under a regulatory consent order since 2024, the bank was not able to adequately address its issues. This episode reviewed an article from Banking Dive titled “Philly lender becomes fifth bank to fail in 2026.” A link to the article is included below.
Link: Philly lender becomes fifth bank to fail in 2026 | Banking Dive