The Banker Next Door

If community banks want to better manage their existing or potentially new fintech relationships, what is the best way to do that? ICBA offers seven steps that community banks should consider. They include 1) Identity a problem or opportunity for your bank, and source solutions accordingly, 2) Start with a simple solution, 3) Consider growth-stage fintechs, 4) Don’t overlook cultural fit, 5) Connecting with the founder is just as important as the company, 6) It’s Ok to say “no” fast, and 7) Turn to ICBA innovation for support. Most community banks have anywhere between 250-400 vendors. That is a lot of vendors to manage. While your bank’s vetting and due diligence process may be excellent, a lot depends on the history of the fintech they are dealing with. Think about complexities, cultural fit, the founder’s plans, and what is most important for your bank. This episode reviewed an article from ICBA titled “Seven Steps to Successful Fintech Partnerships for Community Banks.” A link to the article is included below.
Link: Seven Steps to Successful Fintech Partnerships for Community Banks - ICBA.org

With interest rates rising, banks need to be concerned about interest rate risk and being competitive on fixed-rate commercial loans. One option to consider is loan-level hedging. In a typical back-to-back deal, the lender enters into a swap with the borrower and an offsetting swap with a dealer. The borrower-facing swap provides them with the desired fixed interest rate, which may be a more attractive rate than the bank for otherwise be able to offer, thus helping them to win the business. The dealer-facing swap is structured as a floating rate loan to offset the lender’s interest rate risk. Before going down this road, there are a few things for a bank to consider. 1) Start with borrower demand, 2) evaluate the economics, and 3) Choose the operating model. Loan-level hedging can be a great strategy to help banks stay competitive, win business, and reduce interest rate risk, but it must be the right situation. As interest rates continue to increase, banks will have to think strategically about how to position ongoing loan growth. This episode reviewed a blog post from PCBB titled “Rates are rising. What could this mean for fixed-rate lending?” A link to the blog post is included below.
Link: Rates are Rising. What Could This Mean for Fixed-Rate Lending?

The Financial Accounting Standards Board (FASB) is currently conducting a post-implementation review (PIR) of the Current Expected Credit Losses (CECL). Has CECL delivered? Is it working as intended or has it produced unintended consequences? The Fed’s Michelle Bowman thinks that CECL has been a total failure and that FASB should permit banks to return to the incurred-loss methodology. CECL has proven to be very costly to implement and manage for most banks, especially smaller community banks. FASB’s PIR is not a referendum on CECL. It does not appear likely that CECL would be scrapped but rather just have some changes to the existing structure. This does present a great opportunity for banks to right-size their CECL framework. Every bank should review the OCC’s handbook on Allowances for Credit Losses that was updated in July 2026. This episode reviewed an article from Bank Director, a blog post from PCBB, and OCC’s Handbook for Allowances for Credit Losses. The Bank Director article is titled “CECL under review: Weighing the costs, benefits and impact.” Links to the article and OCC handbook are included below.
Link: CECL Under Review: Weighing the Costs, Benefits and Impact | Bank Director
Link: Allowances for Credit Losses: Revised Comptroller’s Handbook Booklet and Rescissions | OCC

Bank News: UMB Financial Corp agreed to purchase El Dorado Savings Bank for $506M. First Community Bankshares agreed to acquire Main Street Financial Services Corp for approximately $243M. Renasant Corp agreed to purchase Commercial Bank & Trust Co. for $142M. Financial Plus CU to merge with Monroe Community CU. 1 NB Bank agreed to purchase in-state peer Headquarters Holding Co. in a stock-and-cash transaction. Texas Community Bancshares agreed to purchase Banc of San Jacinto County Bancshares in an all-cash transaction. Ripple received unconditional approval from the OCC to launch a national trust bank and immediately entered into partnerships with BNY and Robinhood. Galaxy Digital applied for a bank charter with the OCC. SoFi reported strong earnings for Q3 2026. Bank of Hawaii sees planned $200M deposit runoff in Q3 2026. Colony Bank executes on $19.9M sale-leaseback as part of repositioning its investment securities portfolio. Senator Warren wants to restore bank examiner powers, because apparently, they lost it somewhere. Piermont CEO wonders how fintechs will perform with new regulation requirements. Bank of America opens new branches in Wisconsin. This episode reviewed multiple articles from Banking Dive and S&P Global Market Intelligence (subscription required).

Managing interest rate risk is critically important. Banks usually do this through their Assets and Liability Committee (ALCO). ALCO examines how changes in interest rates impact earnings and equity value. They use several methodologies to do this. Net interest income is examined through Earnings at Risk (EAR) and equity value is examined through Economic Value of Equity (EVE). A gap or sensitivity analysis will be conducted that includes interest rate shocks of -400 bps and +400 bps. That gap analysis is what is mirrored in the OCC interest rate risk report. While we do not have access to banks ALCO, we can look at the OCC report to get a good idea as to how most bank balance sheets are currently positioned and what the impact of rising interest rates will be on earnings and equity. This episode reviewed the OCC’s Interest Rate Risk Statistics Report for Fall 2026. A link to the report is included below.
Link: Interest Rate Risk: Interest Rate Risk Statistics Report | OCC

This video is a clip from BND: Strategy Room Live Stream on October 24, 2026. European auto makers are getting crushed right now because of the hardcore pivot toward all electric vehicles, letting Chinese automakers into their market, and then further subsidizing said Chinese automakers. Now Volkswagen, BMW, Mercedes Benz, and Porsche are all cutting jobs and sustaining big losses. The U.S. auto industry dodged a bullet as this could have been their fate. The U.S., under the Trump Administration, turned away from a hardcore pivot to EVs and did not allow China to flood the market.

This video is a clip from BND: Strategy Room Live Stream on October 24, 2026. What do Private Credit, Insurance, and the Commercial Paper market on Wall Street have to do with your pension or retirement account? As Blue Owl continues to slump and Mark Walter’s problems mount, Private Credit is desperate to get into your retirement account! Why? What does Mark Walter’s investment in insurance companies have to do with the commercial paper market on Wall Street? How does the AI trade play into all of this? Finally, why is Wall Street working to take away investor protections?

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.

What are the main banking core system providers doing with stablecoins? FIS and Fiserv came out of the gate with big announcements when the GENIUS Act was passed into law in 2025. FIS put out a plan that would allow clients the ability to make domestic and cross-border payments using Circle USDA. Fiserv planned to launch a digital assets platform and its own stablecoin called FIUSD. A year later and not much happened. Jack Henry was more patient in their approach. They decided to allow third-party stablecoin providers to integrate with their platforms in a way that allows clients to choose from multiple options. There are two big problems right now. First, banks do not see major demand for stablecoin products, so they are not moving quickly to adapt. Two, and a far bigger issue, is that the banking technology stack and digital asset provider technology stack are very fragmented, which makes putting stablecoin in place really difficult. This episode reviewed an article from FinXtech titled “Cores find stablecoins a hard sell for customer.” A link to the article is included below.
Link: Cores Find Stablecoins a Hard Sell for Customers - FinXTech

On October 21, 2026, the OCC issued GENIUS Act regulations: Final Rule. This Final Rule addressed standards and requirements related to activities, reserve assets, redemption, risk management, audits, reports, supervision, custody, applications, registrations, revocation, recission, and capital and operational backstop. The Final Rule stopped short of preventing stablecoin issuers from providing yield, instead the OCC will examine situations on a case-by-case basis. This did not make the banking lobby happy, as the ABA and ICBA pushed back. It’s not exactly a win for the crypto community either. The OCC sought to “ride the fence” and make both lobbies happy while providing the necessary framework for stablecoin issuance and operations. Does this open the door to deposit-flight concerns? Maybe, but there are pros and cons in every situation. This episode reviewed multiple articles and press releases from S&P Global, Banking Dive, American Bankers Association, and the OCC. A link to the GENIUS Act Final Rule is included below.
Link: Implementing the Guiding and Establishing National Innovation for U.S. Stablecoins Act for the Issuance of Stablecoins by Entities Subject to the Jurisdiction of the Office of the Comptroller of the Currency