The Banker Next Door

Tioga-Franklin Savings Bank (TFSB) failed in August of 2026 costing the Deposit Insurance Fund $5.4 million. According to the OIG report, TFSB failed due to continued losses caused by high overhead expenses from expanding its mortgage banking division. The losses eventually wiped out the bank’s capital. TFSB reporting earnings from 2020 to 2022 primarily from PPP loan fees. Once that program ended the bank shifted its strategy to growing its mortgage division. As this division grew, the overhead costs eroded the banks profits. TFSB became unprofitable in 2023, loan losses then mounted wiping out the bank’s capital. The bank attempted to find new investors to recapitalize but was unable to do so. TFSB was founded in 2000 in Philadelphia. The bank spent much of its existence under regulatory oversight. The bank was downgraded in 2023 and never recovered. This appears to be a case of good old fashion horrible management. The OIG report found no wrongdoing on behalf of the FDIC. This episode reviewed FDIC OIG Failed Bank Review – Tioga-Franklin Savings Bank, Philadelphia, PA. A link to the report is included below.
Link: Failed Bank Review – Tioga-Franklin Savings Bank, Philadelphia, PA

Community Bank & Trust – West Georgia (CB&T) failed in May of 2026 costing the Deposit Insurance Fund $97.3 million. According to the OIG report, CB&T failed due to deficient management and board oversight following a change in the bank management in 2022 and the implementation of a very aggressive nationwide loan strategy. The small community bank got away from its traditional banking model to implement a loan strategy that utilized USDA and SBA guarantees. They also acquired an “excessive amount of low-quality assets.” The bank’s management was charged with not having adequate underwriting, internal controls, credit administration, or risk management systems to support the loan growth. Credit quality deteriorated quickly leading to loan losses that wiped out capital. The bank was being monitored by the FDIC, had been downgraded, and was under consent order. Even worse, a regulatory review found management used payment deferrals, extensions, and other loan modifications to try and hide the problems in the loan portfolio. The OIG found no wrongdoing on the part of the FDIC but did make three recommendations for how they could improve. This episode reviewed the FDIC OIG Material Loss Review of Community Bank & Trust – West Georgia. A link to the report is included below.
 Link: 4. Material Loss Review of Community Bank Trust - EVAL-27-01 - Redacted.pdf

The third quarter 2026 SLOOS survey from the Federal Reserve reporting on bank lending practices. Banks reported that lending standards remaining unchanged on C&I loans to large and middle market firms but tightened for small businesses. On net, C&I loan demand for firms of all sizes was weaker. Banks reported tightening lending standards on all commercial real estate loan categories. They also reported weaker demand for all CRE loan categories. Banks reported leaving lending standards unchanged for most types of residential mortgages. Standards for subprime mortgages tightened. Standards on HELOCs were unchanged. Banks reported weaker demand across all RRE loan categories and unchanged demand for HELOCs. Banks reported leaving lending standards for credit card loans, auto loans, and other consumer loans unchanged. Banks reported stronger demand for credit card loans but weaker demand for auto loans. The report also added several special questions around credit card loans and lending to NDFIs. Banks tightened lending standards to all types of NDFI loans. Loan demand for NDFIs was mixed. This episode reviewed the Federal Reserve Senior Loan Officer Opinion Survey (SLOOS) for the 3rd quarter of 2026. A link to the report is included below.
Link: The Fed - The October 2026 Senior Loan Officer Opinion Survey on Bank Lending Practices

Bank News: First Capital to purchase First Bancorp for $33M. Bank7 completes deal for Century Financial. Colony Bankcorp completes deal for First Reliance Bancshares. University Bancorp acquires remaining 20% of University Bank. Integrity Bank Plus has applied for permission with the FDIC to merge with State Bank of Jeffers. Sugar River Bank is purchasing a bank branch from Bank of New Hampshire. OppFi has decided to withdrawal its application to purchase BNC National Bank. NBKC Bank seeks approval to purchase the BaaS portfolio of Lincoln Savings Bank. What does the democratic sweep of the midterms mean for banks? FDIC declares Old Glory Bank adequately capitalized. CoinFlip, a crypto ATM operator, was ordered by California regulators to repay scam victims $4.8M. Well Fargo thinks this is a ‘now or never’ moment for bank M&A. PNC boosts branch expansion. Truist launches new merchant tools. Key Bank purchases Atlantic-Pacific Capital to boost investment banking business. BayFirst posts a small quarterly loss but still extends current loss streak to 7-straight quarters. This episode reviewed multiple articles from Banking Dive and S&P Global Market Intelligence (subscription required).

This is part 44 of the crypto series. The fallout from the largest hack in crypto history continues as Binance tries to recover some of the lost $6.3 billion in cryptocurrency. How did this happen? Binance has stated that hackers used fake job interviews along with malicious software and internal AI tools that were designed to infiltrate. Who is responsible? North Korean hackers are currently the prime suspect. Currently, Binance’s CFO is out, and U.S. banking regulators are contacting banks to find out if they have any exposure or vulnerabilities. As an employer, what can you do to avoid job search scams? Furthermore, ICBA is already hot on the topic as they have warned about North Korea being THE bad actor in crypto theft. They are called for a stronger regulatory response. They have also proposed seven steps that policy makers should take now to address the issue. This episode reviewed multiple blog posts from ICBA and articles from CNBC and The Wall Street Journal.

This video is a clip from BND: Strategy Room Live Stream on October 31, 2026. Banks are growing cautious around AI lending. Elon Musk says that Neocloud companies are in big trouble. What are Neocloud companies? The Anthropic IPO prospectus is insane! No one should be investing in this company. Microsoft is cutting 60,000 jobs! Intel stock has a massive dive! The AI trade is getting long in the tooth!

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.

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