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President Donald Trump's executive order severely limiting the Treasury's Community Development Financial Institution Fund has thrown the industry into confusion as financial companies try to quantify the damage.
An executive order issued late Friday cut the Treasury Department Community Development Financial Institution Fund and other federal programs to their legal minimum.
Bankers' surveys of commercial clients have found that corporate decision-makers are less concerned about adverse tariff effects than nervous investors.
The KBW Nasdaq Bank Index is down more than 7% year to date. Analysts blame confusion caused by President Trump's evolving tariff policies and heightened worries about an economic downturn that could hurt banks' credit quality.
Forecasters on an American Bankers Association panel predict continued economic growth this year, though they say President Trump's tariffs have created new inflation and recession risks.
Following a record-setting 2024, only one transaction involving a credit union buying a bank has been announced so far this year. Seller concerns about regulatory approval and pushback from bank industry groups have contributed to the slowdown.
Changes are needed to shore up the agency's finances and guarantee the integrity of its flagship 7(a) lending program, according to a leading trade group.
Deal advisors said the Trump administration's tariff threats and the specter of inflation have given some bankers reason to pause on acquisition plans. Momentum could still mount, but uncertainty in Washington is a detriment early in the new year.
A record 22 credit unions announced plans to acquire banks in 2024, though the year ended on a discordant note as regulatory concerns appear to have derailed a planned CU-bank deal in Georgia.
The Seattle-based company's deal with Bank of America comes five weeks after the termination of its planned sale to FirstSun Capital Bancorp in Denver.
Analysts say lenders' shares could rally on deregulation, lighter tax burdens and a resurgence of M&A. Declining interest rates and lower loan losses could further bolster bottom lines and attract investor interest.
Lower borrowing costs, reduced exposure to the urban office sector and flattening vacancy rates could collectively save lenders from beleaguered corners of the commercial real estate market.
Some lenders are once again hiring mortgage lenders, but memories of the painful staffing cuts they were forced to make over the past two years remain top of mind.
Republic First Bank allegedly discriminated against minority borrowers before it went under in April. New Jersey officials want both the acquirer of its remains, Fulton Bank, and the FDIC to assume some responsibility.
The average size of a Small Business Administration 7(a) loan has fallen to just over $400,000, a level last reached in 2017, according to agency statistics.
Anticipated interest rate cuts could help stressed borrowers, but such a shift in monetary policy may curb lending income.
The Minneapolis-based banking giant is enjoying its biggest year ever for 7(a) lending, with volume up 40%, as borrowers "are still coming to us," its SBA chief said.
REV Federal Credit Union in suburban Charleston, South Carolina, plans to acquire First Neighborhood Bank in West Virginia. It marks the 15th deal this year involving a credit union buying a bank, closing in on 2022's record of 16 deals.
Lower interest rates could bolster loan demand, credit quality and securities portfolios. But they could also curb lending profitability faster than they ease deposit costs, crimping net interest margins and eating into near-term profits.
Increased demand from borrowers may hinge on Federal Reserve Chair Jerome Powell and his colleagues cutting interest rates this fall.
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