BCB loan cleanup raises losses as fintech charters challenge sponsor banks

BCB Bancorp plans an equity raise and troubled-loan cleanup. It expects a third-quarter loss of $126.2 million to $136.1 million. BCB plans to sell 12.65 million shares and $210 million of commercial loans, and to mark down a $96 million portfolio of loans designated available-for-sale. It intends to use nearly $100 million of proceeds to dispose of troubled credits.

Chime’s proposed Stride Bank acquisition threatens The Bancorp’s sponsor-bank revenue. Chime accounted for about 8% of The Bancorp’s second-quarter revenue, although their contract runs until mid-2028 and requires years’ notice to exit. A vast majority of The Bancorp’s deposits come from banking-as-a-service partnerships. More large fintechs are securing bank charters, which can lower their funding costs and let them retain more economics; sponsor banks are narrowing their fintech focus.

FinCEN submitted a proposed customer due-diligence rewrite. The agency sent the proposal to the Office of Management and Budget’s Office of Information and Regulatory Affairs on September 17, but its proposed changes have not been disclosed. Banks still have legal duties to identify and verify beneficial owners after domestic beneficial-ownership reporting requirements were curtailed.

Starling’s preliminary Silicon Valley Bank review largely confirms earlier findings. The review tested conclusions from three prior government reports on the bank’s 2023 failure. It found no clear link between online discussion and rapid withdrawals, saying visible signs of distress and private communications better fit the run dynamics. Further insights remain for a later report.