Bank M&A, charters and supervisory pressure converge

Pennsylvania regulators closed Tioga-Franklin Savings Bank, the Fed ordered SouthPoint Bancshares to support SouthPoint,. Pennsylvania regulators closed Tioga-Franklin Savings Bank, appointed the FDIC receiver, and arranged for Second Federal Savings and Loan Association of Philadelphia to assume all deposits and buy substantially all assets; Tioga-Franklin had $68 million of assets and $67 million of deposits, with an estimated $5.5 million Deposit Insurance Fund cost. The Federal Reserve and Alabama regulators ordered SouthPoint Bancshares to serve as a source of financial and managerial strength for SouthPoint Bank, and Old Glory Bank scrapped its SPAC merger plan after previously warning it might need a sale or organized wind-down because it lacked sufficient capital to satisfy regulators.

Santander closed its Webster Financial deal as Goldman agreed to buy LCN Capital Partners. Banco Santander completed its acquisition of Webster Financial on Aug. 20, with Santander expecting no brand or system changes for the next 12 months, a likely core conversion by end-2027, and roughly 18% U.S. return on tangible equity by 2028 versus 10% in 2025. Goldman Sachs agreed to buy LCN Capital Partners for $410 million in a transaction expected to close by year-end.

HomeTrust agreed to buy Blue Ridge Bankshares, Forbright agreed to sell branches to Trustar, and Luminate acquired First. HomeTrust agreed to acquire Blue Ridge Bankshares in an all-stock transaction valued at about $448.1 million, expected to close early in the first quarter of 2027 and adding roughly $1.9 billion of loans and $1.9 billion of deposits. Forbright agreed to sell two branches and a customer service center to Trustar, parting with about $750 million of local deposits while its digital deposit platform has gathered $4.3 billion in two years; Luminate Bank acquired First State Mortgage Services, adding about 43 team members including roughly 26 originators, with financial terms not disclosed.

Itaú won a conditional charter as Swift advanced tokenized payments. The Office of the Comptroller of the Currency granted Itaú Bank a U.S. charter on Aug. 14 for a Miami-based national bank subsidiary, conditional on Federal Reserve membership and FDIC deposit insurance, with an 8% Tier 1 leverage minimum for the first three years. Swift will test live tokenized cross-border payments with 17 banks on a blockchain-based orchestration platform for bank-issued tokenized deposits, while final settlement remains on existing payment rails.

Interstate lending and Fed independence stayed in court. The Tenth Circuit heard oral arguments over whether Colorado can enforce state rate caps on out-of-state, state-chartered banks, a dispute centered on the Depository Institutions Deregulation and Monetary Control Act opt-out provision and interstate rate-export rules. The White House also initiated a for-cause process to remove Federal Reserve Governor Lisa Cook, giving her until Aug. 26 to respond, after the Supreme Court previously allowed her to remain on the Fed board while removal litigation proceeds.