Tioga-Franklin Savings Bank in Philadelphia becomes the fifth bank failure of 2026. The bank had $68 million in assets as of June 30th. The FDIC estimates that the failure will cost the Deposit Insurance Fund approximately $5.5 million. Second Federal Savings and Loan Association assumed all the single branch bank’s deposits and most of its assets. The FDIC acted as receiver. Tioga-Franklin Savings was founded in 1873 and was one of about 22 black-owned banks in the U.S. The bank was plagued by deficiencies that were identified starting back in 2023. Despite being under a regulatory consent order since 2024, the bank was not able to adequately address its issues. This episode reviewed an article from Banking Dive titled “Philly lender becomes fifth bank to fail in 2026.” A link to the article is included below.

Link: Philly lender becomes fifth bank to fail in 2026 | Banking Dive

Why would someone want to start a De Novo bank? If you wanted to, how would you go about it? What is the process? This episode tries to answer these questions. First, if you want to start a De Novo bank focus on the “why.” What is a compelling customer problem and how will you solve it? What is your niche? Why would a customer switch to your bank? A good example is Bird-in-Hand Bank in Lancaster, PA. This bank was built to specifically serve the Amish community. Another consideration is local community relationship banking versus national product-centric fintech platform. Let the “why” drive everything. Second, If you want to start a De Novo bank you should follow these 7 steps. 1) Team and Governance, 2) Seed money, 3) Choose the niche, 4) Three-year business plan, 5) Choose charter type and file, 6) Raise capital, and 7) Build infrastructure and tech. This episode reviewed two blog posts from PCBB titled “De Novo Formation Part 1: Start with the Why” and “De Novo Formation Part 2: Executing the how.” Links to both blog posts are included below.

Link: De Novo Formation - Part 1: Start with the Why

Link: De Novo Formation – Part 2: Executing the How

The FDIC announced a new deposit insurance application process. This will be a two-phase process used to evaluate new applications to speed up the review process. The FDIC will provide de novo applications who satisfy requirements with a contingent authorization within 120 days of receiving the application. The idea is to make the process more efficient by getting a green light before organizers spend significant capital and time to form a new bank. Additionally, the OCC said it will continue to encourage the formation of new banks and strengthen the resilience of the federal banking system. This episode reviewed press releases from the FDIC and OCC and an article from Banking Dive titled “FDIC tweaks de novo application process.” Links to the FDIC and OCC press releases are included below.  

Link: OCC prioritizes de novo banks - ICBA Payments

Link: FDIC tweaks de novo application process | Banking Dive

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.

This video is a clip from BND: Strategy Room Live Stream on August 16, 2026. Private Credit has a liquidity issue as loan defaults continue to increase. While cash redemption requests have calmed down a little, they continue at a concerning pace. At the same time, money inflows into Private Credit funds have slowed dramatically and loan defaults continue to rise. This mix of events is leading to liquidity issues, but what does ‘liquidity’ mean? That depends on who you ask in the Private Credit world. The goal post has moved from ‘everything is fine, nothing to see here’ to ‘we are in a credit cycle and there will be some losses.’ Next Stop – ‘who could have seen this coming?’

The Treasury department has ended reporting requirements for American small businesses know as Beneficial Ownership Information or BOI. The Treasury issued a final rule in the federal registry. The final rule also deleted all previously collected BOI information. Congress passed The Corporate Transparency Act in 2021, which required FinCEN to create a database that would collect BOI information on small businesses in the U.S. In classic congressional style you have to pass the bill to know what is in it! After American small business owners discovered this new data collection and realized that it was unconstitutional, as the suit brought by NSBA proved, the pushback began. Treasury killed the database from FinCEN, but banks are still required to collect BOI on their customers. This has not completely gone away. A new administration could resurrect this database idea. This episode reviewed an article from The Business Journals (subscription required) titled “Trump admin ditches small business reporting mandate” and a press release from FinCEN. A link to the FinCEN press release is included below.  

Link: FinCEN Permanently Ends Beneficial Ownership Reporting Requirements for Millions of Small Business Owners | FinCEN.gov

The off-balance sheet lease commitments and purchase commitments for Meta, Google, Microsoft, and six additional companies are almost $3 trillion dollars! These commitments far exceed their current CAPEX spending, which has already turned free cash flow negative. How are these commitments financed? Meta’s Hyperion data center is used as an example. Meta partners up with Blue Owl (yes that Private Credit darling) in a special venture, then Beignet Investor (holding company that owns Blue Owl Stake) raises the construction financing in the form of a bond sale. Meta, as the minority partner, is also the tenant of the data center. Meta lease payments provide the cash flow to make payments to bond holders. Meta signs a 20-year lease but does not list this as an existing lease obligation until it starts paying rent. The problem with these deals is that all these companies are betting on future cash flows that may not materialize and their free cash flow is already negative BEFORE these obligations hit the balance sheet. Can you say overextended! This episode reviewed an article from The Wall Street Journal (subscription required) titled “Why Big Tech’s AI spending is $3 Trillion Higher Than It Seems.”

Bank News: HomeTrust Bancshares to purchase Blue Ridge Bank for $448.1M in stock. HBT Financial to acquire First State Bank for $204.6M. Citibank to acquire rewards platform Kard Financial to increase its consumer cards business. World Liberty Financial has received conditional approval from the OCC for a national trust bank charter. The bank will issue and manage its own stablecoins. Sezzle has decided to switch from pursuing an ILC bank charter to a national bank charter. OCC returns Zerohash’s charter application after finding significant regulatory concerns. Bunq is rejected for an OCC bank charter after the regulator stated operations would be inadequately capitalized, its management inexperienced, and profit goals unrealistic. Custodia continues to whine about not getting a Fed master account. U.S. Bank warns investors about possible negative impacts from debanking inquiries. First Guaranty Bank agrees to FDIC consent order. The Federal Reserve is seeking to make amendments to their FedNow service to speed cross-boarder transactions. This episode examined a series of articles from Banking Dive.

This video is a clip from BND: Strategy Room Live Stream on August 16, 2026. There are currently seven major issues in the world of AI. 1) Price war – pressure from China’s AI models and chips, Anthropic busted changing plans and prices. 2) Models out of control causing havoc – OpenAI, Anthropic, and Meta all had models breaking out. 3) Government oversight and potential regulation. 4) Data center push back. 5) Circular financing ring – increasing cost of chips – Nvidia and OpenAI. 6) IPOs – Anthropic and OpenAI. 7) Questionable accounting and employee departures.  

A shortage of accountants is beginning to cause disruption with bank and corporation financial reporting and internal controls. The accounting shortage is becoming more widespread after the number of practicing accountants has declined 17% from the profession’s employment peak in 2019. What can banks and corporations do to address this? Try outsourcing certain functions and focusing on AI and Automation. Don’t forget to maintain guardrails. This episode examined a blog post from PCBB titled “The Accountant Gap: Reshaping CFI’s Financial Reporting.” A link to the blog post is included below.

Link: The Accountant Gap: Reshaping CFIs' Financial Reporting