The Banker Next Door

Who is Jane Street? They are a mysterious high frequency trading hedge fund on Wall Street that seems to have its hands in everything with some questionable behavior. Jane Street was started in 2000 by three former executives of Susquehanna International Group and an IBM developer. There is no public face to the firm, and they do not like publicity. New hires are discouraged from drawing any attention to themselves or the firm. That means no media and anything that might catch the attention of regulators. Jane Street has grown from a handful of employees to over 3,500 with $45 billion in trading profits so far in 2026. Jane Street has become a major player on Wall Street and when they surface in the news it is usually negative. Whether allegations of insider trading in crypto, having an alum like Sam Bankman Fried, suing rival Millennium Management, or losing $15 billion to situational awareness, this hedge fund gets around. Make no mistake, this hedge fund is here to stay, and they are part of the new bread on Wall Street. This episode reviewed two articles from The Wall Street Journal (subscription required) titled “Secretive Wall Street Powerhouse Jane Street Seizes the AI spotlight” and “Jane Street suffers loss of about $15 billion following troubles at Situational Awareness.”

Italian bank Monte Dei Paschi (BMPS) has had quite the saga over the last two years. BMPS has had CEO issues, multiple potential merger partners, rogue board members, and tons of media! Everything a good banking soap opera needs. When last we left BMPS, Intesa Sanpaolo made an offer to purchase the world’s oldest bank seeking to create the “UBS” of Italy. BMPS responded by attempting to purchase Banco BPM. Intesa Sanpaolo received pushback from Italian regulators and offer to split up BMPS by selling the retail part of the bank to BPER Banca SpA. BMPS has fended off the merger proposal but their bid to purchase Banco BPM was thwarted by their largest shareholder, Credit Agricole. Then BMPS turned around and made joint bids for Banca Generali and Banco BPM. Will BMPS be able to complete these twin mergers? Will they be able to fend off Intesa Sanpaolo? This episode reviewed multiple articles in The Wall Street Journal and S&P Global (subscriptions required).

Security Bank & Trust President Andy Schornack worked with several employees to develop an AI credit workflow solution for processing commercial loans. Andy had investigated several fintech providers and found they had several product solutions, but the costs were prohibitive at five and six figures. These were very high costs for a $1.3 billion community bank to absorb. Andy’s wife, being in the software business, suggested that he try Anthropic’s Claude Cowork. Using Claude, Microsoft Power Platform and SharePoint Andy was able to create an automated workflow solution that was able to replace the current manual process. The cost of this was only a few hundred dollars per month. Andy has worked with his fellow team members to take the workflow through 80 iterations. This is a great example of how AI can work for your bank. This episode reviewed an article from FinXtech titled “How I solved it: Security Bank & Trust uses AI to build credit workflow app.” A link to the article is included below.

Link: How I Solved It: Security Bank & Trust Uses AI To Build Credit Workflow App - FinXTech

Bain & Company recently released a report detailing their outlook on U.S. bank M&A through 2030. Some of the key findings include: 1) there will be at least one bank to cross the $1 trillion assets threshold but could be as high as 2-3 via M&A, 2) There will be continued consolidation for small and larger regional banks, 3) There will be continued consolidation for community banks, 4) Banks should consider under-the-radar options when screening M&A targets, and 5) While scale-and-scope deals are currently outperforming, banks should consider buying fintech challengers. This episode reviewed Bain & Company’s bank M&A report titled “Hidden Gems: How to find the US bank M&A targets everyone else is missing.” A link to the report is included below.

Link: Hidden Gems: How to Find the US Bank M&A Targets Everyone Else Is Missing | Bain & Company

Bank News: Chime to buy Stride for $590 million. Chime outgrew their partner model. Will the Chime deal lead to further fintech-bank competition? EverBank to purchase WaFd in a reverse merger for an approximate cost of $3.9 billion. Does this merger have execution risk? John Marshall Bancorp to purchase in-state peer Eagle Financial Services for $253 million. Finward Bancorp considered 7 different merger partners before accepting First Financial bid. Circle buying Tazapay for approximately $400 million. Bank7 wins auction to purchase 71% of Century Financial. Trustmark bank sells 34 branches to Blue Owl Real Estate Capital in sale-leaseback deal valued at $91.7 million. The founders of Georgia Skyline Bank, a new De Novo in Georgia, have decided to recapitalize Highland Community Bank in Virginia as a faster path to growth and profitability. Mercury received conditional approval for deposit insurance from the FDIC. Block has applied for a National Trust Bank charter through the OCC. United Bancorporation of Alabama is fighting back against activist investors. The Federal Reserve and Governor Bowman are sued by Better Markets over capital-requirements process. GAO report on banks support or nonsupport of cannabis industry. Banks fear of missing out is fueling their AI spending. This episode reviewed multiple articles from Banking Dive and S&P Global Market Intelligence (subscription required)

This video is a clip from BND: Strategy Room Live Stream on September 5, 2026. Bond market yields are not just increasing in the U.S. they are increasing all over the western world. France, Italy, UK, and Japan have all seen increasing 10-year treasury yields. The growing global debt of $350 trillion is getting very expensive to service. Inflation, the war with Iran, $40 trillion in national debt, and a new Fed chairman are all weighing on the U.S. bond market. This leads to several questions. Will the U.S. require a weaker market (i.e. recession) to achieve lower yields? Have we entered a new era of higher interest rates? What do higher rates mean for the government, corporations, and consumers? Everything becomes more expensive to finance. For consumers it exacerbates the issue of affordability. In addition, what do higher rates mean to bank investment portfolios? Right now, they continue to put pressure on AOCI by increasing negative returns. This episode reviewed articles from The Wall Street Journal, The Epoch Times, S&P Global, and CNBC.  

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 episode reviewed recent data for bank IPO’s and capital raises, M&A activity, new charter requests, FDIC problem bank list, recent bank failures, the return of shareholder activism, and the impact of rising yields on accumulated other comprehensive income or AOCI. Capital raises through preferred equity (IPOs) picked up in the second quarter of 2026, but subordinated debt and senior debt are still the preferred vehicles. Bank charter applications hit 33. M&A activity has picked up with 98 deals so far in 2026. The number of banks on the FDIC’s problem list dropped to 47. The number of bank failures in 2026 increased to 5. Rising yields put pressure on AOCI causing the banking industry total to decrease to negative $156 billion. The easing regulatory environment coupled with the increase to M&A is bringing a new wave of shareholder activism to U.S. banks. This episode reviewed multiple articles from S&P Global Market Intelligence (subscription required).

Bank CEO compensation for the big 4 CEOs dramatically increased in 2025. Citigroup CEO, Jane Fraser, became the highest paid bank CEO with a pay package of $95.8 million. Wells Fargo CEO, Charles Scharf, came in right behind with a pay package of $94.5 million. JPMorgan CEO, Jamie Dimon’s, pay package was $40.6 million. Bank of America CEO, Brian Moynihan’s, pay package was $32.7 million. The lists reviewed include top 10 highest paid bank CEOs, 10 highest paid bank CEOs with assets between $1B and $10B, 10 highest paid CEOs with assets between $10B and $50B, 10 highest paid bank CEOs with assets between $50B and $500B, 10 highest paid CEOs with assets under $1B. Also examined is CEO pay ratios versus median employee salaries and the overall rise in CEO bonuses. This episode reviewed two articles from S&P Global Market Intelligence (subscription required) and an article from Bank Director titled “What’s behind the rise in CEO bonuses?” A link to the Bank Director article is included below.

Link: What’s Behind the Rise in CEO Bonuses? | Bank Director

Bank News: BitGo acquired NYDIG’s trading business. Equity Bancshares to acquire Lincoln Savings Bank for $123.8 million. FNBO to acquire InBankshares Corp for an amount up to $204 million. Bank7 wins auction to purchase 71% of Century Financial. TabaPay is seeking to attain a bank charter by purchasing Transact Bank. UK neobank Revolut receives conditional bank charter from the OCC. Zerohash reapplies for OCC trust bank charter. OpenReserve received conditional approval for a national bank charter from the OCC. Old Glory Bank revisits capital raise and IPO after SPAC deal fails. Farmers & Merchants Bank incurs $85 million loss to reposition securities portfolio. Judge blocks SVB ex-parent from getting $1.7 billion from the FDIC. U.S. bank seeking to expand business roster. GAO believes holding company rules should be reviewed. Citizens focusing on private-bank customers. Republicans introduce a bill to change the CFPB funding structure. 21 banks partner up on stablecoin project. Banks maybe favoring tokenized deposits over stablecoin. New clarifications on SARs for banks. TD Bank is seeking to open 100 new branches. This episode reviewed multiple articles from Banking dive and S&P Global Market Intelligence (subscription required).