- Rates: Treasury yields were mixed to lower this week, with the front end roughly flat while longer tenors declined. SOFR swap rates rose modestly and uniformly across the entire curve. This divergence points to a meaningful widening of swap spreads at the long end, suggesting funding/hedging pressures pushed swaps higher even as Treasury demand kept cash yields anchored or lower further out the curve.
- Valley National Bank Acquires Providence Bank & Trust: Bank M&A activity is still active, as evidenced by the announcement that New Jersey-based Valley National Bank agreed to acquire Illinois-based Providence Bank & Trust in a cash-and-stock transaction valued at 1.45x tangible book value for $247mm. Valley National entered Chicago in 2022 through the Bank Leumi USA acquisition but lacked a retail presence. Valley National CEO Ira Robbins called the deal “in direct alignment with strategic priorities of enhancing core funding base, diversifying the loan portfolio and driving fee income.” The transaction will add ~$1.6b in assets to Valley National Bank and continues its expansion into the Chicago market. The acquisition demonstrates regional banks’ practical innovation in M&A strategy – using bolt-on deals to build retail deposit franchises in markets where they already have commercial relationships, addressing funding pressures without organic branch buildout costs.
- Philadelphia’s Tioga-Franklin Savings Bank Closes as 5th Bank Failure of 2026: Pennsylvania regulators closed the bank Friday. Second Federal Savings and Loan Association of Philadelphia assumed all deposits and substantially all assets. Tioga-Franklin had $67mm in deposits as of June 30. The FDIC estimates the failure will cost the Deposit Insurance Fund $5.5mm. The bank was founded in 1873 as Tioga Building and Loan Association and was one of ~22 Black-owned banks in the U.S. Tioga-Franklin entered the April 2024 FDIC consent order citing deficiencies in board supervision, management, capital planning, liquidity, interest rate risk, audit, and credit administration following a 2023 exam.
- Brazil’s Itaú Unibanco Receives OCC Conditional Approval for U.S. Charter: Itaú aims to operate from a single Miami branch targeting high- and ultra-high-net-worth individuals with Latin American connections. The bank must launch with at least $507mm in capital and maintain a tier 1 leverage ratio no less than 8% throughout its first three years. Percy Moreira, head of Itaú’s international private bank, is listed as the proposed U.S. CEO. The bank has maintained a U.S. presence since 1979, and will offer deposit accounts, mortgages, credit cards, and fiduciary products. The charter reflects practical innovation in cross-border wealth management – using Miami as a gateway for Latin American wealth while the OCC accelerates charter approvals.
Rate Curves
