Trading Points: Mortgage Finance With Rising Volumes and Loan Defaults

October 23, 2025 | In this issue of The Institutional Risk Analyst, we dive back into the world of banking and mortgage finance after another crazy week in the financial markets. We’ve got a couple of questions from our Premium Service subscribers that we want to address first. And don't forget to check out our post for The Daily Reckoning: "The Bezzel: Is it 1925 All Over Again?"

One reader asked about First-Citizens Bank & Trust Company, the wholly owned banking subsidiary of First Citizens BancShares (FCNCA), buying 138 branches in the Midwest, Great Plains and West regions of the U.S. from BMO Bank N.A., the US unit of Bank of Montreal (BMO).

The good people at BMO have been taking a kicking in commercial real estate since last year, yet another example of why we think the Canadian government should prohibit its banks from operating in the US. We cannot think of a single example of a Canadian bank building value in the US market going back half a century. The credit losses for BMO's $300 billion asset US unit have been above the peer average going back years.

To us this transaction is a win/win. BMO needs to reduce its risk exposure in the US, but FCNCA is going to manage these assets far better than BMO.  FCNCA is one of our favorite regionals and ranked 30th in the WGA Top 50 Banks in Q3 2025.

The $230 billion asset Raleigh, NC, based bank acquired acquired all customer deposits and loans of Silicon Valley Bank (SVB) from the Federal Deposit Insurance Corporation in March 2023. We’ll be updating the Top 50 Bank rankings in two weeks. The chart below shows the Top 50 Banks sorted by market cap with the better performing banks starting with SoFi Technology (SOFI) on the left.

Source: Yahoo Finance

Another reader asked regarding our earlier comment ("The Powell FOMC & the Housing Trap"):

“It seems like the natural conclusion from your argument is that the mortgage origination channels (especially refi) will be the big winners over the next two years. Something along the lines of Blend / Better / Rocket. Do you think that's correct?”

Want to read more?

Subscribe to theinstitutionalriskanalyst.com to keep reading this exclusive post.

Subscribe Now