The Institutional Risk Analyst

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Top Five US Banks: Q3 2020 Earnings Setup

Updated: Oct 19, 2020

New York | We start this edition of The Institutional Risk Analyst by noting a couple of important developments in the world of financials. First, Western Alliance Bancorp (NYSE:WAL) Friday announced it had purchased Galton Funding, “a rare example of a depository taking title to a nonbank, non-QM originator,” Inside Mortgage Finance reports. Rare indeed, but also a red flag.

WAL is a great performer and ranks in the top decile of Peer Group 1, the 127 largest US banks about $10 billion in assets. But when you see commercial banks buying non-QM loan businesses, that does kind of give us a certain feeling of déjà vu. The reason that Citigroup (NYSE:C) still has not addressed chronic internal controls issues goes back decades ago to the acquisition of several nonbank businesses.