Is Cross River Next? The Bank That’s Not A Bank

At a first glance of their website, one wouldn’t immediately think that Cross River is a bank. And apparently, that was intentional.

“It’s not a question of [whether if] we’re not a bank,” said Phil Goldfeder, former Senior Vice President of Global Public Affairs at Cross River, in a year-old interview on the Youtube platform FinTech Cowboys. “Obviously, what we bring to the table from a regulatory structure, from a compliance structure, from the bank’s side is very important to our partners. But it’s not who we are. Who we are is probably more tech than bank.”

It would’ve been a nice angle for the Fort Lee-based firm, until the recent cataclysm raining down on the banking industry claimed crypto-friendly banks as its first victims.

Major banks like Silicon Valley Bank, Silvergate Bank, Signature Bank, First Republic Bank, and Credit Suisse have fallen one by one as they facing bank runs that ran them illiquid. Regulators and Wall Street firms were quick to rescue the collapsing banks by hoping to infuse capital through acquisitions or auctions.

A recent report of Cross River’s first quarter financials seemingly shows that the firm’s total loans and lease financing receivables amount to $6.4 billion, of which approximately $1.2 billion are more than 90 days past due.

This comes from the previous quarter report where total loans ended at $7.3 billion with $2.2 billion beyond the 90-day due mark.

It is also interesting to note that the share of the past due receivables the firm had has spiked in the last year, from under 1% to beyond 30% in the quarter ending December 2022.

A big part of why the aforementioned banks have fallen is being blamed on rising interest rates. Less depositors are borrowing and, to some extent, repaying their loans–which contributed to forcing the financial institutions to run illiquid as their own payables notch higher with higher interest payment costs.

This also comes on the heels of the firm receiving a cease-and-desist order from the Federal Deposit Insurance Corp. (FDIC) over what the agency said were “unsafe or unsound” practices related to fair-lending laws.

The company failed to create and maintain “internal controls, information systems, and prudent credit underwriting practices,” according to the FDIC, which issued a statement on Friday. Cross River and the agency negotiated a consent agreement on March 8, without admitting to or denying any allegations or infractions.

According to the settlement agreement, the bank’s board of directors must improve management and oversight of controls and guarantee that corrective steps are executed. The company must obtain FDIC approval for new third parties and credit products.

Following the failure of Silicon Valley Bank, Chief Executive Officer Gilles Gade stated in a statement that bank scrutiny is increasing. Cross River has “regulatory examiners reviewing some elements of our business on a continuous basis,” he explained.

For Cross River, it seems to be business as usual, recently touting its partnership with digital financial institutions. But given the recent figures, albeit speculative and piecemeal, is this going to be a “let’s-cross-that-river-when-we-get-there” type of situation?


Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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