Banking news roundup, May 12, 2023

Marqeta faces layoffs, Block contract expiration

The payments fintech Marqeta is cutting about 150 jobs, or 15% of its total workforce, as it tries to recover from the 2022 slump that hurt many technology companies. "This is not a decision we've made lightly but is a targeted move to help us capitalize on the tremendous opportunity in front of us in the most aggressive and disciplined way possible," said CEO Simon Khalaf, according to a transcript of the company's earnings call. For the quarter ending March 31, Marqeta reported losses of $68.8 million, up from a loss of $60.6 million the prior year. Revenue increased to $217 million from about $165 million the prior year. Marqeta grew quickly during the pandemic's rush to digital commerce, then faced financial challenges as the technology economy corrected. Khalaf became CEO in January, with marching orders to diversify revenue sources for Marqeta, which gets a large portion of its revenue from providing technology for Block and its Cash App. Marqeta's contract with Cash App expires in March 2024, and other parts of Marqeta's Block contract expire at the end of 2023. "Our Block renewal continues to be a priority for us. We're actively engaged in helping to drive their success across multiple programs, and the different contracts we have with them all have at least four quarters left to run," said a Marqeta spokesperson in an email. —John Adams

Paris Finance latest: BofA to grow in French capital 

At Bloomberg's Future of Finance forum on Tuesday, Vanessa Holtz (pictured above), who runs Bank of America's operations in France, said that headcount in France would "continue to grow organically according to where our client needs are." Since Brexit, an increasing number of financial institutions have moved key operations to Paris. Stephane Boujnah, CEO of Euronext NV, said on the panel that Brexit-related shifts in the finance landscape have only just started. France's economy has been resilient despite a challenging macroeconomic environment. In addition, the country has been roiled by protests in reaction to efforts by President Emmanuel Macron to reform the pension system. But Holtz said the protests and strikes are not putting off investors making long-term plans. —Alan Katz, Bloomberg News

Southern Security poised for huge membership growth after field of membership expansion

Southern Security Federal Credit Union in Collierville, Tennessee, has expanded its field of membership to include a larger portion of Memphis and an additional 18 counties in Tennessee, Mississippi and Arkansas. The National Credit Union Administration recently approved plans for the $235 million-asset credit union to add 296 census tracts, which have an estimated potential membership of 1.1 million. The credit union currently has roughly 23,000 members.

"We pride ourselves on partnering with our members to increase their financial knowledge while positively impacting their personal and business finances. We believe we can be a great resource to the underserved residents and businesses in this expanded territory of the mid-South," said Dawn Graeter, Security Federal Credit Union President and CEO, in a press release Wednesday. Southern Security partnered with Dollar Associates, LLC, to expand its field of membership. Chris Dollar, a senior consultant with the firm, said Southern Security was and remains a multiple common bond federal charter, which has been serving employer groups in the west Tennessee market. "The expansion builds on this foundation and allows for geographic qualification in the approved underserved areas," he said. Southern Security earned $252,000 in the first quarter of 2023, a 92% increase compared with a year earlier, according to call report data from the NCUA. —Ken McCarthy

First Horizon commits part of TD breakup fee to local communities

First Horizon pledged to donate $50 million from a $200 million merger termination fee paid by TD Bank Group to nonprofit organizations that benefit local communities. "Our commitment to continuously care for our communities — through all economic cycles — has always been part of our strategy," First Horizon CEO Bryan Jordan said in a statement. TD's $13.4 billion acquisition of Memphis-based First Horizon was called off last week when the Canadian lender announced it was uncertain "as to when and if" regulators would approve the deal, according to a joint statement released by the banks. Scrapping the deal raised questions from community groups that would have benefited from TD's $50 billion community benefits agreement as part of the merger about whether TD would continue to support local initiatives. While the community benefits agreement was contingent on the completion of the merger, a TD spokesperson said in a statement, the bank will continue to support local communities where it operates through charitable giving. —Jordan Stutts

The Structured Finance Association names Scott Frame as chief economist and head of mortgage-backed securities policy

The Structured Finance Association has named Scott Frame as its chief economist and head of mortgage-backed securities policy. Frame previously served as vice president for financial research at the Federal Reserve Bank of Dallas. Before that, he spent more than 16 years at the Federal Reserve Bank of Atlanta where he served as a senior advisor, and as a financial economist and senior policy advisor.

Michael Bright, the trade group's CEO, said in a press release this week that Frame is "uniquely suited to navigate public policy issues, build relationships across the country, and provide strategic guidance as we continue our work to improve and strengthen the broader structured finance and securitization market."

Frame currently serves as an associate editor of the Journal of Money, Credit and Banking, the Journal of Financial Services Research, and the Journal of Financial Research. He also previously served as executive director of the International Banking, Economics, and Finance Association and is a past president of both IBEFA and the Southern Finance Association.

SFA has more than 370 members including mortgage issuers, servicers, trustees, broker-dealers and diversified financial intermediaries. —Kate Berry