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In-state deals in Ohio, Iowa, Nebraska; Senate OKs funding for SBA 7(a) program

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In-state deals in Ohio, Iowa, Nebraska; Senate OKs funding for SBA 7(a) program

In Ohio, Warsaw Federal Savings and Loan Association, an independent mutual bank based in Cincinnati, agreed to affiliate with First Mutual Holding Co. in a deal set to close in the first quarter of 2020.

In Nebraska, Cornerstone Bank agreed to acquire Security Home Bank and Malmo Insurance Agency in a deal expected to close in the fourth quarter.

In Iowa, South Ottumwa Savings Bank applied with the Federal Deposit Insurance Corp. to acquire Albia, Iowa-based Peoples State Bank. Financial terms of the deal were not disclosed.

To wean them off the London interbank offered rate, or Libor, the Federal Housing Finance Agency told the 11 Federal Home Loan Banks to stop by Dec. 31 purchasing investments in assets tied to Libor with a contractual maturity beyond Dec. 31, 2021.

Nasdaq is trying to quell initial public offerings of small Chinese companies through tighter restrictions and slower approvals, Reuters reports, citing regulatory filings, corporate executives and investment bankers. Most of these companies' stocks trade thinly in the U.S. as most of them stay in the hands of a few Chinese insiders, according to the news outlet.

The Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corp. issued a final rule raising the appraisal exemption threshold for residential real estate transactions needing an appraisal to $400,000 from $250,000. Instead of a full appraisal, transactions at or below the $400,000 threshold only need to obtain evaluation, which is a less detailed and cheaper process.

After the House of Representatives, the Senate approved Sept. 26 the funding for the continued operation of the Small Business Administration's 7(a) program for the fiscal year 2020, American Banker reports. Seen as a result of lobbying efforts of the program's advocates, including three major banking trade groups and the National Association of Government Guaranteed Lenders, the new funding includes $99 million for the program's credit costs in fiscal 2020. The fresh mandate averts the program's second shutdown this year, supposedly on Oct. 1.

The Malaysian government intends to bring up to the High Court Oct. 22 the 1MDB-linked case against Goldman Sachs Group Inc., Bloomberg News reports, citing prosecutor Aaron Chelliah, who said the order came from the Attorney-General's Chambers. Subsidiaries of the U.S. banking giant are facing criminal charges for allegedly misleading investors in arranging $6.5 billion of bond sales for the state fund even if they knew of the supposed scam. Goldman Sachs President and COO John Waldron, however, said in a Bloomberg Television interview Sept. 25 his company plans to help Malaysian investors get back the money they lost.

Meanwhile, Goldman's three-year-old consumer bank Marcus is struggling, The Wall Street Journal reports. The bank, which also clinched a costly credit card partnership with Apple Inc., launched Marcus without a collections team to go after delinquent borrowers, resulting in early loan losses. Marcus has since recorded $1.3 billion in losses. The bank is reportedly eyeing online lender GreenSky Inc., which launched a strategic review.

The U.S. Securities and Exchange Commission made two units of Bank of Montreal pay more than $37 million to settle charges of failing to tell clients about certain aspects of how the companies selected investments in their retail investment advisory program. The SEC found that the program, known as the Managed Asset Allocation Program, or MAAP, included the selection of more expensive investments from which BMO Harris Financial Advisors Inc. and BMO Asset Management Corp. profited.

Morgan Stanley and Bank of America Corp., both known to cater to older, wealthy families, are looking to start relationships with young professionals by building on their employee benefits management businesses, executives informed Reuters. Morgan Stanley plans to roll out deferred compensation management, health savings accounts and student loan refinancing through Shareworks by Morgan Stanley, which it bought for $850 million. Bank of America is likewise now making money marketing a full suite of employee benefit products, including 401(k)s, equity compensation plans and health savings accounts.

The National Credit Union Administration is considering regulating transactions that involve credit unions acquiring banks, the Credit Union Journal reports. While such deals were not common before, 36 of these have been announced since 2015, 14 of which are happening this year.

Hedge fund launches have continued to rise in the first half of 2019, with 153 new ones opened in the second quarter, bringing the first semester total to 289 new funds, according to the latest HFR Market Microstructure Report. Fund liquidations, on the other hand, declined but remained elevated on a calendar year basis, with 186 funds liquidating in the quarter ended June 30, a decrease from the first quarter's 213 funds.

In other parts of the world

Asia-Pacific: US denies report on delisting Chinese firms; Japanese banks in Aramco IPO

Europe: Commerzbank sees more costs; Barclays fined; EC extends Dexia guarantees

Middle East & Africa: Saudi insurers Walaa, MetLife AIG ANB to merge; Kenya expects more bank M&A

Now featured on S&P Global Market Intelligence

Bank M&A 2019 Deal Tracker: First Defiance deal tops September 1st half: Seven U.S. bank deals were announced in the first half of September, the largest of which was First Defiance Financial Corp.'s agreement to acquire United Community Financial Corp. in a deal valued at $474.8 million, according to S&P Global Market Intelligence data.

Buying banks 'absolutely' a good growth strategy for credit unions, leaders say: Membership growth at credit unions that have acquired banks outpaces the rest of the industry. Since the fourth quarter of 2015, credit unions that have purchased banks grew membership 22.7%, while other credit unions only grew membership 15.1%, according to S&P Global Market Intelligence data.

De novo banks class of 2019 — Chicago-based FWBank files: Chicago-based FWBank filed to form a new bank on Sept. 23, marking the 13th de novo application of 2019 and the state's first application of the year.

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.
In Asia, Hang Seng lost 0.33% to 25,954.81, while the Nikkei 225 dropped 0.77% to 21,878.90.
In Europe, around midday, the FTSE 100 slipped 0.25% to 7,407.99, and the Euronext 100 shed 0.06% to 1,092.48.

On the macro front

The Chicago PMI and the Dallas Fed Manufacturing Survey are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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