Statement · October 22, 2025
Collateral Is Collateral Once
A statement on loans to nondepository financial institutions. Customers asked what EveryBank lends to finance companies and private credit funds. Our Head of Lending answers, on average.
In September, two companies most of our customers had never heard of went bankrupt. Tricolor, a Dallas subprime auto lender and used-car dealer, filed for Chapter 7 on September 10, amid reports that it had pledged the same car loans to more than one lender. First Brands, the Ohio company behind FRAM filters and Trico wiper blades, filed for Chapter 11 at the end of the month. By early October the questions were about how much of its financing sat off its balance sheet. Neither company is a bank. Both borrowed from banks, and from the funds and finance companies that banks lend to.
Banks call that last group nondepository financial institutions: finance companies, private credit funds, mortgage lenders, business development companies. Here is what EveryBank lends them, from our most recent Call Report.
- Mean EveryBank: $312.6 million. In 2016 it was $48.0 million. Across all banks, these loans are now 10.6% of the loan book, up from 3.3%. Part of the jump came at the end of 2024, when the reporting instructions changed and banks moved existing loans onto this line.
- Median EveryBank: $0. Only 13.8% of banks report any.
- The 31 banks over $100 billion hold 87.6% of it.
EveryBank has no direct exposure to Tricolor or First Brands. We do have exposure to the average of everyone's exposure, which is how averages work.
"Collateral is supposed to be collateral once. A car can back one loan. If it is backing two, one of those lenders owns a picture of a car."
— Kal Lateral, Head of Lending
Median EveryBank's version of private credit is the car dealer down the street: a customer for thirty years, whose lot you can see from the branch. It has never pledged the same car twice, because we would notice.
We will report September 30 figures with our third-quarter results.
Update, Jan. 2, 2026: American Banker reports that lending to nonbanks made up 40% of bank loan growth in 2025, and that part of it was relabeling. We mentioned that.
Mr. Twain read this statement almost a year after it ran. For a man in his condition, that is prompt.
He referred Mr. Lateral to his previous thoughts on one asset with two owners. A collector of echoes paid $3,285,000 for a hill because of the echo on it. A rival paid about three million for the hill across from it. It took both hills to make the echo, and the Supreme Court had to decide who owned what:
"...the two men were separate and independent owners of the two hills, but tenants in common in the echo..."
— Mark Twain
Neither man could use the other’s hill without consent, and neither gave it. The echo stopped. The collector had borrowed against all of it, too, and his heir was told that "there is not an echo in the lot but has a mortgage on it."
Mr. Twain also struck a line from this statement: "I wasn't worth a cent two years ago, and now I owe two millions of dollars." It is in The Gilded Age, which has his name on the cover, in a chapter that his co-author wrote.
Edited by Mark Twain (posthumous)
Postscript. The reporting line below first dated the Journal’s Tricolor story Sept. 11, the day it was updated. It ran Sept. 10, the day of the filing.
Reporting: The Wall Street Journal (Sept. 10 and Oct. 8, 2025); ABA Business Law Today (Oct. 2025); Bloomberg (Sept. 29, 2025); CNBC (Oct. 10, 2025); American Banker (Jan. 2, 2026). Loan figures: public bank filings, June 30, 2025 and March 31, 2016.