Rebel Cole, Ph.D.

Lynn Eminent Scholar Endowed Professor of Finance Florida Atlantic University

  • Boca Raton FL

Rebel Cole, Ph.D., is a former fed staff economist and an expert in financial institutions, real estate, and small-businesses.

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Spotlight

3 min

FAU Data Analysis: Falling Rates Bring Some Relief to Banks

Falling interest rates brought some relief to banks’ portfolios for unrealized losses on investment securities, according to a data analysis from a finance professor at Florida Atlantic University. Only two banks with assets over $1 billion reported unbooked securities losses greater than their total equity in the first quarter of 2025, down from three in the last quarter of 2024, according to the U.S. Banks’ Unrealized Losses on Investment Securities screener. For unbooked losses equal to 50% of Common Equity Tier 1 Capital (CET1) equity, 24 banks were on the list for the first quarter of this year, down from 34 in the fourth quarter of 2024. Rates dropped from the end of 2024 through the end of March, providing some relief to banks that had extensive interest rate risk in their investment securities portfolios. The yield on the 10-year treasury bond fell from 4.57 to 4.25 as of the end of March. “While this would appear to be good news for the U.S. banking industry, with unrealized securities losses declining by $69 billion from the end of 2024 to March, rates have climbed back to where they were at the end of 2024 so that losses today would be back up close to $500 billion,” said Rebel Cole, Ph.D., Lynn Eminent Scholar Chaired Professor of Finance in the College of Business. The aggregate unbooked securities losses on bank balance sheets declined by $69 billion from $483 billion at the end of the fourth quarter in 2024 to $414 billion at the end of the first quarter this year. The quarterly U.S. Banks’ Unrealized Losses on Investment Securities Screener, produced as part of The Banking Initiative in FAU’s College of Business, measures banks’ exposure to risk based on their unrealized losses in their investment securities portfolios. To calculate a bank’s risk, Cole uses the most recently available data from quarterly call reports published by the U.S. Federal Financial Institutions Examination Council. Of the 4,543 banks reporting in the first quarter for this year, Cole focused on 1,042 banks with more than $1 billion in assets to calculate unrealized losses on investment securities and compare those losses to a bank’s CET1. Regulators would force a bank that lost half of its CET1 capital to take remedial actions, such as raising new capital or seeking a merger partner; in the worst case, a bank may face closure by the FDIC. “It’s likely that unbooked losses will continue to grow as interest rates continue to move higher” Cole said. “Both the 50-day and 200-day moving average rate on the 10-Year Treasury bond are rising so losses are growing, not shrinking. And this is only one part of banks’ balance sheets that are suffering from rising rates. There also are massive unrealized losses on banks’ residential and commercial mortgage portfolios that total to another $500 billion.” Looking to know more? We can help. Rebel Cole is available to speak with media about banking and the impact on interest rates. Simply click on his icon now to arrange an interview today.

Rebel Cole, Ph.D.

2 min

Data Analysis: Commercial Real Estate Troubles Threaten U.S. Banks

The U.S. banking system is on a precipice as exposures to commercial real estate grow and banks grapple with high interest rates, according to an analysis by a finance professor at Florida Atlantic University. Of the 158 largest banks, 59 in the country are facing exposures to commercial real estate greater than 300% of their total equity capital, as reported in the fourth quarter 2024 regulatory data and shown by the U.S. Banks’ Exposure to Risk from Commercial Real Estate screener. “Regulators have been putting pressure on banks to reduce their exposures. However, it’s a very difficult thing to do without sending a signal of weakness to the market and creating more problems,” said Rebel A. Cole, Ph.D., Lynn Eminent Scholar Chaired Professor of Finance in FAU’s College of Business. “To get around this, many banks are ‘extending and pretending’ by restructuring their loans.” The U.S. Banks’ Exposure to Risk from Real Estate screener, a part of the Banking Initiative at Florida Atlantic University, measures the risk to exposure from commercial real estate at the 158 largest banks in the country with more than $10 billion in total assets. Using publicly available data released quarterly from the Federal Financial Institutions Examination Council (FFIEC) Central Data Repository, Cole calculates each bank’s total CRE exposure as a percentage of the bank’s total equity. Bank regulators view any ratio over 300% as excess exposure to CRE, which puts the bank at greater risk of failure. Troubled debt restructuring for commercial construction, multifamily, owner-occupied and owner-non-occupied mortgages tripled since 2023. They reached $18 billion in the fourth quarter of 2024, up from $6 billion in Q2 2023, according to data from the FFIEC. While non-owner occupied nonfarm, non-residential accounts for more than half of these amounts, there is also serious deterioration in multifamily and commercial construction loans. “Banks choose to extend these loans, hoping interest rates might drop. While the Fed did cut rates,” Cole said. “If a loan is maturing from five years ago in today’s rate environment, rather than refinance it with today’s terms, they will restructure the loan under the same terms from five years ago for another year. This all depends on interest rates falling, which is not likely to happen this year.” Among banks of any size, 1,788 have total CRE exposures greater than 300%, up from 1,697 in Q3; 1,077 have exposures greater than 400%, up from 971 in Q3; 504 have exposures greater than 500%, up from 426 in Q3; 216 have exposures greater than 600%, up from 166 in Q3. For comparison, the aggregate industry total CRE exposure is 132% of the total, unchanged from the third quarter of 2024. Looking to know more? We can help. Rebel Cole is available to speak with media about commercial real estate and the potential threats to the American banking system, Simply click on his icon now to arrange an interview today.

Rebel Cole, Ph.D.

1 min

Is the U.S. banking system on the edge of collapse? Our #expert can explain

The recent bailout of First Foundation Inc, parent of First Foundation Bank, by a group of investors has reignited concerns about the stability of the U.S. banking system, specifically banks exposed to debt in the commercial real estate market teetering on the verge of collapse. First Foundation Bank reported more than $6 billion in commercial real estate mortgages on its financial statements for the first quarter of the year, equal to almost six times its equity capital and almost half of its $13.6 billion in total assets. Bank regulators consider any exposure greater than three times equity to be excessive. An analysis by Rebel Cole, Ph.D., Lynn Eminent Scholar Chaired Professor of Finance in the College of Business at Florida Atlantic University, previously found that the First Foundation Bank was fourth highest among the largest banks in the nation in terms of its exposure to commercial real estate debt. It’s likely that other banks are also at similar risk: among banks with more than $10 billion in total assets, there are 67 that exceed this 300% concentration ratio, Cole’s analysis showed. Among the approximately 4,600 banks of any size, Cole reports that 1,871 have total CRE exposures greater than 300%, 1,112 have exposures greater than 400%, 551 have exposures greater than 500%, and 243 have exposures greater than 600%. Cole is available for expert commentary on the stability of the U.S. banking system, other banks at risk due to their CRE exposure, and investor confidence.

Rebel Cole, Ph.D.
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Biography

Rebel Cole, Ph.D., is the Lynn Eminent Scholar Chaired Professor of Finance in the College of Business at Florida Atlantic University in Boca Raton, Florida. Previously, he has taught at DePaul University in Chicago, UNSW in Sydney and the University of Auckland in New Zealand. He received his Ph.D. in business administration from the University of North Carolina in 1988, after which he spent 10 years working as a financial economist in the Federal Reserve System.

Cole is a special advisor to the Asian Development Bank, the International Monetary Fund, the World Bank and other non-governmental organizations, providing training and technical assistance to central banks around the world in more than 60 countries.

Cole has published peer-reviewed articles in top academic journals that include the Journal of Finance, the Journal of Financial Economics, the Journal of Financial & Quantitative Analysis, the Journal of Corporate Finance, the Journal of Banking & Finance, the Journal of Real Estate Finance and Economics and Real Estate Economics. His primary areas of research are commercial banking, commercial real estate, corporate governance, entrepreneurship, and financial institutions. Many of his papers use sophisticated survival models to analyze the factors explaining the failures of banks and small businesses.

According to Google Scholar, his works have been cited by other scholars more than 11,000 times. According to Scopus, his works have been cited more than 2,500 times. Most of his research papers are available for download from his webpages at http://www.rebelcole.com.

Cole is a frequent commentator in the financial press. He has been quoted in, or appeared on: Accounting Today, the American Banker, the Bloomberg Businessweek, CNN Money, Fox Business News, the Huffington Post, the New York Times, National Public Radio, the PBS Nightly Business Report, the Street.com, the Voice of America, the Wall Street Journal, the Washington Post, WTTW’s Chicago Tonight, and Yahoo Finance.

Areas of Expertise

Small Business Finance
Financial Institutions
Commercial Banking
Corporate Governance
Real Estate

Education

University of North Carolina at Chapel Hill

Ph.D.

Finance

1998

University of North Carolina at Chapel Hill

B.A.

Economics

1981

Selected Media Appearances

Small Banks Are Losing to Big Banks. Their Customers Are About to Feel It.

The Wall Street Journal  

2023-03-30

Those banks are “the heart and soul of small-business lending,” said Rebel Cole, a professor of finance at Florida Atlantic University.
Banks with less than $10 billion in assets accounted for nearly 43% of small loans to businesses outstanding at the end of 2022, according to Prof. Cole’s analysis of federal banking data. The 13 largest banks, by contrast, accounted for less than 23% of small- business loans, much of which represents credit-card balances, he said.

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Elon Musk’s bank loans show the divide in American finance

Financial Times  

2022-04-30

The changes in lending practices have been particularly pronounced in the years after the financial crisis. Bank lending increased to bigger businesses, but not to smaller ones, according to statistics compiled by Rebel Cole, a former Federal Reserve Board staff economist who is now a finance professor at Florida Atlantic University. By his count, the total stock of business loans of more than $1mn at US banks rose from $1.44tn in 2010 to $2.75tn in 2019 (the last year before data was skewed by the pandemic). By contrast, total loans of under $1mn fell from $652bn to $645bn.

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Floridians Fared Worst in Study of Pandemic Unemployment Relief

Bloomberg Law  

2020-10-15

“Florida’s UI computer system, like those in many other states, crumbled under the onslaught of UI filings after the lockdown was implemented in March,” said Rebel Cole, a business and finance professor at Florida Atlantic University who studies unemployment trends.

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Selected Articles

How Did the Financial Crisis Affect Small-business Lending in the United States?

The Journal of Financial Research

Rebel A. Cole,Jason Damm

2020

We analyze changes in lending by U.S. banks to businesses from 1994 to 2011. We find that lending to businesses, and in particular to small businesses, declined precipitously following onset of the financial crisis. We also examine the relative changes in business lending by banks that did, and did not, receive Troubled Asset Relief Program (TARP) funds from the U.S. Treasury, and find that banks receiving capital injections from the TARP failed to increase their small-business lending. Finally, we find strong and significant positive relations of both bank capital adequacy and profitability with small-business lending.

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Changes in Personal Bankruptcy Protection Laws: The Impact on Bank Lending to Small Businesses

SSRN

Jason Damm, Masim Suleymanov, Rebel A. Cole

2020

In the U.S., individuals who file for bankruptcy can protect certain property from creditor liquidation during the debt settlement process. We find that additional property protection, brought about by changes to personal bankruptcy laws, reduces credit availability for small businesses. Particularly in the sample of large loans greater than $100,000, which are the most at risk of loss in case of default. This impact is more severe during times of financial crisis when bankruptcy rates rise. Changes to bankruptcy protection laws also have real economic consequences for small business activity, leading to lower wages and fewer establishments per capita.

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Debt financing, survival, and growth of start-up firms☆

Journal of Corporate Finance

Rebel A. Cole, Tatyana Sokolyk

2018

We analyze the relation between different forms of debt financing at the firm's start-up and subsequent firm outcomes. We distinguish between business debt, obtained in the name of the firm, and personal debt, obtained in the name of the firm's owner and used to finance the start-up firm. Start-up firms with better performance prospects are more likely to use debt and, in particular, business debt. Compared to all-equity firms, firms using debt at the initial year of operations are significantly more likely to survive and achieve higher levels of revenue three years after the firm's start-up. However, results hold for business debt only. Debt obtained in the name of the firm is associated with longer survival time and higher revenues, while debt obtained in the name of the firm's owner has no effect on survival time and is associated with lower revenues.

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