Vanessa Cortez on LinkedIn: JPMorgan borrows from First Republic playbook to add affluent clients (2024)

“Full faith and credit.”So now our First Republic accounts are still safe, just now they are JPM Chase. We’ve seen this movie before.The recognizable backstory here is parallel to Silicon Valley Bank in that the deposits were relatively highly concentrated, and the customer base tightly networked across, in this case, mid market business sectors and wealth advisors. All of whom were understandably hypervigilant about safety/insurance limits. And a bit gun-shy in the wake of recent events.This is also going to be a challenge for JPM Chase to find a high net worth/premier customer home within their Chase premier category, to retain these customers who’ve become accustomed to very high touch relationship banking (and who hadn’t chosen Chase in the first place).Count another “soft landing” for customers piloted by the regulators. It’s a crash landing, however for the shareholders.A ditch in the ocean for depositors and borrowers (who will float to safety at (Even within their private banking operation) but may be inconvenienced for a few weeks while their lines of credit are brought back to life under the chase umbrella). And hopefully a good glide path for the wonderful employees on the front lines who will (we hope) be able to continue their premier service to customers. And yes, the parachutes may or may not be clawed-back for top executives. This is an ongoing issue that may need congressional and regulatory review.Maybe we need to replace “full faith and credit” with “safe and sane.”#firstrepublicbank #jpmorganchase #fdic

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The nation’s top six banks recently reported charges totaling $9.4 billion related to the Federal Deposit Insurance Corp.’s special assessment aimed at replenishing the agency’s deposit insurance fund after several bank failures last year. The fund was drained ofroughly $16.3 billionafter the agency agreed to backstop the uninsured deposits of Silicon Valley Bank and Signature Bank after bank runs led to their collapses last March. The agencyannounced in Novemberthat the largest banks would pay the majority of the fee. Lenders with less than $5 billion in assets are excluded from paying the special assessment. paid the largest share, at $2.9 billion. The bank reported $49.6 billion in annual net income.Bank of America’sfee to help the FDIC replenish the fundscame in at $2.1 billion, while Wells Fargoreported a special assessment chargeof $1.9 billion.#FDIC #SVB #depositinsurance

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From today’s WSJ talking about consumer credit and savings patterns.Select article excerpts worth noting:"...more loans are going bad after what had been record-low losses. American consumers are starting todeplete coffers of extra cashthey built up during the pandemic. Fighting in the Middle East, the continuing war in Ukraine and risinggovernment deficitsare adding to the uncertainty."Consumers broadlycontinue to spend and borrow, a sign that many are optimistic about their own financial prospects. However, some households are spending just to keep up with rising prices, or because high housing prices have made them give up on the idea of saving for a down payment."Credit-card spending was up at all three banks. Overall credit-card loans jumped by more than spending at both JPMorgan and Citigroup, a sign that borrowers are carrying over bigger balances each month."Borrowers are falling behind on some loans at faster rates than before the pandemic, squeezed by higher interest rates."More loans started to go bad in the third quarter. Net charge-offs roughly doubled at all three banks from a year earlier, though they remained a small proportion of overall lending."Mortgage originations slid 9% from a year earlier at JPMorgan and 17% at Citigroup. At Wells Fargo, which said it would dramatically shrink its mortgage business this year, originations dropped 70%."I've posted frequently about the early warning indicators of savings depletion combined with increased credit card utilization coupled with increased month-over-month credit card balances being carried by the consumer. For a large part of the population, much of this spending is on life in general (food, gas, etc.), not vacations, toys and other recreational items.I recognize that many don't want to talk about this, especially in light of the tremendous challenges and headwinds we have been facing in the mortgage industry, but we need to. It's better to be prepared with the right loss mitigation and default strategies and have little to nothing occur, rather than see borrowers hit the tipping point and servicers not be prepared to address a shift. We might get lucky. Then again, we might not. Feel free to reach out in confidence if you would like to have a conversation about planning or validating your preparedness involving people, process and technology. We at ALE Advisors are here to help. Prabhakar Bhogaraju, Terri Davis, and I will be at the MBA Annual in Philly next week if you would like to do a quick meet and greet.

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If you were hoping the bank collapses were over after Silicon Valley Bank and Signature Bank fell earlier this year, there’s some bad news today. First Republic, the latest casualty, was seized and sold to JPMorgan. Read the details of what happened.#bankingandfinance #addessifinancialpartners

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As a sort of minor followup to my post about 650 billion dollars in unrealized bond market losses in the banking industry, this bank failure hit the news today. Interesting to me is how all of this is based on speculation - these #investors are essentially #speculators, invest based on best return based on certain assumptions about the future (in these case - some sort of stability in interest rates?). Guess/predict/assume wrong, you lose. (There are of course sophisticated ways to offset that risk, but the basic point remains). #REO #FORECLOSURE #bankingindustry #realestateadvice #realestatemarketing #realestateexpert #reolistings #reoagent #NRBAhttps://lnkd.in/evnv4vUi

***TOP TIP***Morning NetworkThought I would share this with you this morning to maybe provide a cash injection into your account before XmasSo over the last few weeks when its been raining on a Saturday (no golf), I have been getting my affairs in order (pension, will, savings, etc). I found an old statement for an ISA I had with Barclays, I was unsure if I had cashed it in or still had it.I phoned Barclays to enquire only to find out that it is now "dormant" which means there is no trace of it on line and there was a process which could take up to 90 days to reactivate (on line form), luckily the lady I spoke with had dealt with this before and managed to process for me which meant I received the funds back within 3 weeks.Top tip - If you invested in an ISA or have a savings account that has been inactive for more than 3 years, please check it has not gone "dormant", this is not a Barclays process, it is standard with most banks for a savings, current or ISA accounts, please have a check on yours and post here if I managed to help with that cash injection. Well done Barclays for helping me get my own money back stress free :)Free tip, no fee applicable :)https://lnkd.in/e53yy5tR

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Is SVB Still Safe to Bank With?A Year of TurbulenceIt's been a rollercoaster of a year for SVB clients, and many are still wondering if the uncertainty is over.I've fielded multiple versions of the question "Is SVB still safe to bank with?" from clients on calls and friends in DMs.As one of our clients described the height of confusion: "That Sunday I was telling my family that it has been a good run. We won't have cash after this. But by Monday morning, SVB was the safest place to hold cash in the country."What's Changed?SVB has new owners, but the core of the institution remains the same. There are still amazing people there who truly understand their business.However, there is some added risk because we don't know the new owners' plans for SVB. That being said, if you are a tech company, they are likely not going to turn their back on you. This has always been the heart and soul of SVB. Leaving this client base behind would not only violate their commitment to their clients, but it would also cause a mass exodus of employees who are there because of the passion they have for the companies they work with.What's the Outlook?It's not uncommon to see a bank's appetite for risk change after changing ownership. We've seen this play out many times in our space, and SVB is not immune to that. However, it appears that they are still winning deals and relationships. I have conversations with multiple lenders a week because of my network and our Holdings partners, and they have all confirmed that SVB hasn't slowed down much. This should be a good sign for those that are still working with them. They are just as committed to serving you.Is There Still Risk?Yes, there is more risk in working with SVB than there has been before their financial troubles. This is all driven by the uncertainty related to the business. However, you are always taking on risks with any counterparty or financial partner that you are working with.What Can You Do?There is no solution to completely mitigate risk. The best you can do is find partners that you are comfortable with, diversify some risk by holding cash with more than one partner (a treasury partner like Holdings), and make an educated decision.Despite the recent challenges, I still think SVB is a fantastic institution. They have a long history of innovation and service, and I believe they will continue to be a leader in the financial industry.What are your thoughts?I'd love to hear your perspective on SVB and its future. How do you approach treasury management as a business leader differently than you did a year ago?#banking #startups #entrepreneurship #economics

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If you read my posts regularly, you know that I crave professionalism and transparency in the financial services industry. 💹 I believe in independent, unbiased advice from true brokers, not proprietary products sold to meet targets and quotas; not suppliers providing incentives to so-called independent advisors; not MLM companies stressing recruiting over client service. 🚫 I watched the latest Marketplace segment on the Big 5 banks with disgust. After getting into deep regulatory trouble years ago for illegally upselling unsuspecting clients, and being punished for it, they are back at it again. (See report below.) 😡 Not only are these practices predatory, but did you know that I have had to assist two retired clients in the last five years in their attempts to negotiate their way out of frozen lines of credit after a spouse passed? That's right, if your dad and mom have a secured line of credit that they are using to assist with retirement, and a spouse passes, the Big 5 will lock down the HELOC and demand the survivor re-qualify or pay it off. Shame! 😠 I am pleased to learn there is a Tier One bank that does not do this. Manulife Bank will automatically transfer a home equity line of credit to the surviving spouse, NO QUESTIONS ASKED! ✔ At least one bank is starting to lean toward true service to clients instead of lip service and billion-dollar quarterly profits for shareholders. 💰 And how do the Big 5 respond to the Marketplace report? You guessed it: deny, deny, deny. 🤥 #cbcmmarketplace #bigbanks #financialadvice #financialplanning #dotherightthing #unbiased #independentadvice #netwebcompartyhttps://lnkd.in/gSpMq2D7

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JPMorgan Chase CEO Jamie Dimon has noted a divergence in his #customer base, with lower-income #consumers running out of the cash cushion they had built up during the pandemic. He stated that these consumers no longer have excess savings. This sentiment is echoed by other banking executives, such as Wells Fargo’s CEO of consumer lending, Kleber Santos, who described the situation as a "tale of two cities". Middle- and upper-class customers are faring well, while lower-income consumers are showing signs of financial stress.The net result? A credit squeeze with The Fed maintaining interest rates in a range of 5.25%-5.50%, the highest in almost a generation (22 years).https://lnkd.in/gYC_HW6X

🚩BANK TERM FUNDING PROGRAM (BTFP): < FOUR MONTHS TO GO? THEN ...🚩🚩AS MARK MOSS AND GEORGE GAMMON flagged in my posts earlier this week, the BTFP, which was deployed in the wake of SVB et al, is planned to wind down in March.🚩REVERSE REPO "BUFFER" is also running down at the same time, yet we may not have seen the end to banking stress. Loan loss provisioning just started. And corporate bond spreads are blowing out.🚩FDIC PRESENTED KEY TESTIMONY TO CONGRESS this week:* As of June 30, 2023, the Deposit Insurance Fund (DIF) balance totaled $117.0 billion, * down $11.3 billion (8.8 percent) from year-end 2022, primarily resulting from an increase in loss provisions associated with the failures of Silicon Valley Bank (SVB); Signature Bank NY,NY; and First Republic Bank (First Republic), SFO CA* A total of five banks failed so far in 2023, resulting in a combined estimated loss of $34.2 billion. As of June 30, 2023, the FDIC estimated the cost for the failures of SVB and Signature Bank to total $18.5 billion. * Of that estimated total cost of $18.5 billion, the FDIC estimated $15.8 billion was attributable to the cost of covering uninsured deposits as a result of the systemic risk determination made on March 12, 2023, following closures of SVB and Signature Bank. 🚩QUESTION: WHAT IF A BEHEMOTH ran into a derivatives buzzsaw or credit event? JPM has $1.48 TRILLION in uninsured deposits within the USA and abroad. Beyond "too big to fail". And a USA money center bank and primary dealer for US Treasuries.🚩FDIC WOULD BE OVERWHELMED in seconds, not to mention associated counterparties in a contagion scenario. Hopefully there is a plan; JPM CEO Dimon is selling ONE MILLION shares of JPM in 2024. Who is going to buy them?#jpm #fdic #wallstreetonparade #svb #reverserepo #frb #provisioning

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