Equity and credit markets continued their march higher and tighter this week, buoyed by JP Morgan’s earnings. Although the bank reported a lower than estimated EPS of $1.07 due to a $2.4 Bn 4th quarter charge related to the new tax law, it indicated that its effective tax rate will fall from 32% to 19%. Revenue from fixed income trading across the street continues to disappoint, with unadjusted revenues down 17% yoy, which has pushed banks to focus on more consumer lending and fee-revenue from asset management.
US CPI came in at 2.1%, in line with economists’ estimates. Retailer Wal-Mart announced yesterday that it would raise the minimum wage to $11/hour and could force other retailers and employers of minimum wage workers to follow suit, and stoke wage inflation that market participants are eagerly awaiting. The impact of just Wal-Mart’s wage hike is expected to be 1bp to the annual inflation rate.
Kevin Wack at American Banker reports that consumer credit reached an all-time high of $1.023 Tr. Nevertheless, debt levels are below their per-capita peak and below long-run trend. Household debt service levels also remains low.
In regulatory news, the Trump administration is weighing a revision to the antiquated CRA rules. The OCC has proposed to expand the activities that would qualify under the 1977 Community Reinvestment Act to include small-business loans along with community development loans and investments.
The latest securitization, MFT 2018-1 has received AA, A, BBB and BB ratings on its tranches from Kroll. The deal amount is $393 Mn and comprises loans originated by Cross River Bank as part of Marlette’s Best Egg brand. The loan pool has a weighted average FICO score of 710, loan sizes between $2,000 – $50,000, loan terms between 3 and 5 years and APRs between 4.99% and 29.99%. The securitization is expected to close next week.
In FinTech financing news, Petal raised $13 Mn to enable individuals without a credit history to get a credit card. The qualification criteria for the credit card is based on a host of factors like borrower income and saving habits. YieldStreet raised $113 Mn in equity and debt to continue growing their alternative asset investment platform for individuals. Alkami raised $70 Mn to develop their mobile banking app which it leases to banks and credit unions.
We will release our 4Q2017 MPL Securitization Tracker on Tuesday, capping a quarter of record issuance of $4.4 Bn. PeerIQ expects issuance to grow by 30% in 2018 to $18 Bn.
With that, we are pleased to announce a few of the recent additions to the PeerIQ team. Since PeerIQ’s $12 MM Series A this past August, we have been investing in scaling up the organization and expanding our suite of offerings. Recent hires include:
Kevin Walsh – Chief Commercial Officer
Kevin is responsible for new revenue generation, forging strategic partnerships, and managing our sales, marketing, and client delivery teams.
Prior to PeerIQ, Kevin ran direct to consumer mortgage lending for Ocwen Financial, where he led $3B in annual production, in addition to marketing, analytics, partnerships, and strategy. Previously, Kevin was a management consultant at Inductis where he served Fortune 50 financial services firms. Kevin holds a PHD in Physics from Yale.
Ashish Dole, CFA – Head of Research
Ashish leads the research team, setting the course of our core program, overseeing asset execution, supporting credit and valuation modeling, and otherwise generating actionable insights for clients from PeerIQ datasets and other resources.
Before joining PeerIQ, Ashish was a buy-side trader and strategist focused on RMBS, ABS and CLO debt.
Jason Harris, CFA – Director of Client Delivery
Jason partners with our clients to ensure their success. He manages new onboardings, data integrations, and communicates client and sector feedback to our product teams.
Before PeerIQ, Jason worked at Amherst Pierpont, where he structured and traded agency RMBS and led the team that built a risk management system across all firm inventory and reverse repo positions.
Mike Wohl – Product Manager
As a Product Manager at PeerIQ, Mike leads cross-functional teams for significant platform builds and new features. Mike brings a wealth of product experience from his time at Cambridge Associates, the investment consulting firm, where he led the development of data and workflow applications.
Nate Aiken, CFA – Product Manager
Nate is a product manager at PeerIQ, where he leads the build of major platform features, with a focus on structuring, credit facility management, and other liability-side tools.
Prior to PeerIQ, Nate was an Associate at BlackRock Solutions, where he worked across investment, risk, and client-facing teams to understand client needs and develop appropriate analytical toolsets.
Huayong Zhou, Ph.D. – Quantitative Engineer
Huayong is a quantitative engineer at PeerIQ, working across both our quant and engineering teams to build out our heavy-computation and modeling infrastructure. He also works closely with risk model logic and integrating it into our core platform.
Before joining PeerIQ, Huayong was a quantitative risk modeler at JP Morgan, where he focused on developing machine learning algorithms to model consumer and mortgage credit risk.
PeerIQ in the News:
- Tuesday January 9 2018, Daily News Digest (LendingTimes, 1/9/18)
- Credit card debt hits all-time high of $1.023 trillion: Fed (American Banker, 1/8/18) U.S. revolving consumer debt reached an all-time high of $1.023 Tn in November, according to Federal Reserve Board data, marking the end of a seven-year-long recovery in the credit card market that followed the Great Recession.
- Trump Administration Seeks to Change Rules on Bank Lending to the Poor(WSJ, 1/10/18) The Trump administration plans to unveil a major revision to the Community Reinvestment Act that would make small business loans eligible.
- Community Reinvestment Fund, USA and U.S. Bank Partner to Expand Access to Credit for Small Businesses (BusinessWire, 1/9/18) Connect2Capital platform will connect small businesses to responsible lending options from Community Development Financial Institutions.
- Predicting Comptroller Otting’s Impact on Fintech (Lend360, 1/18) Otting will likely continue the approach of Acting Comptroller Keith Noreika, balancing the OCC’s consumer protection mission with its parallel duty to preserve the safety and soundness of the banking system and the institutions the OCC regulates.
- How Banking-as-a-Platform Propels Cross River Bank (Knowledge@Wharton, 1/12/18) Cross River Bank is upending traditional banking with its banking-as-a-platform model, and expanding credit access to consumers.
- Reliamax’s Michael VanErdewyk: ‘We’re seeing a move towards more private student loans’ (Tearsheet, 1/12/18) Reliamax’s CEO sees growth in the $100 Bn private student loan industry, taking market share away from Federal lenders.
- Petal Raises $13 Million To Give Starter Credit Cards To Millennials (Forbes, 1/10/18) Petal, a financial technology upstart that aims to provide credit cards to young people and others who lack a credit history, has raised $13 Mn in a Series A.
- YieldStreet Raises $113 Million Financing Round to Disrupt Alternative Investing (BusinessWire, 1/10/18) YieldStreet raised $113 Mn to continue growing their alternative asset investment platform for individuals.
- Alkami raises $70 million for mobile banking software (TechCrunch, 1/9/18) Alkami’s 4.5 Mn users have generated enough revenue for the company to justify a $70 Mn Series D round, led by General Atlantic, with participation from MissionOG.
- Jack Ma Debt Giant Grinds to Halt as China Curbs Micro-Loans (Bloomberg, 1/8/18) Chinese billionaire Jack Ma’s Ant Financial is pausing sales of asset-backed securities as the government steps up curbs on micro lending.
- Apparently, People Say “Thank You” to Self-Driving Pizza Delivery Vehicles(MIT Technology Review, 1/10/18) And other experiments with autonomous vehicles.