Small banks you’ve never heard of are quietly enabling the tech takeover of the financial industry

Instead of trying to beat a wave of high-growth financial technology startups at their own game, a group of small banks is opting to join them. These low …

In order to take customer deposits in the United States, a company needs federal deposit insurance. It’s an elite club that is not eagerly looking for members.

“It’s very difficult, if not impossible for a nonbank to get an account with the Fed,” said Amias Gerety, partner at QED Investors and a former acting assistant secretary at the U.S. Department of the Treasury. “Through that you can get access to the payment system the Fed controls.”

That gives the community banks that work with fintechs some breathing room for now, but competition looms. The Office of the Comptroller of the Currency is accepting applications for a national fintech charter, which would give the agency more direct oversight instead of regulating their partner banks.

“It’s awkward to regulate these fintech companies indirectly, so the thought is, if we give them a charter we can regulate them directly with a bit more clarity,” Gerety said.

Companies can also apply to be an industrial loan company, or ILC, which allows nonbanks to lend money, issue consumer and commercial loans, and accept federally insured deposits. Wal-Mart fought hard for the designation in the early 2000’s but dropped its application following a backlash from banking officials, watchdog groups and lawmakers.

More recently, fintech payments company Square refiledwith the FDIC for a special ILC license that among other things would allow it to accept government-insured deposits. It pulled its first application in July, but the company was clear back then that it intended to refile after it could “amend and strengthen” the application.

Square, run by Twitter founder Jack Dorsey, already has a small-business lending arm through Square Capital, which operates through Celtic Bank in Salt Lake City, Utah.

Varo Money, a mobile-only banking start-up, made history as the first fintech to receive preliminary approval for a national bank charter from the OCC. They still need full approval from the agency, as well as FDIC approval, according to the CEO.

Varo’s co-founder and CEO Colin Walsh led Europe’s largest consumer credit and charge card business at American Express. He said he knew the process wasn’t going to be easy, and it still relies on its bank partnership until the approvals are completed. But it wanted to go out on its own.

“With a partnership, you’re beholden to the success of the bank, anything that they could do right or wrong that could limit your success,” said Walsh, who was also a managing director at Lloyd’s Banking Group in London. “I think that’s the No. 1 thing here, is to control your own destiny — we wanted a broader set of permissions.”

Other fintechs are less eager to leave their banking relationships. Chime, an online-only bank, said it may consider going the banking route eventually. But for now, CEO Chris Britt said it can focus on building the platform and customer experience.

“Becoming a bank right now hasn’t been a top priority for us,” said Britt, a former executive at Green Dot and Visa before co-founding Chime. “I could imagine over time it’s something we might want to explore and we’re seeing other companies exploring that notion.”

This is completely new territory for most regulators. With the financial crisis fresh in the mind of most Americans, they are careful not to open the floodgates too quickly. The bar is especially high in the U.S., and fintechs that want to become a bank need to prove they can provide the safety and soundness.

“Regulators are going to take a long look at this and ask, ‘Who’s running this thing?'” said Donald Powell, a former FDIC chairman. “You need to go in the front door, and not the back door or the side door.”

The United Kingdom is more open to “challenger banks.” The Competition and Markets Authority, or CMA, made it easier for these start-ups to enter the retail banking market after 2008, allowing firms such as Revolut to pass the billion-dollar valuation mark. The mobile-based bank said earlier this year it plans to expand into the United States and Canada.

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AQR Capital Management LLC Has $1.02 Million Holding in Meridian Bancorp Inc (EBSB)

AQR Capital Management LLC raised its holdings in Meridian Bancorp Inc (NASDAQ:EBSB) by 26.9% during the 3rd quarter, according to its most …

AQR Capital Management LLC raised its holdings in Meridian Bancorp Inc (NASDAQ:EBSB) by 26.9% during the 3rd quarter, according to its most recent filing with the Securities & Exchange Commission. The fund owned 59,896 shares of the savings and loans company’s stock after acquiring an additional 12,709 shares during the quarter. AQR Capital Management LLC owned approximately 0.11% of Meridian Bancorp worth $1,018,000 as of its most recent filing with the Securities & Exchange Commission.

Other institutional investors and hedge funds have also recently bought and sold shares of the company. Monarch Partners Asset Management LLC raised its stake in Meridian Bancorp by 63.9% in the third quarter. Monarch Partners Asset Management LLC now owns 1,226,226 shares of the savings and loans company’s stock valued at $20,846,000 after buying an additional 477,852 shares during the last quarter. BlackRock Inc. raised its stake in shares of Meridian Bancorp by 8.8% in the second quarter. BlackRock Inc. now owns 3,677,833 shares of the savings and loans company’s stock worth $70,430,000 after purchasing an additional 298,381 shares during the last quarter. Matarin Capital Management LLC purchased a new position in shares of Meridian Bancorp in the third quarter worth about $2,971,000. Dimensional Fund Advisors LP raised its stake in shares of Meridian Bancorp by 5.7% in the second quarter. Dimensional Fund Advisors LP now owns 2,676,878 shares of the savings and loans company’s stock worth $51,263,000 after purchasing an additional 145,466 shares during the last quarter. Finally, FSI Group LLC purchased a new position in shares of Meridian Bancorp in the third quarter worth about $2,199,000. 66.08% of the stock is currently owned by institutional investors and hedge funds.

In related news, EVP Edward J. Merritt sold 2,800 shares of Meridian Bancorp stock in a transaction that occurred on Monday, January 28th. The stock was sold at an average price of $15.80, for a total transaction of $44,240.00. The sale was disclosed in a filing with the SEC, which is accessible through this hyperlink. Also, Director James G. Sartori sold 2,400 shares of Meridian Bancorp stock in a transaction that occurred on Friday, November 30th. The stock was sold at an average price of $16.25, for a total value of $39,000.00. The disclosure for this sale can be found here. Insiders sold 12,300 shares of company stock worth $195,091 over the last ninety days. Corporate insiders own 5.30% of the company’s stock.

Several analysts recently commented on EBSB shares. BidaskClub lowered Meridian Bancorp from a “buy” rating to a “hold” rating in a report on Thursday. Hovde Group reaffirmed a “hold” rating and set a $15.00 target price on shares of Meridian Bancorp in a report on Monday, January 28th. Finally, Zacks Investment Research raised Meridian Bancorp from a “hold” rating to a “buy” rating and set a $17.00 target price on the stock in a report on Friday, January 11th.

Shares of EBSB opened at $15.77 on Friday. The company has a current ratio of 1.24, a quick ratio of 1.24 and a debt-to-equity ratio of 0.90. Meridian Bancorp Inc has a 12 month low of $13.67 and a 12 month high of $20.95. The company has a market capitalization of $856.81 million, a price-to-earnings ratio of 14.88 and a beta of 0.50.

Meridian Bancorp (NASDAQ:EBSB) last issued its quarterly earnings data on Tuesday, January 22nd. The savings and loans company reported $0.24 EPS for the quarter, missing the consensus estimate of $0.29 by ($0.05). Meridian Bancorp had a net margin of 23.56% and a return on equity of 8.37%. The business had revenue of $42.31 million during the quarter, compared to analyst estimates of $45.20 million. Research analysts anticipate that Meridian Bancorp Inc will post 1.2 earnings per share for the current year.

Meridian Bancorp Profile

Meridian Bancorp, Inc operates as the holding company for East Boston Savings Bank that provides various financial products and services for individuals and businesses primarily in Essex, Middlesex, Norfolk, and Suffolk Counties, Massachusetts. The company accepts various deposit products, including non-interest-bearing demand deposits, such as checking accounts; interest-bearing demand accounts comprising NOW and money market accounts; savings accounts; and certificates of deposits, as well as commercial checking accounts.

See Also: What is the Consumer Price Index (CPI)?

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INSIKT Changes Name to Aura

SAN FRANCISCO–(BUSINESS WIRE)–Feb 12, 2019–INSIKT, a mission-driven financial technology company that offers affordable loans to …

SAN FRANCISCO–(BUSINESS WIRE)–Feb 12, 2019–INSIKT, a mission-driven financial technology company that offers affordable loans to hard-working families, today announced that it has changed its name to Aura to expand its focus on creating greater financial health, independence and economic stability for millions in America.

“Today, I am excited to share that INSIKT has undergone an extraordinary transformation that starts with a bold new name,” said James Gutierrez, CEO and Founder of Aura. “Aura, like your credit score, may seem invisible, but it matters a lot. Today, we commit to making the seemingly invisible role of credit, approachable, visible, clear, transparent, easy to understand and fair for all. Most financial institutions see borrowers as a number, a risk, a reflection of the past. This says nothing about a borrowers’ potential and where they can go. The difference for us — we see their Aura, not just their credit score. We see them, their potential, and their dreams.”

Since its launch in 2014, INSIKT has provided more than $390 million in affordable, credit-building loans to 320,000 borrowers at over 1,200 partner locations using technology that enables local businesses to administer credit applications.

Now, Aura will build on this success by adding a new consumer product experience that will further empower borrowers and put them on the road to financial security. Recognizing that most of its customers do not know what their credit score is or how much they should save on each paycheck, Aura will provide its borrowers with free credit scores, a summary of what’s in their credit report, and a personalized budget, including expenses, DTI and tips for savings.

Additionally, Aura is launching a new customer loyalty program, known as “Aura Hearts” that offers benefits to borrowers who pay on time such as larger future loans, lower rates, and faster pre-approvals.

“We have worked to ensure Aura makes managing debt a launch-point for personal independence,” said Gutierrez. “We want everyone to see and understand their financial history, reduce fear around personal finance in the communities we serve, and increase borrowers’ ability to navigate the financial system. Aura is here to make sure that borrowers have a true partner on their financial journey.”

Aura’s new website is located at www.myaura.com.

About Aura:

Aura is a technology-powered, Community Development Financial Institution (CDFI) that provides small, affordable loans to working families in America. Aura’s mission is to build financially healthy low-income communities by providing empowering financial services to America’s 66-million underbanked and unbanked. Aura has pioneered a cloud-based lending technology that enables trusted local businesses to submit credit applications for centralized review and approval by its proprietary scoring algorithms.

Currently available in nearly 1,200 locations across California, Texas, Illinois and Arizona, Aura has provided hundreds of thousands of credit-building, responsible loans to low-income households since launching in 2014. Aura was founded in 2012 by James Gutierrez, Kevin Kang, and Randy Wong. All three founders helped create and scale Oportun, a CDFI and one of Time Magazine’s Top 50 Most Genius Companies in 2018.

View source version on businesswire.com:https://www.businesswire.com/news/home/20190212005204/en/

Scott Gerber | 408.202.4255 |scott@vrge.us

KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA

INDUSTRY KEYWORD: OTHER CONSUMER TECHNOLOGY DATA MANAGEMENT INTERNET SOFTWARE PROFESSIONAL SERVICES BANKING FINANCE CONSUMER

SOURCE: Aura

Copyright Business Wire 2019.

PUB: 02/12/2019 06:00 AM/DISC: 02/12/2019 06:01 AM

http://www.businesswire.com/news/home/20190212005204/en

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Comparing of Mogo Finance Technology Inc. (MOGO) and China Internet Nationwide Financial …

Since Mogo Finance Technology Inc. (NASDAQ:MOGO) and China Internet Nationwide Financial Services Inc. (NASDAQ:CIFS) are part of the Credit …

Since Mogo Finance Technology Inc. (NASDAQ:MOGO) and China Internet Nationwide Financial Services Inc. (NASDAQ:CIFS) are part of the Credit Services industry, they are influenced by compare. The influences particularly affect the profitability, analyst recommendations, risk, institutional ownership, dividends, earnings and valuation of both companies.

Earnings & Valuation

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Mogo Finance Technology Inc. N/A 0.00 N/A -0.80 0.00
China Internet Nationwide Financial Services Inc. 28.56M 0.72 22.66M 1.03 1.36

Table 1 highlights Mogo Finance Technology Inc. and China Internet Nationwide Financial Services Inc.’s gross revenue, earnings per share and valuation.

Profitability

Table 2 shows Mogo Finance Technology Inc. and China Internet Nationwide Financial Services Inc.’s return on equity, net margins and return on assets.

Net Margins Return on Equity Return on Assets
Mogo Finance Technology Inc. 0.00% 0% 0%
China Internet Nationwide Financial Services Inc. 79.34% 37.6% 34.5%

Insider & Institutional Ownership

The shares of both Mogo Finance Technology Inc. and China Internet Nationwide Financial Services Inc. are owned by institutional investors at 6.21% and 0.6% respectively. Mogo Finance Technology Inc.’s share owned by insiders are 38.26%. On the other hand, insiders owned about 73.89% of China Internet Nationwide Financial Services Inc.’s shares.

Performance

Here are the Week, Month, Quarter, Half Year, Year and YTD Performance of both pretenders.

Performance (W) Performance (M) Performance (Q) Performance (HY) Performance (Y) Performance (YTD)
Mogo Finance Technology Inc. -15.32% -8.73% -26.94% -11.44% -56.34% -48.25%
China Internet Nationwide Financial Services Inc. -13.5% -34.42% -84.07% -93% -97.57% -96.64%

For the past year Mogo Finance Technology Inc. has stronger performance than China Internet Nationwide Financial Services Inc.

Summary

China Internet Nationwide Financial Services Inc. beats on 9 of the 10 factors Mogo Finance Technology Inc.

Mogo Finance Technology Inc. operates as a financial technology company in Canada. The company offers its products to help consumers enhance their financial health. It offers digital access to free monthly credit score monitoring; MogoCard, a Mogo Platinum Prepaid Visa card; MogoMoney personal loans; MogoProtect to identity fraud protection; and MogoMortgage, a digital mortgage brokerage solution. The company was formerly known as Hornby Management Inc. and changed its name to Mogo Finance Technology Inc. in June 2012. Mogo Finance Technology Inc. was founded in 2003 and is headquartered in Vancouver, Canada.

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Jefferies estimates maximum loss exposure due to involvement with FXCM at $148.2m

Jefferies Financial Group Inc (NYSE:JEF), formerly known as Leucadia National Corporation, has just posted a SEC filing including information about …

This estimate includes the carrying value of the term loan ($73.2 million) and the investment in associated company ($75 million) at November 30, 2018.

Jefferies Financial Group Inc (NYSE:JEF), formerly known as Leucadia National Corporation, has just posted a SEC filing including information about its performance for the 11 months to end-November 2018.

The Group has already provided some key data in a press release published earlier in January. In today’s 10-K filing with the SEC, however, the Group offers more details on its performance and on its investment in FXCM.

It is probably not necessary to remind FinanceFeeds’ readers about the loan that Leucadia extended to FXCM back in January 2015… The loan had an initial interest rate of 10% per annum, increasing by 1.5% per annum each quarter, not to exceed 20.5% per annum. During the eleven months ended November 30, 2018, interest accrued at 20.5% per annum.

During the eleven months ended November 30, 2018, Jefferies received $18.3 million of principal and interest from FXCM and $67.6 million of principal remained outstanding under the term loan as of November 30, 2018. Through November 30, 2018, Jefferies has received cumulatively $349.8 million of principal, interest and fees from its initial $279 million investment in FXCM.

Jefferies has the right, as does Global Brokerage Holdings, the owner of the remaining 50% of FXCM voting interest that is not held by Jefferies, to require a sale of FXCM beginning in January 2018. Distributions to Jefferies under the amended agreements are now: 100% until amounts due under the loan are repaid; 50% of the next $350 million; then 90% of the next $600 million; and 60% of all amounts thereafter.

Jefferies’ maximum exposure to loss as a result of its involvement with FXCM is limited to the carrying value of the term loan ($73.2 million) and the investment in associated company ($75.0 million), which totaled $148.2 million at November 30, 2018. This amount compares to $212.8 million at September 30, 2018.

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