I want to address the recent events regarding Silicon Valley Bank (SVB) and other financial institutions facing similar challenges. Clearly, there are some that believe this is reminiscent of 2008 and as a result we see charged emotions, fear, and speculation in the market. If you have had an opportunity to read the updates provided by Gene Goldman and the Cetera Investment Management team, there exist material differences between these events and those of 2008, and as a result we remain optimistic that this market disruption will be short term.
We view the SVB collapse as an event triggered by certain banks not having enough cash on hand to fund withdrawals of customer deposits, many of which are tied up in longer-term federal bonds for regulatory reserve purposes. This creates pressure to sell portions of the bond portfolios before maturity, which in a rising interest rate environment often happens at a significant loss.
With that said I do want to take a moment to share an update on Cetera and in so doing, hope to provide you with some comfort.
Let me begin by assuring you that Cetera does not face these issues. We do not hold on our balance sheet long-term interest-sensitive investments, and do not have any direct investments or corporate balances with SVB, NY Signature Bank, First Republic Bank, or Credit Suisse affiliates.
Additionally, we do not fund customer deposits with longer term investments or loans. At the time of this letter, we have substantial available liquidity through cash on hand and available credit lines and maintain more than the minimum regulatory requirements. Our fiscal stability and growth trajectory were noticed by both Moody’s and Standard & Poor’s, which both recently upgraded Cetera’s credit ratings.
The financial health of Cetera’s wealth hub is of paramount importance. Beyond that, we continue to advance our strategy and experience growth in our business and believe we have improved the quality of our profits, as recognized by both Moody’s and Standard & Poor’s.
It’s my fervent hope this provides you with some insight into the financial stability and growth trajectory of Cetera. Your financial health and the success of your practices are at the nucleus of everything we do, and it’s my privilege to serve you.
Chief Executive Officer
Cetera Financial Group