Even in hindsight, it seems surreal that the most innovative bank in America, Silicon Valley Bank (“SVB”), was brought down in a matter of just two days by an old-fashioned bank run that conjures memories of Jimmy Stewart in It’s a Wonderful Life. Unfortunately, the collateral damage of SVB rapidly imploding and needing to be taken over by the Federal Reserve precipitated self-fulfilling fears that First Republic Bank (“FRB”) would be the next domino to fall.

Within a matter of two months, the two most iconic and foundational local banks with storied histories of over 40 years were now distant memories. The loss of these two banks will reverberate throughout Silicon Valley’s startup scene for some time, and will negatively impact liquidity in the high-end housing market. For the typical buyer, the loss of these banks will not negatively impact them, as several alternative options exist; however, with few lenders comfortable lending over $10M, losing the two banks most frequently willing to find ways to make the deal work creates concern.

As the top buyer’s agent in Silicon Valley for over a decade, and the most well-educated, with graduate degrees from both Berkeley Law School and Stanford’s Graduate School of Business, I have helped dozens of clients purchase high-end homes in Atherton, Woodside, Los Altos Hills, and Palo Alto. A large number of my clients will initially obtain loans on these properties, and historically the lender for homes over $20M was almost uniformly SVB or FRB. Similarly, the majority of my clients who purchased with all cash would then opt for a cash-out refinance, almost always with SVB or FRB.

Over the last few months, my buyers who have purchased their high-end homes with all cash are now evaluating which bank is the best fit to fill this vacuum in high-end lending. The following banks are the top choices I have found thus far:

Citi Private Bank – Currently, this is the bank that is most aggressively trying to take advantage of this unique opportunity to capture market share. A client who recently purchased in Atherton, and was planning on using SVB, was instead able to find a similar rate by forming an investment management relationship to subsidize a lower mortgage rate. SVB’s use of mortgages as a loss leader to form long-term relationships is being replicated at Citi Private Bank.

JP Morgan Private – While I was hoping that FRB would survive, when they did go under I was optimistic that they would be acquired by JP Morgan Chase. Despite having some of the best minds in the business, JP Morgan has been surprisingly weak in their wealth management division, yet they wisely realized FRB’s affluent client base as an ideal segue to expand their business. While JP Morgan has stated that they will close FRB, they are retaining the focus upon upper-end clientele and the existing branches will be centers for relationship formation. Michael Repka and I attended a seminar by JP Morgan Private Bank where they explicitly stated their goal of doing more loans and wealth management in Silicon Valley.  

Private Lenders – I have a network of private lenders who provide liquidity to clients to help facilitate trade-up buyers in need of capital for a purchase and then quickly pay back the loan once they close upon their former residence.

FinTech Startups – While less likely, FinTech startups such as Brex, who have greatly benefited from SVB and FRB’s demise, may shift their focus from providing liquidity to start-up employees to concentrating on serving their C-suite executives when purchasing a home.

While there is still uncertainty regarding what bank or entity will replace the dominant role FRB and SVB provided, I am encouraged that so many banks see the potential and seek to fill the void. With my focus solely upon buyers, I stay on top of every major bank and lending option to provide my clients with the optimal match based on their personal financial goals and constraints.