FDIC approval advances lending ambitions as broker-dealer pushes deeper into banking
Edward Jones has moved a significant step closer to launching its own US federally insured bank, reviving a strategy years in the making.
With the firm seeking greater control over lending economics and client cash flows in an increasingly competitive wealth management market, it has welcomed the Federal Deposit Insurance Corp. and the Utah Department of Financial Institutions conditionally approval of the creation of Edward Jones Bank, a Utah-chartered industrial loan company expected to focus primarily on securities-based lending funded through brokerage client deposits.
The decision caps a multiyear effort that included a withdrawn 2020 application and a renewed push last year, part of a broader shift by the St. Louis-based broker-dealer toward integrating investment advice with everyday financial services. Edward Jones’ parent company reapplied for the charter in 2025 after abandoning its earlier bid in 2022 following discussions with regulators.
Regulators concluded the proposal satisfied statutory approval standards but imposed several conditions. Among them, the bank must maintain a minimum 9% tier-one leverage ratio and secure capital and liquidity support agreements from affiliated entities before deposit insurance becomes effective.
The approval will lapse if the institution is not established within 12 months unless regulators grant an extension.
Edward Jones has said the bank plans to open by early 2027 and will be headquartered in the Salt Lake City area.
Lending first, retail banking later
Rather than building a traditional branch bank, Edward Jones Bank will initially center on expanding credit tied to clients’ investment portfolios.
The institution will absorb the firm’s existing reserve line of credit portfolio — currently available in 47 states and Washington, DC — and extend availability nationwide. It will also gather deposits through the firm’s insured bank deposit program and issue certificates of deposit directly to clients.
FDIC staff said the proposed business model relies on sweep deposits sourced from brokerage relationships to fund securities-based loans across the country.
Managing partner Penny Pennington framed the approval as a pivotal moment for the firm’s long-term evolution.
“This approval marks an exciting moment in Edward Jones’ deep century-long history of helping people achieve financial fulfillment,” she said.
David Chubak, head of wealth management and field management, pointed to changing client expectations as a key driver behind the strategy.
“For over a century, clients have relied on Edward Jones financial advisors for trusted investment and retirement guidance, and we recognize when client needs are shifting,” Chubak said. “They want a more complete view of their financial lives. With the approval of our bank application, we can now deliver even better on what our clients are asking for.”
Part of a broader banking buildup
The bank approval builds on several years of incremental moves into banking services.
In 2023, Edward Jones said it planned to introduce checking and savings accounts through partnership with Citi after internal research found that 54% of clients wanted coordinated guidance across saving, spending and borrowing decisions. However, Citi later ended its third-party banking services, leading to Edward Jones partnering with US Bank in 2024.
The firm already offers margin lending, securities-based credit lines and cash-management tools, and has expanded partnerships to deliver credit cards and co-branded checking accounts as part of a wider push to deepen client relationships.
Even with its own bank, those partnerships are expected to remain part of the strategy. Edward Jones said the new institution will complement existing arrangements supporting clients’ everyday spending needs.
Industry backing — and scrutiny
Industrial loan companies allow commercial firms to own FDIC-insured banks without becoming traditional bank holding companies, a structure that has drawn ongoing debate among regulators and banking trade groups.
Supporters argue the model expands access to regulated banking services. The National Association of Industrial Bankers praised the approval, saying Edward Jones met rigorous supervisory standards.
“The FDIC approval process confirms that Edward Jones has met the highest standards of safety, soundness, and consumer protection in banking,” said Frank Pignanelli, executive director of the group. “Because of Edward Jones’ strong presence in many underserved areas across the country, this approval will help promote financial inclusion and banking access by bringing fully regulated banking and financial services to more of the people who need them most.”
For Edward Jones, regulatory approval marks only the beginning.
The firm is betting that deeper control over lending and deposits — combined with advisor relationships spanning thousands of communities — will encourage clients to consolidate more of their financial lives under one roof.
Whether advisors embrace the expanded capabilities and clients move additional assets onto the platform will ultimately determine whether the long pursuit of a bank charter reshapes the competitive positioning of one of the industry’s largest independent broker-dealers.
