Bufetico
Arli Renacido was trying to pay a bill for her grandmother when the screen told her the payment couldn’t be completed. The account was a joint one at Chase that she’d shared with her grandmother in the Philippines for fifteen years. She says a branch manager told her it had been flagged and didn’t explain much, and that a letter came about two weeks after she noticed the freeze. There was no suspicious activity, she says, and for about three months she had no access to money her grandmother depended on.
The I-Team at ABC7 Chicago reached out to Chase after that, and Chase released the $44,000. “And I was just like, ‘well, finally, just some movement,’” she told the station.
Chase told the station that protecting customers’ accounts is its top priority. Sometimes it spots a transaction that worries it and acts on it, the account terms allow that, and every bank does the same. A man in Lombard, Jim Gibson, had told the same reporter in October that Chase froze $42,000 of his for more than a month. Reading those two stories, I kept wondering where that $44,000 sat on the bank’s own books while she couldn’t touch it.
It sat under deposits, on the liabilities side, as money the bank owes. Frozen or not, the bank held it and the bank owed it back. That’s the normal state of a deposit, and that’s the difference between a bank and every other company I look at. For a shoe company, the cash in the bank account is the shoe company’s. For a bank, most of the cash is a customer’s, on loan until they ask for it.
Going through my own list, I found sixty-seven financial companies sitting among the two hundred names my tool ranked highest, out of close to thirty thousand. Financial companies are about one name in ten, so about nineteen of those two hundred would have been normal. Something was pulling them to the top, and any bank’s annual report shows you what it was.
JPMorgan’s profit, and its cash
JPMorgan Chase earned between $24 billion and $58 billion every year from 2016 to 2025. Over the same ten years, the cash from its operations, in its annual reports, was negative in four of them. Between its best year and its worst it swung by $254,901 million: plus $107,119 million in 2022, minus $147,782 million in 2025. So in 2025 the bank earned $57 billion and its operating cash flow was minus $148 billion, and in 2022 it earned $38 billion and the cash flow was plus $107 billion. There’s no relationship between the two lines.
For a normal company those two lines should move together. Profit is the accounting version of cash, cash is the version you can spend, and when they disagree for long, something’s going on and you want to know what. For a bank they disagree because “cash from operations” means something different when your business is holding other people’s money, Renacido’s included.
What moves the cash line in a bank
A bank’s operations are taking deposits, making loans and holding securities to trade. When a customer deposits money, the accountants file it under financing, the same drawer as borrowed money. The securities the bank holds for trading go under operations: put money into that pile and it’s cash going out, let the pile run down and it’s cash coming in. The loans it keeps go under investing, a section I’m leaving alone here.
So the operating cash line is mostly a record of the bank getting bigger and smaller. In 2020, JPMorgan’s deposits grew by $602,765 million in one year, because the country was flooded with money and a lot of it landed in bank accounts. In 2022 deposits fell by $136,895 million as that reversed. Those movements are enormous, and they have nothing to do with how well the bank runs. The operating line swings with the pile the bank holds for trading, and with the other balances that sit next to it in that section. Renacido’s account, or Gibson’s, or yours, is one drop in that. That’s why the profit line is the calm one here and the cash line is the noisy one, the reverse of a normal company. The calm line has an estimate inside it, though: how many loans won’t be paid back is management’s own guess, and that guess moves.
What my tool was doing with it
For most companies, my tool looks at the cash a business generates after paying for what it needs, and works out from there what the company might be worth. It has one assumption buried so deep that I’d stopped seeing it: that cash from operations belongs to the business.
Point that at a bank in a year when the trading pile, or one of the other balances in that section, happens to run down. The cash comes back through operations, and my tool sees an ocean of it, treats it as the company’s own, and hands back a value for the bank that’s far too high. That’s the sixty-seven companies. They were banks in years when those balances happened to be running down, measured by something that couldn’t tell the difference between a customer’s money and their own.
So what I do instead
I stopped. Financial companies no longer get a valuation from me at all. Where the number would have been, there’s a gray square, and a gray square beats a figure I know is wrong.
Banks can be valued. People have been doing it for a century with other tools: what the bank earns on the capital it holds, how much of its lending goes bad, what it pays for deposits against what it charges for loans. Cash generation isn’t one of them.
Where this breaks
I’ve thrown out a whole sector to fix a measurement problem. The better fix is a tool built for banks, and a gray square means I haven’t built it yet. I’ve also shown one bank, the largest, over ten years, and the picture is clear because it’s an extreme case. A small regional bank with stable deposits will show a much tamer cash line, and the mismatch will be less obvious there, which makes it more dangerous. There’s no telling from the outside which ones will look like JPMorgan, so I switched it off for all of them.
“Financial company” is a label, and the label comes from whoever files the paperwork, so it doesn’t always match what the business does. There are companies classified as financial whose cash flow does behave like an ordinary firm’s, and they’re gray now too. My method could have given them a figure, and now it doesn’t. Real estate companies were the case I looked at most carefully, because they also turn an unusually large share of their sales into cash. In their case the pattern turned out to be the business itself, renting things out, so they stay. The line between those two situations was a judgment call, and somebody else could draw it somewhere else.
The page Renacido’s money is on
On JPMorgan’s 2025 cash flow statement, the operating section ends at minus $147,782 million. Two sections down, in financing, the deposits line reads plus $153,168 million: customers’ money coming in during the year. At the end of 2025 JPMorgan held $2.6 trillion in deposits, and Renacido’s $44,000, frozen across the year end, would have been somewhere in that number.
Now go back up to the operating section, to a line under “net change in” that’s easy to skip: trading assets, minus $156,461 million. Growing the pile of securities the bank holds for trading took that much cash in the year, and on a cash statement, growing the pile counts as cash going out. The whole operating section comes to minus $147,782 million. That one line is minus $156,461 million.