Spekulatius

@Dalal.Holdings Thanks for the summary, i was aware of the insurance transaction. It is interesting that the insurance brokerage business is worth a substantial part of TFC market cap. I followed TFC when they were BBT for a while and never really liked management too much as I think they overpromised and underdelivered. That said, the shares seemed habe taken quite a beating for a bank with this quality and particular the demographic tailwind in their operating area.

@CorpRaider I felt the MTM losses were underreported at that time, but it’s now that it got everyone’s attention, it should not be the sole focus. I think the possibility to pledge securities with the Fed goes a long way to alleviate bank runs. If we indeed get more bank runs, I expect the limits on deposit insurance to get raised, because I think the Fed will do everything to protect banking from a meltdown because it would cause a meltdown of the economy with unthinkable consequences. As far as an ownership is concerned, I own (and added recently) to USB and started positions in TFC and PNC. I do think that PNC has better management than TFC, but TFC is nicely positioned in the sunbelt, which gives them an organic growth advantage. I believe the super- regionals should be able to handle any crisis just as well as the mega banks. One of my biggest concerns related to macro is commercial real estate, especially office and to a lesser degree retail. Smaller banks, but also larger banks have heavy exposure to real estate lending and the interest rate changes are going to lead to lower valuations here.

I think you can’t look at the asset side of a bank in isolation without looking at the liability side. The issue with mark to market aside, the simple fact remains that banks make more money at higher interest rates than with ZIRP, because NIM tends to go up, up to a certain point. That said, the deposit run is a risk, but we are not exactly in unchartered water with 4% interest rates either. Personally, I like the super- regional banks better than the merge banks with an investment bank attached (JPM, BAC , C) but I do think that at least JPM achieves some synergies having both, the rest I am not so sure about.

Who is black? I got to get myself tested.

This is the thread to discuss US regional bank stocks. The SIVB and Signature bank failure has caused a decline in regional bank stocks that I think is a buying opportunity. Let’s discuss.

I don’t think so. This would be quite a statement actually. I don't recall them putting out hard numbers on housing valuation.

So what fucks the poor (however you define it) more? a) 5% unemployment and 2 % inflation or b) 5% inflation and 2% unemployment? Quite frankly, it is not clear to me. I think the middle class is fucked more by b).

I think WFC is just too kneecapped plus their online banking still sucks. I would rather go with regionals like PNC or TFC or USB (bought a bit of all three today). I just don’t think it has much of a chance to perform very well.

I sold $CATY for a quick flip. Sad to let here go, but bought other banks stocks from the proceeds. ($PNC, $TFC, more $USB). I think the super regionals and perhaps BAC is the way to invest, or gamble in stuff like $WAL

5% unemployment and 2% inflation is better than 5% inflation and 2% unemployment. There I said it.

New position in $LUV (starting out small). Edit - bought starters in regional bank stocks $PNC and $TFC

The same could be said for any other bank. CATY clients are chinese individuals and small business. They have established relationships with most customers. I don’t even think that 1.86% criticized assets is all that high given their focus on small business operating in urban centers. Most of their loans are floating rate, so further interest rate rises should not hurt so much even if they have to raise deposit interest rates (which they started doing). I do think that their deposit Beta moved closer to one, so further rises interest rates won’t do them much good.

I am sure the new CEO has a great time on his first day on the job.

The Fed may have asked JPM nicely. I think JPM will end up owning them.

SBNY wasn’t technically insolvent. They had losses from treasuries of about ~$2.5B, if I see this correctly, with $6.4B in equity. They had issues with liquidity (mostly large business accounts that are uninsured) and a taint from their crypto involvement that lead to a bank run. They have a liquidity problem, not a solvency problem. There are a lot of banks that can fail as well now, after SBNY fails. What we are seeing here are large scale viral nature bank runs. Game stop time for banks.

The failure of Signature Bank ($SBNY ) is scarier from a bank investors perspective than SVIB’s. SBNY had issues, but they weren’t insolvent even accounting for losses in their security portfolio. it was simply the liquidity shortfall from bank run that did them in. The bank run was caused by reputational damage from crypto and liquidity strain because crypto deposits were leaving, then came the know können on effect from SIVB. This wasn’t a bad bank per say, it neither was SIVB.

I think the bailout for depositors was done to prevent sudden deposit flight like the one who did SIVB in. There were likely many request from depositors the last few days to move fund away from banks that looked like they are having issues. With financials, perceived issues can very quickly become real issues due to reflexivity. Things can become much viral much faster than even 14 years ago during the GFC and it’s also a bit easier to move funds out. These frictionless systems can move very quickly in a herd like fashion even with many small participants as the GME short squeeze and similar events have shown.

I am a bit surprised that Signature bank is shut down. They clearly were on the ropes, but that was awfully quick. Maybe we should tax crypto to pay for this mess.

This is not Joe Sixpacks bank. Joe is protected anyways up to $250k and not many average people have more than that in a single bank account. These are corporation and VC firms who have CFO’s who made decisions. It was also Peter Thiel who literally cried fire and instigated a bank run here. are is well known as a libertarian. So, I am not sure sob stories “we couldn’t have known better “ are appropriate here. Feels a bit like trying to buy insurance after you had a car crash. In any case, the depositors will probably lose 20% or thereabouts above 250k. Everything below 250k is insured and can be paid out, so it’s not like Mondays payroll for a small form is in jeopardy here. Since liquid assets (even after haircuts ) are a bit more than 50% of the balance sheet, about 50% of deposits should be available very quickly (next week) with probably the other 30ish percent being paid out in weeks or so, all without rescue package. It’s not quite as catastrophic as it’s made out to be. The FDIC is government sponsernd but works like a Mutual insurance cos that banks need to pay in. If coverage is increased, then the contributions need to increase too, there is no free lunch.

I don’t think Berkshire is going to touch SIVB (too messy, he needs to replace management etc) but I think he might get some phone calls from other bank CEO’s that want to raise capital quickly. I am sure he is open to preferred deals with equity kickers with the right bank. SCHW might be a good bet. Berkshire not just get money quickly without fuzz, but also the seal of approval from Omaha, which is equally valuable.

Why would companies tap their revolvers? They only do this if they themselves are in a liquidity crunch. The bigger risk is deposit runs, Imo. I think those are unlikely, but there are few banks with strained liquidity and narrow focus like PACW that may have to do something.

This gal wasn’t the head of risk management. Looks like she was head of risk management for the UK sub which had little to do with the blowup. Head of risk management was Laura Izurieta, which came from Capital One and apparently had a carrier in banking.

Long list of filing on 3/10/2023 regarding SIVB. companies that held cash are RBLX, RKLB, ROKU, SGMO https://www.sec.gov/edgar/search/#/q=Silicon%20Valley%20Bank&dateRange=custom&startdt=2023-03-09&enddt=2023-03-11 Also, crypto of course involved with a stable coin failure: https://www.wsj.com/articles/crypto-investors-cash-out-2-billion-in-usd-coin-after-bank-collapse-1338a80f?mod=hp_lead_pos1

LOL, how many people actually read 10-K’s? I bet less than 1% of the people investing or even less than 10% of the people claiming to do a lot of reading when investing. To be fair to the banks, you need to look at both the asset as well as the liability side to get the full picture.

During the last financial crisis, E*Trade got into trouble, because they also started a banking sub and made it easy to get home equity loans. They had some toxic looking assets on the balance sheet that they could work out over time, but it does not take much for the customers to get running, especially since brokerage is very commoditized product with low switching costs. I guess these things repeat. Schwab is probably fine here, but what I don’t get is why even take a chance? Why not just create a short treasury ladder instead of going for long duration bonds for an extra 1% or so yield.