US Regional bank stocks - PNC Financial, TFS - Truist, USB- USB Bank, MTB - M&T Bank etc

[Spekulatius]

Acquiring a bank from the FDIC (with backstops and after doing DD) has always been the better option for the acquirer, that is nothing new. I personally have not seen any recent deal with the FDIC  being intermediary that has not worked out well for the acquirer.

 

FRC was a zombie after the deposits left in March, they were just a Walking dead at that point. Any bank without deposit is a zombie.

[John Hjorth]

Personally I think when making judgements about transactions like this with FRC net assets it is easy post transaction [when the dust settles, or things continue to escalate] to come up with socalled thoughtful and rational considerations about the outcome.

 

The fact is that such process is extremely demanding and stressfull for all involved parties here, including involving many parties here. The issue here setting the game conditions is the time constraint, that builds up in the process. The outcome will never be anywhere near perfect - for any part involved.

 

Everybody involved have likely worked off their butts over quite long periods of time, and mistakes, errors and what do I know always happens when you are nearly out of time, deprived from sleep and rest, tired and overworked, the worst is if one in this process has forgotten to take care of the intake of real, good energy [good, healthy food] and to keep the fluid reservoirs intact.

 

This not like Mr. Buffett acting on a socalled incoming call or Fairfax making a friendly acquisition.

[backtothebeach]

Not pretty
 

 

[Dalal.Holdings]

https://www.cnbc.com/2023/05/03/pacwest-falls-40percent-after-hours-on-report-bank-is-weighing-sale.html

 

Quote

PacWest falls more than 50% after hours on report bank is considering strategic options

 

Here we go. As I stated earlier...now that PacWest has announced it is exploring a sale, the market has figured out that receivership is the likely scenario (because why would anyone want to buy them outside of receivership?).

 

By quickly selling off Signature, SVB, FRC on sweetheart terms to buyers (JPM, FCNCA, NYCB stock prices are all significantly UP for a reason since their sweetheart deals with the Feds...), a message has been sent to any would be buyers of struggling banks...

 

Remember: all banks are in a confidence game and no bank can withstand a flight of deposits from a confidence scare and the collapse in equity price of PACW and PACWP signals that lack of confidence and panic (George Soros would call it Reflexivity). It's not just the bad banks that will get caught up in the maelstrom...

 

Like I said, Feds may have saved money by selling off SVB/FRC/Signature on sweetheart deals, but the overall cost to the FDIC/gov't may prove much higher as a cascade of banks can now fail that otherwise would not have--many of which were not "bad banks" like SVB/FRC...

 

 

Edited May 3, 2023 by Dalal.Holdings

[Dalal.Holdings]

Even Billy Boy Ackman gets it

 

Quote

Banking is a confidence game.  At this rate, no regional bank can survive bad news or bad data as a stock price plunge inevitably follows, insured and uninsured deposits are withdrawn and 'pursuing strategic alternatives' means an FDIC shutdown over the coming weekend. And there is no incentive to bid until Sunday after the failure. 

 

[formthirteen]

On 5/2/2023 at 8:48 PM, Dalal.Holdings said:

And I’m out now !

 

You're a legend and my hero.

[Spekulatius]

FHN deal terminated:

https://finance.yahoo.com/news/td-bank-first-horizon-mutually-100000980.html

[LC]

I took a loss on the FHN deal. Wild how external forces (industry in disrepair, regulators with axes to grind) prevents two willing companies from merging. C’est La vie. Gratefully a sub 1% flyer position.

[Spekulatius]

FHN looks like a decent bank. At sub $8, I am a buyer. I don't think there is anything inherently wrong with it.

 

My $USB is getting wrecked here.

Edited May 4, 2023 by Spekulatius

[dealraker]

22 minutes ago, Spekulatius said:

FHN looks like a decent bank. At sub $8, I am a buyer. I don't think there is anything inherently wrong with it.

 

My $USB is getting wrecked here.

Spek, particularly at my age now, you run circles around me as to mental energy and awareness.  Sideline: You can imagine what I think of our presidential candidates!  

 

In late March I sold out of EWBC and CATY when selling other things to fund a land purchase.  I'd held EWBC for 23 years and CATY for 30.  They were not relative big holdings but had grown into some significance.

 

I hold BAC and a tad of WFC and that's it.  I was a bank analyst (for a few years in early life), the fragile nature of banks just doesn't interest me and I'm not energized enough to spend time with it.

 

But it seems to me, and maybe you can elaborate, that if all these banks are in a state of total confusion it would have some significant effect on business and the economy.  How much?  How much do you think the banks are in guarded mode with little new business being accepted?

 

 

Edited May 4, 2023 by dealraker

[Spekulatius]

1 minute ago, dealraker said:

Spek, particularly at my age now, you run circles around me as to mental energy and awareness.  Sideline: You can imagine what I think of our presidential candidates!  

 

In late March I sold out of EWBC and CATY when selling other things to fund a land purchase.  I'd held EWBC for 23 years and CATY for 30.  They were not relative big holdings but had grown into some significance.

 

I hold BAC and a tad of WFC and that's it.  I was a bank analyst, the fragile nature of banks just doesn't interest me and I'm not energized enough to spend time with it.

 

But it seems to me, and maybe you can elaborate, that if all these banks are in a state of total confusion it would have some significant effect on business and the economy.  How much?  How much do you think the banks are in guarded mode with little new business being accepted?

 

 

I think the net effect of this "confusion" besides the banking itself is that it results in credit tightening for small business (served by mostly smaller banks), commercial and in particular commercial real estate lending. This all may boil down to a 0.25-0.5% tightening on top of the tightening that the Fed anyways. That's why I think the Fed should have stopped tightening because the effect of both the bank quantitative tightening and the risk rate increasing compounds.

 

I think Powell is in a tough spot. The economy is still humming along, labor market super strong and the inflation still not budging all that much - for example both residential RE strong, used car value rising and energy/gas/fuel prices rising for most.

 

FWIW, I don't think there will be much effect on residential lending.

[dealraker]

1 minute ago, Spekulatius said:

I think the net effect of this "confusion" besides the banking itself is that it results in credit tightening for small business (served by mostly smaller banks), commercial and in particular commercial real estate lending. This all may boil down to a 0.25-0.5% tightening on top of the tightening that the Fed anyways. That's why I think the Fed should have stopped tightening because the effect of both the bank quantitative tightening and the risk rate increasing compounds.

 

I think Powell is in a tough spot. The economy is still humming along, labor market super strong and the inflation still not budging all that much - for example both residential RE strong, used car value rising and energy/gas/fuel prices rising for most.

 

FWIW, I don't think there will be much effect on residential lending.

Yep.

[formthirteen]

2 hours ago, Spekulatius said:

FHN deal terminated:

https://finance.yahoo.com/news/td-bank-first-horizon-mutually-100000980.html

 

IDFB deal termination next?

[KJP]

https://www.businesswire.com/news/home/20230504005831/en/Western-Alliance-Bancorporation-Issues-Statement-Disputing-Recent-Financial-Times-Article?utm_campaign=shareaholic&utm_medium=twitter&utm_source=socialnetwork

[Peregrine]

12 minutes ago, KJP said:

https://www.businesswire.com/news/home/20230504005831/en/Western-Alliance-Bancorporation-Issues-Statement-Disputing-Recent-Financial-Times-Article?utm_campaign=shareaholic&utm_medium=twitter&utm_source=socialnetwork

 

Wow. I wonder how much of this is being manipulated by the short and distort artists.

[Peregrine]

And just like that, FT deleted their original story. Pretty slimy if they put false speculation out there to benefit some shorts.

[Dalal.Holdings]

Anyone know who regulates California/Western U.S. Banks ? Anyone ? Bueller ? Bueller ?

 

No bank wants to be rumored to be up for sale now because "For Sale" means the FDIC will taken on losses, wipe out common/pref/bonds and give the buyer a sweet deal.

[treasurehunt]

6 hours ago, Spekulatius said:

FHN looks like a decent bank. At sub $8, I am a buyer. I don't think there is anything inherently wrong with it.

 

My $USB is getting wrecked here.

 

Yeah, USB is taking it on the chin.

 

One bit of good news is that two directors have bought shares recently. Scott Wine bought 30K at $32.85 per share; Alan Colberg bought 10K at $34.14 apiece.

 

https://www.marketbeat.com/stocks/NYSE/USB/insider-trades/

[Paarslaars]

TFC taking it hard as well...  just collatoral damage so no worries in the long run.

Edited May 4, 2023 by Paarslaars

[Spekulatius]

52 minutes ago, Paarslaars said:

TFC taking it hard as well...  just collatoral damage so no worries in the long run.

TFC does have an outsized security portfolio with substantial unrealized losses. Management seems so so. I like them less than some other superregionals like PNC or USB but what do I know.

 

I do think that TFC has the deposit base so sustain their assets.

Edited May 4, 2023 by Spekulatius

[Peregrine]

Looks like regulators finally waking up: https://www.reuters.com/markets/us/us-officials-assessing-possible-manipulation-banking-shares-source-2023-05-04/

[lnofeisone]

17 hours ago, Spekulatius said:

TFC does have an outsized security portfolio with substantial unrealized losses. Management seems so so. I like them less than some other superregionals like PNC or USB but what do I know.

 

I do think that TFC has the deposit base so sustain their assets.

TFC was proactive 2 or 3 months back. They called me and offered up various CD deals, etc. I talked to the banker there and it was a high priority. I think they were smart enough to up their deposits and lock some in. 

[Ulti]

https://www.bizjournals.com/atlanta/news/2023/05/04/banking-chris-marinac-small-business-lending.html
 

local lending in Atl “ more of a hassle “

[adesigar]

Is there a better option than IAT or KRE to buy a basket of these banks. 

[Sweet]

Some very suspect price action in some regionals - particularly PACW and WAL.

 

The after hours drop in both PACW and WAL after Powell was speaking made no sense, the rate hike was telegraphed.  Looked like a coordinated attack in low liquidity post-market.

 

And today both have a strong rebound on no news, only for us to find out later there was talk of a short selling ban.

Edited May 5, 2023 by Sweet