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

[RedLion]

18 hours ago, dealraker said:

Won't affect Brookfield...

 

 

 

18 hours ago, Gregmal said:

Actually it’ll be good for them! 

Plan value to the moon

[RedLion]

14 hours ago, Spekulatius said:

The confidence termites chewing on foundations of the banking system is not a good thing.  

I’m going to steal this metaphor and my friends will think I’m genius. 

[whatstheofficerproblem]

13 hours ago, LearningMachine said:

How trustworthy is the table above from twitter?

 

Don't know about the others, but checks out for FRC, 10-K pg. 119;

Total Deposits = $176.4 Billion

Uninsured = $119.5 Billion

Estimates of uninsured deposits are based on the methodologies and assumptions used in our Consolidated Reports of Condition and Income (“Call Report”) filings.

[Spekulatius]

USB has the infamous toilet flush chart formation - down ~8.5% today. Iwonder what's up. I don't think that they are worse than PNC or BAC in terms of what they did with their security portfolio. They do have a lower CET1 ratio of 8.4% due to paying partly cash for the MUFG acquisition.

 

Bought a few more shares today, but won't add more.

 

Maybe it's this (shelf registration):

https://www.sec.gov/Archives/edgar/data/36104/000110465923031197/tm238798-1_s3asr.htm

Edited March 17, 2023 by Spekulatius

[benchmark]

3 hours ago, Spekulatius said:

USB has the infamous toilet flush chart formation - down ~8.5% today. Iwonder what's up. I don't think that they are worse than PNC or BAC in terms of what they did with their security portfolio. They do have a lower CET1 ratio of 8.4% due to paying partly cash for the MUFG acquisition.

 

Bought a few more shares today, but won't add more.

 

Maybe it's this (shelf registration):

https://www.sec.gov/Archives/edgar/data/36104/000110465923031197/tm238798-1_s3asr.htm

I bought more USB as well. I think they have good management. I sold my prior batch in the $60s early last year, happy to buy some today.

[sleepydragon]

 

 

[KPO]

5 hours ago, Spekulatius said:

USB has the infamous toilet flush chart formation - down ~8.5% today. Iwonder what's up. I don't think that they are worse than PNC or BAC in terms of what they did with their security portfolio. They do have a lower CET1 ratio of 8.4% due to paying partly cash for the MUFG acquisition.

 

Bought a few more shares today, but won't add more.

 

Maybe it's this (shelf registration):

https://www.sec.gov/Archives/edgar/data/36104/000110465923031197/tm238798-1_s3asr.htm

Finally had a moment to read this entire thread, which is very useful BTW.  Going into it USB was a bank that made sense to me as well, but does anyone have thoughts on micro cap local banks like CFFN? They’re clearly not the most cost efficient operation, but how do you lose money loaning to predominantly Kansas & Missouri homeowners? Also, they have about the lowest uninsured deposit base that I’ve observed. 

[Spekulatius]

2 hours ago, KPO said:

Finally had a moment to read this entire thread, which is very useful BTW.  Going into it USB was a bank that made sense to me as well, but does anyone have thoughts on micro cap local banks like CFFN? They’re clearly not the most cost efficient operation, but how do you lose money loaning to predominantly Kansas & Missouri homeowners? Also, they have about the lowest uninsured deposit base that I’ve observed. 

You won’t go broke but how do you make money buying a bank with a ~5% ROE at book value? TFSL is a similar play (sort of a failed mutual thrift MHC conversion where the founders son controls the business). At least with TFSL, you get a great dividend.

[KPO]

1 hour ago, Spekulatius said:

You won’t go broke but how do you make money buying a bank with a ~5% ROE at book value? TFSL is a similar play (sort of a failed mutual thrift MHC conversion where the founders son controls the business). At least with TFSL, you get a great dividend.

Appreciate the idea. I’ll look at it further, but on a quick screen it looks like it has an ROE of ~5% at 2X book (compared to CFFN at 5% at 1X book). CFFN doesn’t screen well on dividends until you look at the specials. I believe they’ve paid more than 120% of the current share price in dividends in the last 10 years. 

 

 

 

[John Hjorth]

11 hours ago, Spekulatius said:

USB has the infamous toilet flush chart formation - down ~8.5% today. Iwonder what's up. I don't think that they are worse than PNC or BAC in terms of what they did with their security portfolio. They do have a lower CET1 ratio of 8.4% due to paying partly cash for the MUFG acquisition.

 

Bought a few more shares today, but won't add more.

 

Maybe it's this (shelf registration):

https://www.sec.gov/Archives/edgar/data/36104/000110465923031197/tm238798-1_s3asr.htm

 

This market movement on this Friday appears pretty wild. My monitor tells me -9.38% for the day. But a lot of bank stuff moved 3% - 4% downwards this Friday. -Perhaps just a result of advancing panick?

 

And then there is the fact that Mr. Buffett has been offloading this bank during the last three quarters, by now almost entirely, after owning it for ages [I haven't checked for how long]. To me, that has been a mystery since the reduction of the position started at Berkshire.

 

I looked at it - and M&T Bank - some months ago. Both appear well run with each their own raison d'être in the US banking landscape.

 

USD 462 billion in deposits YE2022. Let's hope this not "yet another one - counting".

[james22]

11 hours ago, sleepydragon said:

 

 

 

*crosses fingers*

[Castanza]

Semi useful chart 

 

[sleepydragon]

3 hours ago, james22 said:

 

*crosses fingers*

I have a feeling WEB is going to say no to all of them. He sold all his bank stocks a few quarters ago

[james22]

16 minutes ago, sleepydragon said:

I have a feeling WEB is going to say no to all of them. He sold all his bank stocks a few quarters ago

 

That only makes me believe he'll drive a hard bargain.

 

If this is to be his swan song, I'd hope he'd make it one that really benefits BRK rather than "saves" the system.

[Gregmal]

I could totally dig Berkshire owning like 20% of the entire regional banking sector 

[frommi]

I know macro is pretty much ignored in this forum, but is nobody afraid that we see a recession in the next 6-12 months? My systems tell me there is a >70% chance for that and i doubt that bank stocks bottom before we even have seen  the start of the recession. I stay far away from banks for now because cyclical stocks tend to look very cheap at the top of the cycle. If you really want to dabble here i would just buy quality, at least thats the lesson i took from previous crisis.

[Spekulatius]

4 hours ago, Castanza said:

Semi useful chart 

 

It not really that useful of a chart.

FRC and I believe PACW have tons of fixed rate mortgages on their books. FRC has ~$100B in fixed rate mortgage and continues to write them aa interest rate rise. crazy. I think they are worth less than 85c on the $ and that in addition to losses on securities. None is accounted for on the chart.
 

Both BAC and TFC look pretty bad on unrealized losses on securities as well, but have very stable deposit basis.

 

It’s not easy to determine which one is going to skate buy and which one is going to have issues.

 

Factors are Tier 1 capital levels, stability of deposits (% uninsured is just one factor here), unrealized losses as a percentage of capital, profitability,% of loan with variable vs fixed interest rates, business diversity , interest rate hedges, management.

 

Ultimately everything boils down to keeping the deposit base stable, but of course that outcome is a function of above.

 

FWIW, MTB looks pretty solid here and indeed has little unrealized losses,  but they have high NPA and excessive (imo) commercial real estate exposure (3x equity).

 

Edited March 18, 2023 by Spekulatius

[Spekulatius]

1 hour ago, Gregmal said:

I could totally dig Berkshire owning like 20% of the entire regional banking sector 

I don’t think he can do all that much. He would have to convert BRK in a bank holding company if he gets a control position in another bank or maybe even sooner and I doubt he want that.

Edited March 18, 2023 by Spekulatius

[Spekulatius]

15 hours ago, KPO said:

Appreciate the idea. I’ll look at it further, but on a quick screen it looks like it has an ROE of ~5% at 2X book (compared to CFFN at 5% at 1X book). CFFN doesn’t screen well on dividends until you look at the specials. I believe they’ve paid more than 120% of the current share price in dividends in the last 10 years. 

 

 

 

I think they have returned most of their excess capital, so the special dividend can’t continue at this level going forward. Their book value is lower now than it was 10 years ago and their balance sheet a bit larger.

[frommi]

What are your thoughts on OZK at the moment? They also look pretty solid on Burry's chart and had pretty remarkable shareholder returns in the past.

[SharperDingaan]

WEB just does a version of the GS thing. A very large convertible (>20% interest on a FD basis), that includes a (fed guaranteed) buyback/interest over X years. As/when the bank progressively buys back at the convertible value, the BRK FD interest declines; otherwise in year X the fed takes out at least enough to keep them below the limit.

 

If the other players also have the deal .... and a portion of their deposits rolls into the convertible ... it's a 'rescue' that comes from 'outside' the system .... Biden can keep his promises .... and FRC instantly becomes one of the strongest banks in the land.

 

We also get a nice bump in the price of CS next week 

 

Fingers crossed.

 

SD

Edited March 18, 2023 by SharperDingaan

[Spekulatius]

9 minutes ago, SharperDingaan said:

WEB just does a version of the GS thing. A very large convertible (>20% interest on a FD basis), that includes a (fed guaranteed) buyback/interest over X years. As/when the bank progressively buys back at the convertible value, the BRK FD interest declines; otherwise in year X the fed takes out at least enough to keep them below the limit.

 

If the other players also have the deal .... and a portion of their deposits rolls into the convertible ... it's a 'rescue' that comes from 'outside' the system .... Biden can keep his promises .... and FRC instantly becomes one of the strongest banks in the land.

 

We also get a nice bump in the price of CS next week 

 

Fingers crossed.

 

SD

I think FRC gets sold for one $. They are deeply insolvent if you account for the fair value of their mortgages and taking into account for losses on securities. The mortgage are the far larger problem. My guess is that “equity” is probably around  -$10B.

 

I think equity preferred will be wiped out and  bonds get a haircut or get wiped out as well. The deposit insurance likely need to bear some pain.

 

WEB won’t do anything with FRC - if he does something at all he will buy more BAC or possible get involved in some preferred deal with another bank.

Edited March 18, 2023 by Spekulatius

[yesman182]

15 minutes ago, Spekulatius said:

I think FRC gets sold for one $. They are deeply insolvent if you account for the fair value of their mortgages and taking into account for losses on securities. The mortgage are the far larger problem. My guess is that “equity” is probably around  -$10B.

 

I think equity preferred will be wiped out and  bonds get a haircut or get wiped out as well. The deposit insurance likely need to bear some pain.

 

WEB won’t do anything with FRC - if he does something at all he will buy more BAC or possible get involved in some preferred deal with another bank.

Why do you think open market purchases in these stocks are out of the questions for WEB? Seems like he could get back in PNC and USB is prices deteriorate another 30% or so. 

[SharperDingaan]

Keep in mind there will be no realized MTM losses if they stay alive, and unrealized MTM losses will be a lot lower six-months past the current market disruption. There is a need to demonstrate the resilience of US regional/money-centre banking structure, and a public non-CB solution (albeit with a little help).

 

The reality is that 2-weeks ago the US Federal Reserve system thought the US banking structure optimal, and has maintained it for years. Collapse FRC and you also collapse the viability of US regional banking .. not in the Federal Reserve System interest. A similar version of the dynamic is in force with the Swiss National Bank and CS.

 

When everyone needs a face saving way out ....

 

SD

[Gregmal]

LOL the system was sound as its ever been, until the guys regulating it went rogue.