Like a lot of the rest of the world, I’ve been thinking about banks a lot recently. Many of the investors I’ve talked to have said “banks are off limits for me.” Perhaps that’s the right approach; banks are somewhat black box-y. They are basically confidence games that take short term money and magically use it to fund long term investments, and right now it appears confidence can disappear from any bank at any time. It really doesn’t matter how good your balance sheet is; if 50% of your deposits pull over night, you’re going to have to fire sale some assets, and when you’re ~10:1 levered (as most banks are), even a small haircut (which you’ll have to take in a fire sale) will lead to the equity being a zero.
what do you think of buffett and munger’s comments? they are kind of the banking experts and expressed a lot of concern that this isn’t close to being over.
In regards to PACW, "Deposit balances further grew ~$700M as of April 24. Total insured deposits, including accounts eligible for pass-through insurance, represented ~73% of total deposits as of April 24, up from 48% at December 31, 2022. Immediately-available liquidity stood at $12.4B,
which exceeded uninsured deposits of $8.1B, with a coverage ratio of 153% at March 31."
I'm also not a bank expert, but that seems solid to me. (I'm long 1500 shares PACWP) Also I was hoping to pick up some bonds in PNC, but decided not to since most of them are trading above par. So clearly the bond market is comfortable with PNC's prospects.
just stumbled on this, thanks for the detailed breakdown on banks! what are your thoughts on the potential release of more treasuries and the short term impact they could have on regional banks?
what do you think of buffett and munger’s comments? they are kind of the banking experts and expressed a lot of concern that this isn’t close to being over.
In regards to PACW, "Deposit balances further grew ~$700M as of April 24. Total insured deposits, including accounts eligible for pass-through insurance, represented ~73% of total deposits as of April 24, up from 48% at December 31, 2022. Immediately-available liquidity stood at $12.4B,
which exceeded uninsured deposits of $8.1B, with a coverage ratio of 153% at March 31."
I'm also not a bank expert, but that seems solid to me. (I'm long 1500 shares PACWP) Also I was hoping to pick up some bonds in PNC, but decided not to since most of them are trading above par. So clearly the bond market is comfortable with PNC's prospects.
I really enjoyed this piece. Thanks for writing it.
is this like when you suggested buying nat gas equities which then fell another 30%.....
NBN holder, here. And big fan of CEO Rick Wayne. Good piece, thanks for sharing.
just stumbled on this, thanks for the detailed breakdown on banks! what are your thoughts on the potential release of more treasuries and the short term impact they could have on regional banks?
Excellent read, thank you Andrew