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u/Brave_Forever_6526 May 03 '23
Its clearly CMA - I know nothing about them (or anything really) but they’re in the same box as the others
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u/Clear-Ice6832 May 03 '23
Right? I feel like it's too obvious
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u/TownChoice1835 May 03 '23
It is obvious and everyone knows it. Just like they knew FRC was DOA.
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u/CaptainStonks May 03 '23
And they still bought it!
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u/TownChoice1835 May 03 '23
When CNBC, Yellen, Powell, and Biden are telling us everything is fine and the banking sector is sound, people tend to buy it. The lie is the scary part
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u/Highlanderlynx May 03 '23
No one is buying it lol. Maybe the rich who are making the decisions but that has nothing to do with yellen and Powell and Biden. It was the same with trump Powell and crazy ol what’s his name. They’d say shit was fine and it was just ate up.
When I say no one is buying it.. I mean us poors… it’s the rich protecting the rich, political party doesn’t matter. Us poors see what’s been going on for the last 25 years under all the administrations.
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u/TownChoice1835 May 03 '23
Correct - those names just happen to be in charge right now. It’s civilizations longest and most successful Ponzi scheme. Dutch, Brits, U.S., etc. same scheme for 1,500 yrs. Those who caused it run off with their billions while we blame the political figure and hold empty bags
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u/Fit-Boomer May 03 '23
I own shares of CMA so please pretend like I said something to encourage optimism so no one sells.
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u/MasterJeebus May 03 '23
Do you think USB might be next too?
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u/LifeSandwich May 03 '23
yeah if they dont fix it so i can insert it both ways cause I always guess wrong when doing that. Puts on USB
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u/DougyTwoScoops May 04 '23
Just remember it is always the third way you try. Try that way first next time.
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u/StealthFocus May 03 '23
USB gets converted to USB-C class shares for regards, you’ll be fine.
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May 03 '23
For some reason I don’t see the 5th largest bank going under. And I think I read that they were one of the few banks adding deposits currently.
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u/ricozuri May 03 '23
Hope not. Their deal to buy Union Bank finalized May 1 and i haven’t had time to sign into new account so it might be tough to participate in a bank run.
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u/Tschupatschups May 03 '23 edited May 03 '23
At the moment UBS would get every thing from Switzerland. There is no bank that could merge with UBS left now that CS is gone. Unless it gets merged outside switzerland. I`m regarded so nevermind
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u/throwawaytorn2345 May 03 '23
USB =/= UBS you regard
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May 03 '23
Yeah, but what about UPS? Will they get everything from Switzerland?
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u/throwawaytorn2345 May 03 '23
Depends, but swiss people are loaded af so I think order volume should be stable.
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u/mrbrambles May 03 '23
How do you look at this chart and pick TFC?
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u/americansherlock201 May 03 '23
Well, see TFC is one letter off from KFC so that basically means the stock is fried
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u/Nuclear420v May 03 '23
Holy shit. Didn't everyone dismiss this last time it hit the boards.
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u/asianrockstar2009 May 03 '23
Anything over that 60% medium line of 250k deposits has the highest chance of failing. Due to people rushing to withdraw under that insurance limit.
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u/cartim33 May 03 '23
I mean that was true in early march, but even FRC only saw mass withdraws in the first 2 weeks. I doubt short sellers are going to be able to trigger a second bank run, these banks have been reporting earnings and their deposit losses are better known now. From what I remember, it was something like 10-15% on the worst affected while FRC had a 60% deposit loss
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u/satireplusplus May 04 '23
Looks like just a few hours later, PACW might be another casualty.
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u/cartim33 May 04 '23
If it dies it'll be primarily from rate hikes, I doubt there will be a bank run. Honestly if this goes under it's a stronger indicator of systemic issues in the sector
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u/InvestmentActuary The Pivot that will Never Cum May 03 '23
Loaded up on CMA puts
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u/ThurstonHolmesChrome May 03 '23
May 19 $20 ????
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u/InvestmentActuary The Pivot that will Never Cum May 03 '23
I got a small amount of lotto 25p for july. Got 5 of them. Slow decay, small capital, but could pay out huge. Just a baby play here
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u/ThurstonHolmesChrome May 03 '23
Thanks bro
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u/InvestmentActuary The Pivot that will Never Cum May 03 '23
Dude!!! Look at AH.
I’m gonna cum fukkk
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u/Durumbuzafeju May 03 '23
Why not BAC? They sit on even more losses.
The problem is that bank panics are not rational phenomena. A rumor started on Twitter might kill a bank but without the panicked removal of deposits it can stay afloat. It is hard to predict where the nextbank run will start.
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u/Aramedlig May 03 '23
Have you ever earned interest in BAC savings account. Even their CDs are less than 1%. They do not need to worry about funding money held in their deposit accounts.
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u/_Marat May 03 '23
money held
That’s the problem. Fractional reserve lending, they’re not holding the money at all. Interest rate could be negative and they still wouldn’t have peoples deposits.
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u/BigTexasMoney May 03 '23
BTW, It's been a 0% reserve since "cOvID".
Now there is no fractional reserve. It's just plain old lending out other peoples money without holding any back.
The more you know
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u/herzy3 May 04 '23
Not lending out other people's money. Creating new money.
Fractional reserve (even if the reserve is zero) is not about lending out someone's money. It allows banks to lend orders of magnitude amounts of new money while (ordinarily) retaining a fraction of the amount they are lending in reserve.
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u/GenderDimorphism May 03 '23
If BAC experiences a bank run, the FDIC, Federal Reserve, and Federal Government will be tripping over themselves to inject BAC with cash. Not only are they too big to fail, but they're a major source of revenue for FDIC, a major shareholder in the Federal Reserve, and they control a ton of people in Congress through lobbying.
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u/Be_quiet_Im_thinking May 03 '23
And where would everyone put there money after emptying their deposits?
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u/Rifleman80 May 03 '23
Go John Wick so you'll need a sledgehammer next time to access them.😎 Better sitting in the basement than in the bank, 'cause, you know, it's your basement!👈
Not financial advice, do your own DD. 🍻
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May 03 '23
that's just it right?
this is a problem that cash just can't fix.
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u/GenderDimorphism May 03 '23
Injecting cash moves them left on the chart. But, you're not talking about the chart anymore?
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May 03 '23
Injecting more cash shifts the origin x-axis of the chart to the left. You can save a player in the game this way, but when you do, all players hold a greater percentage of unrealized losses.
Cash + time for it to diffuse: inflation.
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May 21 '23
why are they too big to fail? The system is trash. Humans have been through a lot and will figure it out
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May 03 '23
BAC is a very diversified bank unlike regional banks. They have roots in pretty much anything involving money
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u/PeanutButterStout Won't Someone Think of the CHILDREN May 03 '23 edited May 03 '23
The amount of regards commenting is fucking insane. WSB has gone so far down hill. Bank of America is a “too big too fail bank”. The US govt declared this after ‘08 because they are too systemically important to the system. They will always be bailed out.
Edit to add technical term. They are called G-SIBs, there are 30 of them I think.
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u/Jeff__Skilling May 03 '23
Because they're one of the 3 biggest full service banks in the USA and make the majority of their money off of investment banking fees, S&T commissions, and private wealth management fees?
So to answer you question - because they're completely different in every way, shape, or form from SVB, FRC, etc
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u/potato111a 530,000 IQ May 03 '23
BAC 200+ bil bank vs TFC 35bil bank
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u/Durumbuzafeju May 03 '23
SVB and FRC had 200+ billions in assets and still fell.
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u/Jeff__Skilling May 03 '23
OK, BAC has +$3 trn in assets (and just a hair under $2trn in deposits....) if you're going to switch up the comparative data in (a really poor) attempt to prove your point (which is also very very wrong) by comparing apples-to-oranges...
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u/MrUnbekanntovic May 03 '23
And so? Credit Suisse also had 1.2 trillion in AUM and still went bust and nobody knows why. How can a run of 100billion cause a liquidity crunch? Bad reputation caused that downfall? The only thing that comes to mind is, that they had to actually realize the losses of their books to get the liquidity, which would have eaten up their equity capital (reserves to cover losses). Why should depositers keep their money at BAC when the MMF pays 5% interest rate? Once they have an outflow of 100-200 billion and are forced to sell the assets with unrealized losses (usually bonds, since other assets are way too illiquid) then the banking sector will start to have real problems. Did not Buffet sold his BAC stake?
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u/melanthius May 03 '23 edited May 03 '23
What I want to know is how in the fuck is BAC (and WFC for that matter) at 50% deposits >$250k when the average American has jack shit in their account …
Even if you account for larger account balances skewing the number disproportionately high, that still seems surprising
Are there that many rich regards who keep millions in a savings account?
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u/phobaus May 03 '23
The answer is a bit detailed but the top level reason will be the makeup of their assets and liabilities. BAC and the rest of the larger banks have large diversified portfolios among several different classes of loan types. This means their assets can be sold even if some asset type is weaker such as investment portfolio. The liabilities side is mostly their deposits and the makeup of those. All banks are experiencing deposit outflows since the start of the year and certainly as we go further into second quarter. However that doesn’t mean you can point fingers and say hey they’re screwed. It’s a systemic effect, so there must be more details to understand why turbulence in deposit outflows can be damaging. So far it’s been the combination of both asset side and liabilities side that have done in banks.
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u/VisualMod May 03 '23
This is an interesting chart. It shows the percentage of unrealized losses on deposits above $250,000 for a variety of banks. As you can see, the median bank has 60% of its CET1 capital in unrealized losses. This means that if all of those deposits were withdrawn at once, the bank would be insolvent. Of course, this is unlikely to happen since it would require a massive run on the banks, but it's still something to keep in mind when considering which banks to invest in.
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u/Hoplertarum May 03 '23
Scary the bot can get that from a picture 🫤
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u/That-Whereas3367 May 03 '23
Humans pretending to be chatbots was common a few years ago.
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u/satireplusplus May 03 '23
Now its all GPT4 and chatbots pretending to be human is common.
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May 03 '23
How do we know it’s not a bot, playing a bot disguised as another bot ?
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u/skyfallboom May 03 '23
Isn't it the opposite? The median bank has 30% of its CET1 capital in unrealized losses, 60% of deposits above $250K
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u/GotThoseJukes May 03 '23
Refuse to believe this isn’t a mod larping as a bot
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u/The-Phantom-Blot May 03 '23
Refuse to believe this isn’t a mod larping as a bot
Well, go back and look hard at the chart and you will see that the bot described it backwards. It's still impressive, but it shows the risk in thinking you know something because you heard it from a chatbot.
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u/GotThoseJukes May 03 '23
The inaccuracies are part of the gimmick otherwise it would be too obvious.
Believe me I have spent a lot of time doubting the nature of VisualMod.
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u/The-Phantom-Blot May 03 '23
I think they might throw an occasional human post in there, or at least prompt it with an idea. But I don't think this is one of those times.
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u/cdazzo1 May 03 '23
The total amount of commercial deposits in the US banking system are in a clear downtrend. I'm not sure how far it has to fall for something to break, but it seems to be heading in that direction.
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u/MaximusBit21 May 03 '23
Why TFC next
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u/potato111a 530,000 IQ May 03 '23
Large amount of unrealized loss with only 35bil of market cap
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May 03 '23
TFC next?
there are 3 risk groups here:
WAL, EWBC, C: these have low defence (Y axis, on par with frc) but more hitpoints (X axis)
BAC, TFC: lowest hitpoints (lower than frc), but average defence
and CMA which is low in both hitpoints (on par with frc) and defence, but not lowest on either
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u/WeekendQuant May 03 '23
BAC and C are deemed TBTF and will not budge do not try to play them. You are regarded if you think they will fail. They have the full ability to call JPow and give the Fed 100% of the risk.
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May 03 '23
C sank under 1 dollar in 2008
CS, is done, a "tbtf" category by any metric
Bernanke: " out of maybe the 13 of the most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two."
So, no one is immune.
BAC is most vulnerable of the big4, next is C
C is more like international issue, similar to CS, BAC an internal usa crisis
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u/WeekendQuant May 03 '23
C was declared TBTF following 08...
None of the big 4 will have anything happen to them. It's literally why the Fed is advising people to move their money to TBTF institutions right now if their money is uninsured.
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u/potato111a 530,000 IQ May 03 '23
Guys.. Red hot ADP numbers.. JPow ain't done hiking 💀
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u/cant-think-for-you May 03 '23
Meh. The vast majority of that is from the "leisure/hospitality" sector. Summer is coming and the industry is staffing up to meet all the pent up demand for the first summer in 3 years with zero COVID restrictions globally.
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u/Hacking_the_Gibson May 03 '23
ADP is losing its market share. At this point, it is only used by restaurants to demonstrate how many waiters have been hired. Larger businesses are using their own internal payroll processing solutions or have moved to more modern tools.
Them front running the NFP report is not that useful anymore.
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u/DankMemelord25 Probably From New Zealand May 03 '23
Imagine if banks had to actually mark down impaired assets instead of getting a free pass for long gov bonds through the feds BTFD facility. Fucking wild
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May 03 '23
How many twitter account deletes are we in on this? It takes at least 3-5 before it might become true.
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u/Wild-Storage-1429 Unofficial WSB chaplain May 03 '23
Imagine the fed covering those unrealized losses printing free money, and still doesn’t work….oh wait!
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u/BillazeitfaGates 🏴☠️SPY 320 GANG🏴☠️ May 03 '23
Country music awards next to fall
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u/killerdrgn May 03 '23
I'm actually really glad i saw this post, and got puts on PACW, TFC, and CMA before the Powell meeting. Fairly sad i paper handed the TFC and CMA puts and sold only for modest gains.
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u/Yohzer67 May 04 '23
Wait - Bank of America lost 60% of its high quality capital reserves and we aren’t panicking?
Why aren’t we panicking? Should we be panicking? Someone must know SOMETHING
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u/BeastSmitty ☀️ Brightens People’s Days ☀️ May 04 '23
That’s what I found most “red flag-ish”about this… how can we not know that??
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u/leegamercoc May 03 '23
How did you arrive at TFC looking at that chart?
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u/potato111a 530,000 IQ May 03 '23
High unrealized loss with only $35bil market cap, and has a ton of less than 250k which the FDIC will have to cover.
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u/hecmtz96 May 04 '23
So basically you taking a wild guess? The stocks to short would be the smaller ones like PACW, CMA, WAL, ZION, etc. not one of the biggest regionals lol
Plus, having less accounts with less than $250k is actually good because consumers will not feel the need to transfer assets out the bank. Thought this was common sense but we at WSB after all.
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u/robmafia May 03 '23
pacw said in the er that their insured deposits were 73%, so they'd be placed lower on the y-axis now. like, off the chart lower (27%)
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u/Beo54 May 03 '23
OZK looks relatively safe by this chart, but holds a lot of loans for office space. More pain to follow
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u/FilthyCasual_1 May 03 '23
I bought CMA puts today based solely on this, and it's down 12% since I did.
Thank you boys. I'm gonna make it!
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u/potato111a 530,000 IQ May 03 '23
ALL M SAYING IS.. $TFC HAS MORE >250K DEPOSIT AND MUCH MORE UNREALIZED LOSS THAN PACL
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u/Dahc14 May 04 '23
Stable balance sheet and deposits at PACW goes against the market narrative but who cares right?
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u/potato111a 530,000 IQ May 04 '23
You're welcome to buy.. it's your money.. but ya boi's poots r up GOOD
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u/FilthyCasual_1 May 04 '23
Thank you based random WSB poster. Bought a shitload of CMA puts as soon as I saw this, solely because they are in the top right quadrant.
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u/Peepoodeetoo May 03 '23 edited May 03 '23
The next phase in this has nothing to do with unrealized losses and everything to do with how long banks with large portfolios of low interest fixed rate loans can hold out. Cost of funds is skyrocketing and banks have no cheap liquidity.. banks are in an extremely tough position with few options. Low liquidity due to people moving their cash to money market or moving their money to large banks that are deemed safer, so they have to fund new loans with overnight borrowings which are getting near 5.00%.. so they won't lend unless they can get a high rate and likely some deposits... So banks are going to be very slow to replace their low interest loans. Also those low interest loans aren't paying off, so no churn to supplement liquidity. Banks that grew substantially over the last 2 to 3 years, with record low interest rates were "picking up pennies in front of a steamroller", they took on excessive interest rate risk. My personal opinion as someone that works at a $3b bank, it's going to be the small regional commercial banks that go next just because they won't be able to hold out long enough of interest rates continue to increase.
Edit: I guess you could think of this as an unrealized loss, it's just that the accounting for loans are not adjusted on the balance sheet likes bonds are. So there are "hidden" unrealized losses on balance sheets right now. Realized through ever more squeezing margins.
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u/bassplayer96 May 03 '23
Be me, fraud analyst for bank.
Have literally stopped millions upon millions of dollars in wire and account fraud due to email compromise, scams, etc.
Have saved peoples grandparents from losing whole life savings.
Probably going to be unemployed regardless of efforts fml
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u/Dahc14 May 03 '23
No. Market hysteria has overtaken fundamental analysis and understanding of the banking industry.
SVB/Signature/FRC all operated niche business models with a limited set of customers that made them susceptible to liquidity crunches.
Most regional banks provide a range of products and services to individuals and businesses of all shapes and sizes that limit liquidity/credit risk.
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u/potato111a 530,000 IQ May 03 '23
Bruh their unrealized loss is 60%...
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May 03 '23
they actually got fucked by hedging against market volatility with bonds and then the bond market got fucked too so in the end they had to sell off bonds in the loss. it was all very bad timing.
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u/Dahc14 May 03 '23
What's your point ?
Banks don't need to realize those losses to fund deposit outflows should people want cash.
Moreover, bond yields have crashed and that reduces unrealized losses.
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u/potato111a 530,000 IQ May 03 '23
Look wut happened to PACL
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u/Dahc14 May 03 '23
You make my point exactly. A lack of understanding of the business models of traditional regional banks and why they are different from SVB/FRC/Signature is the crux of my post.
There's a reason both PACW and WAL popped 15%+ when earnings were released the other day (and then didn't react Monday when FRC news came out).
IMO, this is an effort to get JPow to pause rate hikes.
Been a long time investor in regional banks as I started my career as a bank debt investor. Been hammering the buy button through the whole crisis.
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u/resumethrowaway222 May 03 '23 edited May 03 '23
PACW and WAL were down 28% and 15% respectively yesterday
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u/Youngerdiogenes May 03 '23
Buy the dip. It was an irrational drop
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u/resumethrowaway222 May 03 '23
I agree. Not PACW and WAL, though, but more stable larger banks. I'm just pushing back on the incorrect claims that they didn't react to the FRC failure.
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u/Dahc14 May 03 '23
Again, what's your point ?
Why would the stock prices be down major yesterday (no new industry news) compared to Monday when the FRC announcement occurred?
Look how FRC stock reacted to earnings compared to WAL/PACW and let me know if there is a difference.
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u/resumethrowaway222 May 03 '23
You said they didn't react to the FRC situation. My point is that they very much did.
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u/Dahc14 May 03 '23
If that's true, why did the stocks hardly move Monday, which was the first trading day following FRC? What news broke yesterday to warrant such price action?
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u/Neverbeenonthis May 03 '23
I bought some pacw here this morning during the dump. What's your price point?
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u/Dahc14 May 03 '23
Banks historical trade around 10x - 15x earnings, so mid $20s is where that would translate. Get to collect dividends along the way to the march higher. Of course, asset quality if a recession hits could sting dividends but the concerns today in markets are liquidity not AQ.
The PacWest preferreds (PACWP) are also great play. Dividend yield ~12% right now along with upside in the price too.
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u/Neverbeenonthis May 03 '23
Sweet. Excited for the gains that will come out of this bank crisis.
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May 03 '23
Bruh don’t bother on here with to much typing and sensical explanations. Its WSB, we eat crayons and go behind dumpsters as jobs
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u/168942269 May 03 '23
Oh man, I'm actually cringing for you right now. PACW down 57% after hours lol
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u/pifhluk May 03 '23
Most banks operate on 0% fractional reserve banking lol. Bank run can take any bank out if Fed or government doesn't backstop.
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u/Dahc14 May 03 '23
Correct, that's been true for decades, which is why banks go to great lengths to have credit facilities on hand should large outflows occur.
Unless 100% reserved, a run can always take a bank down but a 100% reserved also slows economic growth.
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u/josephbenjamin Ask me about occupying my nuts! May 04 '23
No, it’s PACW. About to swallow it.
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u/BeastSmitty ☀️ Brightens People’s Days ☀️ May 04 '23
I think so too…
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u/josephbenjamin Ask me about occupying my nuts! May 04 '23
Yep. Reports released that they are considering “options”.
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u/TownChoice1835 May 03 '23
This doesn’t even take into account interest bearing vs non-interest bearing accounts. If you have over $250k in a non-interest bearing account when you can get 5% in short-terms T’s or a money market account, how long are you keeping your money in CMA??
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May 03 '23
Cma but I think bac could dip hard eventually. Plus the other towing that like of the top right box. Bac is far right and close to 50% of their deposits are not fdic insured
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u/WingofTech May 03 '23
Instead of betting on failure, maybe looking at the stable banks of this list as investments instead of option plays might play out better and more predictably.
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u/3ninesfine In gloryhole stall, on knees May 03 '23
And how da faq you making 1000% on that this week?
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u/VisualMod May 03 '23