The Institutional Risk Analyst

With inflation fears moderating, look for Buy Side managers to buy bank stocks – even if earnings remain constrained...

Remember, for every $1 in debt redeemed on the books of the Fed, a bank deposit disappears.

What can SYF tell us about the bleeding edge of unsecured consumer credit?

How much of book value do banks lose as the Fed adjusts interest rates to fight inflation?

If we assume that asset returns will continue to rise, but that bank funding costs will rise 5x asset returns, then US banks have a problem

If you believe that the Fed is going to keep interest rates at or above current levels through to 2024, then we have a problem....

Persistent talk about a 5.5% 30-year mortgage rate later this year is badly wrong as TBAs flip from 5.5% to 6% coupons for delivery in June

To survive long-term, both WAL and PACW need to get that beta back down below 2 and closer to 1, but the hawks on the FOMC may not cooperate

The Fed's 5.5% increase in short-term interest rates has thrown the pricing for trillions of dollars in real estate into disarray.

The price volatility injected into markets by the Fed is a primary reason why the FDIC cannot easily find buyers for smaller banks.

Q: What happens to net-interest margin for banks when the rate of change in funding costs doubles or more in a single quarter?

Imagine how President Joe Biden will react if Chair Powell needs to announce formal limits on access to US bank deposits.

Until Chairman Powell comes clean with the Congress and the American people, more banks will inevitably fail.

Banks that do not aggressively reprice liabilities and assets as OZK did in Q1 2023 may be left behind.

The funding crisis affecting US banks is not over and very definitely not limited to smaller banks.

Given that the US Treasury is paying 4% for 90-day T-bills, you can see how far banks have to go to become competitive on rates

The Fed by definition cannot make a profit and is always an expense to the Treasury, thus operating losses are a expense to the taxpayer

Most major banks grew larger during quantitative easing. Now many of these banks will shrink in terms of assets and also earnings in Q1 2023

At the Fed, because “confidence” is considered a factor in “policy,” it is OK to fib and obfuscate about the true cost of monetary policy.

We liked the NYCB + Flagstar story prior to the transaction with the FDIC for the assets and deposits of Signature Bank.