Bank Advisors Ltd.’s Post

📈It is encouraging to see that large US banks have successfully navigated the aftermath of the SVB failure. On the other side, smaller banks continue to underperform. 📉 The concerns surrounding these institutions warrant attention and support from regulators. FDIC has recently admitted that #realestate exposure remains a concern for the banking sector. "Commercial real estate (CRE) loan portfolios, particularly loans backed by office properties, face challenges when loans mature...The FDIC will continue to closely monitor these risks". The other area of focus remains the vast amount of #losses in Held-To-Maturity portfolios. According to the FDIC Quarterly Banking Profile “This is the ninth straight quarter of unusually high unrealized losses since the Federal Reserve began to raise interest rates in first quarter 2022.”  📊. #banks #FDIC #InvestmentTrends #AChartADay #Banor

Did the domino effect return from 2008-2009 until the issuance of the Dodd-Frank Act of 2010? At that time, the FDIC announced the collapse of 614 big-name banks during those three years. The recent FDIC report reveals that 63 banks in the United States face insolvency, with unrealized losses totaling $517 billion, primarily from residential mortgage-backed securities. Rising interest rates have worsened this challenging situation, impacting the value of these assets. The number of banks on the FDIC's "Problem Bank List" has escalated from 52 to 63 in the first quarter of 2024. Despite these obstacles, the FDIC emphasizes that the US banking system is not in immediate peril. However, it acknowledges persistent risks from inflation, market volatility, and geopolitical tensions. These factors could hinder banks' lending capacity, profitability, and liquidity. #Banking #CTP #Treasury #Risk #AFP #MINANASIF

Chris Whalen on TBTF Banks "Last week we learned that four of the biggest banks on Wall Street must improve their "living will" blueprints for a hypothetical wind-down. The Fed and other US regulators found weaknesses in their resolution plans. But is a wind-down even possible without a public subsidy given the financial problems in the industry? No. It strikes us as rather facile for regulators and members of Congress to fret about "living wills" when much of the banking industry is visibly insolvent. Perhaps this is the same mental infirmity that enables us to think that $35 trillion in public debt is acceptable? In the event of a bank failure, the folks in resolution and recovery at the FDIC won't even look at the living will." #Fed #OCC #FDIC #doddfrankact #bankregulation #banksupervision #TBTF #GSIFI #GSIB #derivatives #ISDA #BIS #FSOC #systemicrisk #CME #LCH #clearinghouses #CCPs

In light of the FDIC's proposal to reverse a four-year-old rule change, bank executives and boards must meticulously evaluate their institution’s liquidity, funding, and capital, especially if billions in deposits are considered risky. Alexandra Steinberg Barrage, a partner in Troutman Pepper’s Corporate Practice Group, provides her insights in a recent Bank Director article. #Banking #FDIC #TroutmanPepper Read more to understand the potential impacts on bank balance sheets: https://lnkd.in/etXbndZb

A year after Silicon Valley Bank’s collapse, US lenders are still paying the price for cleaning up the mess — and it’s likely to get about $4.1 billion worse. The Federal Deposit Insurance Corp. now estimates $20.4 billion in losses arising from the failure of both SVB and New York-based Signature Bank, according to its annual report released late February. That’s a 25% bump from its $16.3 billion November estimate. The upshot: Scores of institutions — megabanks like JPMorgan Chase & Co., regional lenders like PNC Financial Services Group and even some relatively local-leaning banks — may have to pay more to replenish the Deposit Insurance Fund. That’s the reserve that the FDIC uses to protect depositors when a bank collapses. #fdic #svb #signature #regionalbanks #finance Full story on Bloomberg News:

Those with substantial funds in banks might be unknowingly setting themselves up for potential financial risks. The FDIC, with approximately $178 billion in reserves, is tasked to cover a significant $7.5 trillion in deposits. It's essential to be aware of these figures to avoid facing unexpected challenges in the future. #FinancialSecurity #FDIC #BankingRisk

I go in-depth on why the FDIC’s putative end to TBTF instead hikes moral hazard, speeds runs. Will depositors really know the difference between SPOE and MPOE? The FDIC thinks so. Why? And, most of the planks on which the FDIC posits an end to TBTF for giant banks don’t apply to systemic nonbanks even though the FDIC says it can shutter them too thanks to all these regs.  Will foreign governments play as much ball as the FDIC expects or, more likely, run to raise ring fences?  #FDIC, #TBTF, #nonbanks, #systemicnonbanks, #banks, #bailouts

You see it with banks all the time – Member FDIC But what does FDIC stand for? What is it? And what does it do? FDIC stands for the Federal Deposit Insurance Corporation. The FDIC is an independent federal agency insuring deposits in U.S. banks and thrifts in the event of bank failures. The primary purpose of the FDIC is to prevent "run on the bank" scenarios, which devastated many banks during the Great Depression. In case of bank failure, the FDIC insures deposits up to $250,000 per depositor as long as the institution is a member firm. Meaning, if you have $200k in a savings account and $100k in a CD, you have $50k that is uninsured. #communitybank #memberfdic #fdic #financialiteracy #themoreyouknow #banklocal

Friday it came out that regulators are a bit upset with some large financial institutions and their resolution plans. According to the FDIC itself, "Each resolution plan, commonly known as a “living will”, submitted under Section 165(d) must describe the firm’s strategy for rapid and orderly resolution under the U.S. Bankruptcy Code in the event of material financial distress or failure of the company." So, here's my question. Does the FDIC itself have a resolution plan or living will? Because if any of Goldman Sachs, J.P Morgan Chase, Citigroup or Bank of America are ever looking at bankruptcy, I can't imagine how many other banks have failed or will fail and thus the FDIC itself would likely be toast. I am assuming asking the banking industry or Congress for more money does not quality as a resolution plan for the FDIC, but maybe I am wrong in this assumption. Anyways, for those who know about this topic way more than me (clearly I know close to nothing about it, thus my question) please educate me. #doyourwork #askhardquestions #dontbeabagholder

The 6 biggest banks in the U.S. are taking a combined $9.4B hit to cover uninsured deposits that were swept up in last year's Silicon Valley Bank and Signature Bank collapses. Their payments to the FDIC, which are taking the form of a "special assessment," will help replenish the insurance fund. At the end of Q3 2023, the FDIC's reserves remained below what is required by law. Though most banks wrote off the FDIC's special assessment in Q4 earnings reported last week, payments to the fund will be made quarterly over the next 2 years. The fund was drained of ~ $16.3B after the agency agreed to backstop the uninsured deposits of SVB and Signature Bank after the bank runs led to their collapses in March 2023. The 3 largest banks in the U.S. — JPMorgan, Bank of America, and Wells Fargo— made multibillion-dollar profits last quarter despite this hit from the special assessment. JPM paid the largest charge, at $2.9B. The bank had reported $49.6B in annual net income. BAC's fee to shore up the FDIC fund came in at $2.1B. WFC's charge was reported to be $1.9B.