Sandbox Page

I will be adding a new link titled “Sandbox” in the right hand menu.

That link will get you to this page.

I had originally set up the “Reader Initiated Alert” page for ‘alerts’. I was thinking this, for instance, might be when a preferred stock is undergoing a temporary selloff and someone wants to let the population know about it quickly. Of course we all (including me) use the ‘alert’ page for general messaging.

I am requesting that we start using the Sandbox page for all general talk, and try to preserve the ‘alerts’ page for ‘alerts’.

I have had a screen up on one of my monitors all week where I see all comments – no matter where they are posted–it is a great page and I wish everyone had a page like that–believe me we all benefit from all the knowledge being shared. I don’t want to stifle any of the exchange of knowledge, but hope to get things a bit better organized by adding the Sandbox page.

5,522 thoughts on “Sandbox Page”

  1. Per SIVB preferreds –
    So, First Citizens, if I have it correct, has bought $72 billion of SIVB assets, including 17 branches. Appaloosa Hedge Fund Manager David Tepper was able to snap up an unknown amount of SIVB preferreds on March 18, well after trading in SIVB preferreds was halted? Is there any hope of any meaningful payout to SIVB preferred shareholders at this point?
    Thanks in advance!

  2. Does anyone know why there are rarely (or very few) CDs offered with maturity between October to mid-December ? In the last two/three weeks, I may have spotted one or two with maturity in November. A few with maturity in early October have surfaced more recently. Best I can recall, there was a CD maturity gap between October to mid December. TIA

    1. Hmmm. This piqued my curiosity, so I did a little spin through our database.
      these are the number of fixed rate CD’s maturing by month, which seems relatively uniform throughout the calendar with 2 outliers.
      But these results don’t take into account ones that were called early and are no longer available.
      Could it be the availability gap is due to a bunch of CD’s being called early because of something external that happened, like a Fed increase?

      | 03 | 3548 |
      | 02 | 2805 |
      | 01 | 2490 |
      | 10 | 2459 |
      | 04 | 2438 |
      | 09 | 2430 |
      | 05 | 2394 |
      | 06 | 2315 |
      | 12 | 2283 |
      | 07 | 2244 |
      | 11 | 2222 |
      | 08 | 2185 |

    2. Is it possible that with the drop in rates, investors scooped up existing CDs in those months and since banks tend to offer CDs in increments of 3 months, then because it’s now March, the offerings now would be for June, September and December? FWIW, Ameritrade has lots of secondaries available then.

  3. Not sure why it keeps asking me to verify Im not a bot. I went through 18 pages of pictures. lol. Finally it let me through. It has been doing this a lot lately for me, and not sure why. Makes it difficult to post. Many times i just scrap my post. Not sure if it writes cookies and that process is corrupt. It just keeps asking and asking.

    1. Ditto- not as bad tho . Recently it had a four frame pic of a fire hydrant- perfect- but had to do at least one more series. Crappy- I feel like its play thing. Maybe the programmer is sick.
      Spoke too soon- just now – 6 frames of one bike- will have to do at least one more.

  4. Pretty good charts from the Wall Street Journal if you have access (I sprung for the $1.50/week to get access)

    Where Financial Risk Lies, in 12 Charts
    Data show worrisome trends in real estate, banks and private markets

    Key take-away for me: the Fed’s sharp rate hikes after years of 0% (and the banks’ failure to hedge) have wreaked havoc on the banking system. Banks have ~$550 billion in unrealized losses from securities. Market value of securities held is 90% of cost. “Nearly $8 trillion of deposits at the end of 2022 were uninsured, up nearly 41% from the end of 2019…Nearly 200 banks would be at risk of failure if half of uninsured depositors pulled their money from the banking system….”

    Unrealized losses on real estate, about 10% of $444 billion CRE held. Office vacancies at 18% and rising. Decreasing profits will face increasing losses. Shadow banking a large but unknown risk. PE’s AUM is $11.7 trillion.
    Just my opinion.

  5. Seems like it’s time for Azure’s hard and fast investing “laws”. I came up with these when I was in law school many years ago and have shared them with my friends, clients and family over the years:
    1) Stay away from all investments in transportation companies (planes, boats, cars, shipping freighters, trucks etc)
    2) Don’t buy anything I do not understand
    3) Do my own deep due diligence
    4) Don’t invest in damaged companies and “hope” stocks
    5) Don’t ever guess
    6) Take ownership of each position and never blame anyone but yourself for investing mistakes
    7) Diversify so that any one position is initially no more than 5% of the portfolio
    8) Do not invest in companies that have more debt then equity; except monopolies like utilities
    9) Invest for the future, but focus on the present
    10) Keep learning and listening to people that have a clear vision of what real risk and a quality portfolio should look like
    Finally… I’d rather be out of the market wishing I was in then in the market wishing I was out
    Wishing everyone profitable investing, I am Azure

    1. AB,
      Something to print and hang on the wall.
      #10 always learning from you.
      #1 Learned that a long time ago. Have ZERO /ZIP except for SEAL PA

      1. Charles, that is exactly what I did – I pinned on my corkboard when first posted here back in Nov 2018 …. rest Azure(d) he is no mad man!

    2. That’s a very good set of rules. My substitute to your point #1 has been to avoid all ‘noncumulative’ issues, and to a lesser extent all ‘perpetuals’ …although I loved to trade those Ladenburg Thalmann A series preferred before they went dark. 😉

        1. All the Ladenburg Thalmann notes and preferred series A securities were delisted from the NYSE and deregistered from the SEC in early 2020 after its merger with Advisory Group was completed. There was much discussion about this on III at the time, not sure if its still accessible. IIRC, LTS-A holders were given the opportunity to exercise conversion rights and sell for $25 par, and the note holders were not.

                1. Buying it has nothing to do with it being dark 🙂 You can buy dark securities wherever your broker allows. you just wont see a bid or ask

                  1. In for the duration mcg. I saw them as an underwriter on a new issue month or two ago so still active as a subsidiary of the co. that bought them.
                    Wait to see if the dividend shows up in my account, hopefully end of the week.

    3. Good points to ponder though if I always followed those rules I’d never buy anything. There’s always some guesswork and hope and I don’t fully understand any of these issues. And sometimes doing a deep dive takes enough time to miss out on the immediate bargain price so I’ll do a quick shallow dive if there appears to be other forces moving the price.

    4. More wisdom in that post Azure than pretty much any article i’ve read from financial “pros” or analysts. thanks for sharing that. (#10 is possibly the best advice i’ve ever heard)

    5. Justin’s rule #11….
      don’t invest in an income security where the preferred price is >5X the common price.. Looking at you..POWWP..

    6. All are good rules but the best one for me was (applicable to individual issues as well):

      “I’d rather be out of the market wishing I was in then in the market wishing I was out.”

      1. Definitely some good rules, and many I follow. But my personal favorite is from Mark Twain I try to remember…
        It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. “

  6. Several III’ers have indicated interest in investing in the beaten down preferreds from the banking sector. The theory is that the selling has been overdone in some cases and these issues will rebound over the long term. And by buying at the current prices you will not only get an outsized yield but a large capital gain if you decide to sell at some future date. I decided to take a look at how all of the banks that have preferreds and/or babys/terms outstanding. The starting point I used was 3/1 which was a few days for the Silicon Valley Bank downfall started on ~ 3/8. Looked at the percentage price change through 3/24 plus the market cap of the common.

    Format is: ticker, current common market cap in Billion $’s, % price change, name, comment.

    Sort is by largest percentage drop in price.

    FRC, 2.3$, -89.9%, FIRST REPUBLIC BANK,
    SI, 0.05$, -87.3%, Silvergate Capital Corporation, Closed
    PACW, 1.13$, -65.9%, PacWest Bancorp,
    WAL, 3.62$, -56%, Western Alliance Bancorporation,
    ZION, 4.2$, -44%, Zions Bancorporation N.A.,
    CUBI, 0.58$, -40.6%, Customers Bancorp, Inc,
    SBNY, 4.41$, -37.8%, Signature Bank, Closed
    INBK, 0.15$, -36.7%, First Internet Bancorp,
    KEY, 10.97$, -35.7%, KeyCorp,
    BOH, 2.02$, -32.2%, Bank of Hawaii Corporation,
    FITB, 17.35$, -29.6%, Fifth Third Bancorp,
    TFC, 43.68$, -29.6%, Truist Financial Corporation,
    HBAN, 15.63$, -29.5%, Huntington Bancshares Incorpora,
    SNV, 4.31$, -29.2%, Synovus Financial Corp.,
    HWC, 3.1$, -26.3%, Hancock Whitney Corporation,
    CNOB, 0.7$, -26.3%, ConnectOne Bancorp, Inc.,
    USB, 53.46$, -26.2%, U.S. Bancorp,
    WBS, 6.75$, -25.9%, Webster Financial Corporation,
    MTB, 19.31$, -25.5%, M&T Bank Corporation,
    CFG, 15.06$, -25.3%, Citizens Financial Group, Inc.,
    CFR, 6.44$, -24.8%, Cullen/Frost Bankers, Inc.,
    OZK, 4.02$, -24.5%, Bank OZK,
    FHN, 9.01$, -24.3%, First Horizon Corporation,
    BWB, 0.31$, -23.9%, Bridgewater Bancshares, Inc.,
    BPOP, 3.9$, -23.8%, Popular, Inc.,
    TCBI, 2.42$, -23.6%, Texas Capital Bancshares, Inc.,
    DCOM, 0.9$, -23.5%, Dime Community Bancshares, Inc.,
    RF, 16.71$, -23.5%, Regions Financial Corporation,
    ASB, 2.7$, -23.1%, Associated Banc-Corp,
    WTFC, 4.33$, -23.1%, Wintrust Financial Corporation,
    WFC, 136.84$, -22.4%, Wells Fargo & Company, TBTF
    SYF, 12.25$, -22.1%, Synchrony Financial,
    BAC, 217.1$, -20.5%, Bank of America Corporation, TBTF
    STT, 24.68$, -20%, State Street Corporation, TBTF
    FNB, 4.16$, -19.5%, F.N.B. Corporation,
    FCNCA, 8.4$, -19.5%, First Citizens BancShares, Inc.,
    VLY, 4.73$, -18.8%, Valley National Bancorp,
    FGBI, 0.17$, -18.6%, First Guaranty Bancshares, Inc.,
    FULT, 2.37$, -18.1%, Fulton Financial Corporation,
    MSBI, 0.49$, -17.9%, Midland States Bancorp, Inc.,
    MNSB, 0.18$, -17.2%, MainStreet Bancshares, Inc.,
    EFSC, 1.71$, -16.8%, Enterprise Financial Services C,
    CCNE, 0.42$, -16.8%, CNB Financial Corporation,
    ONB, 4.27$, -16.7%, Old National Bancorp,
    COF, 34.59$, -16.7%, Capital One Financial Corporati,
    FRME, 2.03$, -16.5%, First Merchants Corporation,
    C, 83.91$, -16.3%, Citigroup, Inc., TBTF
    WAFD, 1.95$, -15.1%, Washington Federal, Inc.,
    UCBI, 3.24$, -14.7%, United Community Banks, Inc.,
    FNMA, 0.46$, -14.5%, FEDERAL NATIONAL MORTGAGE ASSOC, Defaulted
    FMCC, 0.26$, -13.3%, FEDERAL HOME LOAN MORTGAGE CORP, Defaulted
    WSBC, 1.86$, -13.1%, WesBanco, Inc.,
    MS, 141.2$, -12.7%, Morgan Stanley, TBTF
    JPM, 367.66$, -12.4%, JP Morgan Chase & Co., TBTF
    MBIN, 1.17$, -11.2%, Merchants Bancorp,
    MFIN, 0.18$, -10.5%, Medallion Financial Corp.,
    GS, 104.33$, -9.7%, Goldman Sachs Group, Inc. (The), TBTF
    LBRDA, 11.52$, -7.7%, Liberty Broadband Corporation,
    BANF, 2.76$, -7.6%, BancFirst Corporation,
    AUB, 2.63$, -6.4%, Atlantic Union Bankshares Corpo,
    TFIN, 1.32$, -6%, Triumph Financial, Inc.,
    AMBK, 0.10$, -1.4%, AMERICAN BANK INC,
    NYCB, 6.11$, 1.8%, New York Community Bancorp, Inc,


    1) A very wide range of price change %. As expected the TBTF have generally performed better, but there are several smaller banks that have also held up well.

    2) The usual suspects First Republic and PacWest lead the worst performers. Note that III favorite CUBI is fifth from the bottom with a -40.6% loss. Obviously the market consensus might be wrong, but believes it is at a high risk of failure. What that would do to the CUBI preferreds and notes is unknowable.

    3) Shocking to me is how small many of these banks are. There are 15/64 with market caps <$1 Billion. If they were gone tomorrow, would anybody notice? My favorite is American Bank (AMBK) with its ~ $100 million market cap and best I can tell only has one branch. It has a 6% cumulative convertible trust preferred that trades by appointment only.

    4) If you are convinced the market has wrongly punished some of the biggest losing banks, the preferreds/baby/terms would be attractive.

    Disclosure: We have about a .001% allocation to bank preferreds. We own one TBTF bank common in one account. We have no open buy/sell orders for any of these issues.

    1. Liberty Broadband ?
      Tex trying to see if we are paying attention?
      Don’t see Heartland ?

    2. Thanks for the list, Random thoughts –

      “Bank stocks would look like obvious bargains if not for the fact that they’re issued by banks.” – Barron’s

      Barron’s just published a buy list of bank preferreds, ranging from TBTFs to …FRC. (“Preferred Stocks Offer a Better Way to Bet on Banks”) It’s also been raining gloom and impending doom on its front page, go figure.

      I see dividend cuts on bank commons and possibly on the suspendable preferreds ahead. There is no discussion of this risk on Barrons or elsewhere. A lot of big bailouts / refis / capital adds, infusions of public / private money. IMHO bad optics for private stock investors to cash out before public money is repaid. I don’t think Middle America will view investor divvy cash-outs favorably. (“Investors in the banks will not be protected. They knowingly took a risk and when the risk didn’t pay off, the investors lose their money. That’s how capitalism works.”)

      Just my opinion.

      1. The Barron’s article was interesting. Thanks for posting.

        I have purchased a healthy amount of bank preferreds since SVB. I’ve tried to stick to the too big to fail as well as the larger regionals. Within the regionals, I’ve had a bias towards those doing business in the middle of the country and the south. I’ve tried to buy a mix of fixed, floaters and fixed to floaters to manage the interest rate risk.

        Because these are preferreds and not commons, the patient can be sick and in the ICU…I just need to keep them out of the morgue.

        If you look at the dividend history of the largest and strongest regional banks, you’ll see that they paid common stock dividends throughout the Great Recession.

        1. “Preferred Stocks Offer a Better Way to Bet on Banks”

          One normally staid corner of the financial markets—preferred stock—has been rattled by the Silicon Valley Bank and Signature Bank seizures, and that has created opportunities for investors.

          Preferreds are a senior form of equity whose dividends come before those of common stock. Preferred shares issued by banks, however, account for about two-thirds of the $400 billion market and the twin bank failures have highlighted the credit risk in these securities.

          In fact, the preferreds issued by SVB Financial Group and Signature Bank, the failed banks’ parents, might have little or no recovery value. Trading in their New York Stock Exchange–listed preferred and common shares has been halted. And an unlisted SVB preferred issue aimed at institutional investors was fetching about 10 cents on the dollar late this past week over the counter.

          While this is certainly worrisome, preferreds still offer a lower-risk way to invest in banks than common shares, and some pros say they now look especially appealing. After its 8.5% drop this month, the sector’s largest exchange-traded fund, the $12.4 billion iShares Preferred and Income Securities (ticker: PFF), yields 6.5%. What’s more, preferreds issued by most banks now yield over 6%, a nice premium to the 3.7% on a 30-year Treasury bond.

          “This is a great time to step into the market,” says Allen Hassan, head of preferred trading at Ziegler.

          Preferreds have long been popular with retail investors because of their combination of relative safety, solid yields, and liquidity. Most are issued with a $25 face value and trade on the NYSE. There also are institutional preferreds, with a $1,000 face value, that mainly change hands over the counter.

          Dividends on most preferreds are taxed favorably, like those on common stock. Companies are loath to miss preferred payouts because they can’t issue common dividends without first paying preferred holders. However, as equity, preferred has more risk than debt.

          Newly issued preferred stock can be problematic; it can’t be redeemed at face value for five years, limiting the immediate upside, while the downside is unlimited. But now, many $25 face-value preferreds are trading under $20, making the risk/reward proposition far more appealing.

          “There is uncommon value in the preferred market,” says Phil Jacoby, chief investment officer at Spectrum Asset Management, a preferred specialist. Yields are near their highest levels in more than 10 years, he observes, and spreads to yields on risk-free Treasuries are historically wide.

          As for the risks, he takes comfort in federal regulatory support for banks on deposits and a new Federal Reserve program that lets banks borrow against their bond holdings.

          Spectrum manages the Nuveen Preferred & Income Securities closed-end fund (JPS), now trading around $6. It has an 8% yield, reflecting leverage, and changes hands at a 13% discount to net asset value.

          His investment firm also runs the Principal Spectrum Preferred Securities Active ETF (PREF), which focuses on institutional issues and yields 5%.

          Individual investors might also want to consider the preferred stock of top banks, such as JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), and Morgan Stanley (MS). These and some others are considered systemically important financial institutions by Uncle Sam, and so carry more capital and are more strictly regulated than regional banks. And, lately, they generally have benefited from deposit inflows shifted from smaller rivals.

          Preferreds from the country’s biggest bank, JPMorgan, offer the lowest yields—its 4.2% series M issue yields 5.6%. Bank of America preferreds, like the 4.25% series Q, yields almost 6%, while Wells Fargo and Morgan Stanley preferreds yield close to 6.5%.

          (Some investors would rather buy big-bank common shares, currently yielding 3% to 5%, because they have more upside potential.)

          Regional banks can offer larger payouts, but also more danger. Investors appear unperturbed about preferreds from Fifth Third Bancorp (FITB), Regions Financial (RF), and Cullen/Frost Bankers (CFR), which yield about 6.5%, only slightly more than some of their too-big-to-fail peers. Higher yields also are available on the preferred of New York Community Bancorp (NYCB), which is buying assets of Signature Bank. Its 6.375% preferred has fallen to $19.45 from $25 and yields 8.6%.

          Then there’s First Republic Bank (FRC). It has inspired some of the worst jitters, even after a $30 billion deposit infusion from JPMorgan and 10 other large banks. Its common trades at $12.50, down 90% this month, while its preferred fetches about $6, well below its $25 face value.

          Although it suspended its common payout, the bank is still paying preferred dividends. There’s risk here—big risk—but investors could benefit if the big banks inject equity into First Republic or if the preferred is converted into common shares on favorable terms.

          That bet is suitable only for investors with cast-iron stomachs. Everyone else should stick with the biggest banks.

          1. Interesting how that article chose to just specifically cite the lowest coupon 4% JPMorgan preferred. I have been buying the 6% C shares now for a couple weeks below par.

            Same deal on on Bank of America with their 6.45% coupon preferred K shares. Always buy the highest possible coupon you can at or under par. Unless for some reason you are speculating the preferreds will be getting called in the near future.

            1. For me Theta it depends on the situation. Last year I was looking for the highest yield series to have call threat price support in face of rising interest rates. Now if ones base assumption is near peaking yields, the preference for me long term is getting the one lowest below par (assuming paying yields are close) so one has potential for upward price movement.

    3. At some of these prices, the risk of 1 or 2 going bust and the preferred getting 0 could be mitigated by allocating among 4-5 issuers, where the capital gain of a share recovery would offset the loss.
      And one nitpick with the Barron’s article.
      There isn’t unlimited downside. That is only on short sales. The downside is limited to the investment.

  7. Happy weekend everyone.

    Just curious, does anyone here play pre-merger SPACs? So long as you always always turn in your shares during the redemption window they start to look a lot like zero-coupon bonds. And the IRRs can be pretty attractive. I’ve seen some in the 7-10% range, pretty good for minimal risk (but a lot of reading through filings).

    1. There are a few CEFs that I know of that play this game…. SPE and BRW come to mind immediately…. the opportunity does seem fascinating on a risk adjusted basis, but the monitoring, aka the reading, necessary to keep up to date on each pre-merger SPAC’s status, seems overbearing….. not recommending either SPE or BRW as this is not a good environment for these types of activist funds right now, but I’ve held on to them, SPE at least, for years…

  8. I thought this article was interesting so wanted to pass along:

    Here are some excerpts of note:

    As JPMorgan’s fixed income strategist Jay Barry writes after looking at the latest Fed H.4.1 statement, borrowing at the Fed’s liquidity facilities was little changed in the week through yesterday at $164bn. More importantly,FHLB issuance activity has declined materially, implying reduced FHLB advance borrowing demand. Thus, it appears that deposit outflows at the very least have slowed

    And some more good news from Barry: “Overall, banks do not appear to be reaching for liquidity and it is possible that some of the borrowing observed last week was proactive in nature. A slowing pace of deposit outflows is the first step in improving sentiment towards regional banks.”

    Thus, with balances at the Fed’s borrowing facilities about unchanged week over week and evidence of reduced FHLB advance borrowing, it appears that deposit outflows at the very least have slowed, consistent with the remarks made by Chair Powell in yesterday’s press conference.

    As Barry summarizes, “Overall, banks do not appear to be reaching for liquidity, and it is possible that some of the borrowing observed last week was proactive in nature.”

    “At end of the day, slowing the outflow of deposits is the first step in improving sentiment towards regional banks. Once we get past the liquidity story, we can focus on the profitability metrics which will negatively be impacted by higher deposit betas and compressing NIMs.”

  9. Preferred ETF Question ~ PFXF VanEck Vectors Preferred Securities (ex-financials)

    I have never owned any preferred ETFs. Any thoughts on this preferred ETF that does NOT invest in financials? It’s about 25% off its post-Covid high and approaching its decade low valuation… currently yields 6.24% & pays monthly.

    Thoughts appreciated!

    1. A passive investment. Most people on this board like to pick their own and/or trade them. Funds are for those not actively playing the game.
      Many preferreds are low volume and a fund may be too big to be nimble, can’t trade volume without moving the price against them. That’s a problem with PFF, I don’t know about the smaller PFXF. Other than that it may be ok for diversification if you don’t have preferreds.

    2. newbie – I have owned a very small amount of PFXF since 2018. I don’t pay attention to the price swings as I bought it for income and over that time it has paid roughly 6% on average (the % has fluctuated with the price)

      I like that it is a monthly payor, non financials and provides me some diversification in issues we common folks can’t buy. That said, my position in it is so small it doesn’t impact me much at all.

      Given where you mentioned the price is at, I took a look and I may buy a bit more as the price is back very close to the level I bought it at in 2018

      1. I could be misremembering, but I think PFXF has an advantage (?) in being actively run by mgmt.

    1. Wonder if Becker told his pals at FRB of San Francisco he was unloading $3.6M of shares in the last few days before Thiel blew the whistle. Sure there are disclosures…

      1. $3.6M is Becker consolation prize after watching $30M+ worth of stock/options get vaporized and permanently being put out to retirement pastures.

        1. Yes I was thinking that too micahc, but I wanted to complain a bit about the club.

          I mean, duration risk is about as rudimentary as it gets in banking, and as Azure’s post underscores, the club went along – right up to the point they they mumbled between themselves that he’ll have to downsize that new boat 20 or 30 feet.

          But yes, you are of course spot-on.

          1. I have seen t-shirts emboldened recently titled:

            SVB Risk Management Shirt: Silicon Valley Bank Risk Management Department

            Which underscores your point all departments have a role to play. Not enough people playing what-if scenarios and thinking new deposits will forever outpace outflows.

  10. Bloomberg Radio had Chris Whalen on this afternoon. He is the best bank analyst that I know. He has been around a long time and worked both with the executive branch, the legislative branch and for the Federal Reserve. He knew Paul Volcker and had extensive conversations with him about the last bought of high inflation in the 70’s-80’s. A few quotes from the interview to the best of my memory:

    1) Current team of Washington (I assume he means Treasury) dealing with the current crisis is the weakest he has seen in the last ~ 40 years. Says that they have minimal market experience, unlike many of the past regulators.
    2) The Fed’s biggest problem is “hubris”, thinking they know everything and can handle it on their own. Says they should be working with legislators on some solutions.
    3) Fed does NOT talk to the banking regulators to understand what effect Fed policies would have on the banks.
    4) Bloomberg asked: “What would you like to hear from Janet Yellen today.” Whalen replied: “I am going back to the private sector” which was not exactly the answer Bloomberg expected.
    5) Talked about what the Fed/regulators SHOULD do, but seemed to have low confidence they would. Top of the list is CUTTING interest rates immediately, lest they kill off more banks.
    6) Very negative on any business holding leveraged duration, aka long term bonds. Specifically banks and Mortgage REITS.
    7) Interesting comment that Goldman Sachs does NOT have to mark their portfolio to market like other banks do.
    8) Very positive about Western Alliance (WAL) and NYCB for different reasons.
    9) Mostly invested in preferreds from banks he likes.
    10) Said we are NOT going back to 2.0% inflation any time soon. Delusional for the Fed to think they can get there.

    1. Tex, thanks and Im glad you didnt stop at point 7 or I would have had an entirely different outlook on his perspective. I have already taken the money and ran on 2 banks, currently fighting just to breakeven with 2 averaging down slowly and trading a few on rips and buy back. Then I have a little side toy FRMEP that I have been able to buy and sell a few hundred shares on quick approx dollar swings each time. But I still respect the risk in this sector.
      I dont know what the Feds infatuation with the artificially created hard 2% is. From 2000-2009 decade it only met that once and the same in the 1990s. Past 6 months is about 3% annualized. And I would take the under on 4% from June 2022- to June 2023.

  11. Another offer in the mail to buy my KTBA, and it was appropriately filed in the a round can with black liner in it. Interesting is that it has been selling under the offer. Maybe they didn’t get the memo.

  12. Sold the shares of NYCB-PU I bought last week at 34.95 today for 40.25
    Also small flip of MGR I bought at 21.50 and sold today at 21.69 They seem to be in a downtrend even with going ex-divy next week. I will re-visit buying again to get my cost basis down on the ones I bought in Nov / Dec. on the next dividend cycle.

  13. I bought 250 AGRIP (Agribank) at par ($100) today. 6.875% coupon callable on 1/01/24 with no maturity date. Baa1/BBB+ Qualified distribution

  14. Former Fed insider Danielle DiMartino Booth has an informative post about the current banking situation. She has a table of “Banks Sitting on Untenable Levels of Unrealized Losses on “Available for Sale” Securities” that lists CUBI, ALLY and a few others

    Verbatim quote:

    “The bottom line is the less liquidity small banks have, the more at risk their illiquid assets. If the deposit hemorrhaging and recession don’t kill them first, Yellen selling hundreds of billions of Treasury Bills at prevailing rates once the debt ceiling is resolved surely will.”

    Probably worth your time if you are either invested in or are considering investing in the banks.

      1. Grid, I have a moderate sized position in CUBI-F and am thinking on capitulating. The near term macro environment could get much worse plus there’s a chance of a “debt ceiling” crash. On the other hand, the outlook for CUBI must not be too bad since the CEO just dropped $500k on the common. I also don’t think a bank on the ropes would be looking to buy another bank and maybe no news of CUBI deposit flight is good news.
        Man, the downdraft in financially related income issues sure came on fast. The breadth of the downturn took me by surprise. I thought I was positioned to weather a storm, but now realize I wasn’t. Even my steady issues like XFLT-A, RMPL-R, OXLCM, OXSQL, NEWTL and ATH-E have gotten hit. I started trying to lighten up on these and more a few days ago. Bank, bdc, reit and mortgage reit preferrreds and ETD’s now comprise about 20% of the port. I got creamed in March 2020 and vowed to never let that happen again. About 65% of my “retirement” is in cd’s and IG bonds. Even so, since the SVB malaise started I’m down 2.3%. While still up ytd, my sensitivity to losses is very high and I’ve started waking up each “market” day with a feeling of dread. That said, I’m an addicted trader and nibled at GMRE-A today @ $24.75 – 7.5% and goes ex is a couple weeks. What do you think of TECTP? I had a small position and added when it breifly hit the 8’s.
        Wish everyone the best.

        1. GR, Yes I certainly wasnt implying its a buy, just fascinated by the twists and turns. This was same situation with NYCB. Dropping hard and market assumed NYCB was “one of the stressed ones” and next thing they buy Signature Bank with a good deal, and then they popped 20%. Its hard to know with these financials.
          I was fortunate to not have been in any financials until just very recently toeing in on a few (and the last bite of this apple hasnt been very tasty yet either). I dont keep any detailed records but was making a lot of great quick trades all year, but the profits didnt seem to be adding up fully until I paid attention to how the brokerage bond desk thieves were ripping me off on their value they were assigning my bonds. The past couple weeks they have given up on scamming me and its jumped to where it should be on the year now. So I definitely relate to your “loss aversion” feelings, despite needing to trade some even now.
          TECTP…I dont know. I actually piggy backed someone here who posted it a couple years ago maybe in the high $7s. . I rode it up to mid $10s and largely held it most of the time after until last fall. It largely stayed stable, so I drifted off of it to buy issues that had dropped. And then the experts market thing bothered me too. This is a private entity filing SEC financials only because they have a puny $15 million preferred issuance. It doesnt make any sense but they do it. It could be just fine and remain so. But I am probably not going to revisit it. But the memories are fond that is certain!

          1. Just as an aside, the probable reason that Tectonic keeps TECTP alive is that its 80% owned by individuals that “manage the business” according to their website. I’ll bet the company provides an incentive for the employees to own this. Nice 10% perk for them.

            1. GRjoel,

              If you look in the 10-K for FY2021, you will find that management owns almost none of TECTP. You will find that they have an exemption from normally SEC filings that makes it easy to meeting the issuance requirements for TECTP. This ends in 2024.

    1. Very interesting Tex the 2nd including her comments about CRE loans.
      Verbatim quote- “Within the total real estate lending number, commercial real estate (CRE) amounts to $2.631 trillion. Small banks are responsible for a record 68.9% share of CRE lending: 1.806 trillion of it.”
      She is a really sharp lady. I respect her opinions.
      Thanks for sharing.
      For me, utes are looking better every day.

  15. If you do an overlay chart of the 10 year treasury with PFF over the last 6 months or so, you’ll mostly see an inverse relationship up until the banking concerns arose.

    I’m not sure if this is due to the fact that PFF includes so many financial institutions or if it’s something else. Curious to hear if others have thoughts about the cause.

    1. Dick the fund is over 70% financials, so it will certainly be at least influenced by the movement of that specific sector.

  16. I picked up some Spire (SR-A) today at 23.30. I would have liked to get it a little cheaper but it will be a long term position barring any calls. Thanks to Grid and other for the awareness. Of course, did my DD to ensure it was right for my needs.

  17. 5+% CDs ~ Noncallable, Fixed, Semiannual, FDIC, par

    * 1yr ~ Charles Schwab, 5.2%, 15987UAY4, 5/2/24
    * 2yr ~ Charles Schwab, 5.05%, 15987UBA5, 3/28/25
    * 3yr ~ Morgan Stanley, 4.9%, 61690U3N8, 3/30/26

    1. I saw a 5.4% one year non-callable from Hope Bank cusip 062683HL4 this morning, and an 18 month from Zions cusip 98970LC43 this afternoon.

      They seem to be a bit like toadstools – popping up and disappearing pretty fast.

      1. A Bank named Hope? Who would name a bank that? At least it’s honest and has a CUSIP. I wonder what they named their kids?
        Moved into a bit of margin funds with some spitball orders today.

        1. I have dealt with their (Bank of Hope) local office for many years. They have always treated me well. They have generally had good interest rates in this market over the years. They are customer-oriented (Yup, real people to talk to and real answers when you have a question) and the local staff will often tell me about new and upcoming special offerings. Just my opinion.

  18. Does anyone have a good tool for importing your portfolio data. I’m willing to pay for something mainly because I don’t feel like taking the time to build something myself.

    What I’m looking for is something where I can put data into a chart and have it spit out a pie graph for me. Just trying to see how heavily allocated I am between sectors, accounts and whatever else I can think of.

    1. At Schwab (and most brokers where I have had accounts), you can download a lot of your raw account data into a spreadsheet (.CSV). At schwab, look for the little “Export” with an arrow symbol on the top right of the page (positions page, history page, etc).

      Probably not as sophisticated as what you want, but helpful when you just want to save re-typing.

  19. Re: DCP/PSX merger (DCP-B, DCP-C)

    What will happen to the Partnership’s Preferred Units in connection with the Merger?
    The Preferred Units will be unaffected by the Merger and will continue to remain, immediately following the Effective Time, issued and outstanding. The Preferred Units will continue to be traded on the NYSE under the symbols “DCP PRB” and “DCP PRC,” respectively.

  20. Question for those buying PACW and FRC preferreds. Do you think the preferred dividends are safe?

    After big, well-publicized, infusions of public and private money for the rescue of PACW, FRC (and likely many others), IMHO the preferred dividends of these banks are at risk. If nothing else, the optics of making non-cume suspendable preferred payments before repaying emergency rescue funds looks bad to the general public. I can’t see management wanting to take the heat by paying a divvy.

    There are lots of enthusiastic PACWP buyers on MarketWatch and The Other Website seeing things as hunky-dory. And, FWIW, buy recommendations are out on PACW and WAL common today.

    Your thoughts welcome.

    1. I keep wondering when/if the ‘noncumulative’ feature of these banking preferred shares gets triggered and whether folks are taking account for that possibility when making purchase decisions.

      1. I am not sure the “non-cumulative” matters very much right now.

        IMHO, in today’s panicky environment, I think that if a bank suspended/skipped a dividend (cumulative or not), they would be toast.

        After the recent big public failures, all banks are now walking a tight rope until things calm down.

        1. Private, that probably applies to the investors. The last panic in 2008 the everyday depositer who had full coverage of their accounts was blissfully ignorant. As pointed out if the bank has a majority of deposits covered by the FDIC I don’t think the investors need worry. Course my famous last words. I am going with instincts on EXSR a local bank of which 51% of the stock is in a trust owned by the local college and their last disclosure that they could hold all investments to maturity. It’s a play for me on 5-1/4% dividend and recovery of stock price

      2. Poplar bank out of Puerto Rico had this problem maybe 4-5 years ago. They had some 7% or so preferreds that were in and out of suspension a few separate times. Seems they always tried to pay the divi any chance they could or were allowed to.

    2. The dividends aren’t safe, and neither is the principal, although I feel a lot better about PACW weathering the storm than FRC.

      (No position in either for what it’s worth)

      1. PACW made some disclosures after their refi (or whatever). Apparently, they now have more cash than uninsured deposits, which is viewed as good.

        Not advocating PACW, but in times like these, the common can have better risk/reward profile than the preferred. Downside risk, both go to zero. Upside reward, preferred goes back to par and tapers flat Common, uncapped, can go up a multiple. I did try this concept in 2008 and had a happy result.

    3. FRC best shot is someone takes over the preferred. A buy out at this stage for pref upside.

      PACW is slightly more interesting. They might have a shot to right the ship and struggle along.

      That is why I only bought a bit of each during the crash which was adding to already pretty small positions of each.

      I was equally adding to the stronger pref that took a bath that are related to this mess so I definitely did not have confidence in my decisions to buy some FRC-x and PACWP.

      It reminds me of the mreit mess during covid. I really did not know if was a big win until later down the road. They were not out of the woods days later after I bought. It dragged on for a bit.

    4. FRC pref should be valued as an option at this point.

      PACW, guilt by (venture bus) association, and IMO has a stronger financial condition (liqudity, uninsured deposit %, total HFS investment and HFI loan unrealized losses relative to tangible book, asset credit quality, blah blah blah) than the market perceives. But I am a biased pref holder.

      WRT divy risk, yes for a couple quarters while they maintain excess liquidity (cash drag), but that’s only short term and arguaby priced in.

      WRT divy risk for the BTFP, no restrictions for BTFP participation.

  21. DJIA & Financials 3/22/23:

    * DJIA ~ (-530 pts)
    * KRE ~ (-5.76%)
    * KBE ~ (-5.11%)
    * KBWB ~ (-4.65%)
    * XLF ~ (-2.36%)
    * PacWest Bank ~ (-17.1%)

      1. Bought MBINO a few days ago, hopped on the AAM-A/B swap wagon, and bought small amounts of a couple other bank preferreds. Swapped more CUBI-E for CUBI-F but got caught in rising prices and lost some shares at a low price.

        1. I have always pretty much ignored bank preferreds. Now when maybe the time to ignore them I am buying some. I bought WAFDP around $15 a few times past week, it jumped well over $16 today. Didnt sell and suddenly it collapsed back under $15.20 so I bought some more. I bought some MSBIP late in the day. Its kind of a local bank in the area here. Already sold off some banks for a couple dollar flips. Good thing I guess because they have dropped too, I see.
          These smaller regionals are generally all getting tossed around together. Baby and bath water thing. Who knows. Wont over expose myself here. In fact Im barely exposed at all. Getting like a widow and orphan and scrapping the profits from the table. Bought another 5% three yr CD today.
          Down to only 10 preferreds and a lot of that is in snoozers GBIL, ALL-B, CNTHP, and TANNZ. Though SR-A is gaining on them if it drops back again.

          1. I was drawn in to bank issues in taxable account for the Qualified Dividends. That’s 0% since the bulk of my money is in IRAs mostly Roth. Sometimes saving money ends up costing money.

          2. Grid, funny you mentioned WAFDP. I bought a moderate position as well today @ $15.27. Cost basis will be below $15 with the divvy next week. I researched the heck out of this one. WAFD is the opposite of SVB with 94% of deposits under $250k. They just increased the common divvy, a director bought $100k of the common last week, earnings are way up and they’ve been focused on managing rising rates with their investments. A real baby thrown out with the bathwater IMO. We’ll see.

            1. Gr, that is why this is my biggest “no risk it no biscuit” purchase. Did you see the video I posted he had with CNBC last week. They keep their duration risk mostly short, and any longer they hedged. This bank has paid 140 consecutive dividends. Plus Moodys mentioned this…
              WaFd Bank’s credit quality track record is a key credit strength. Annual net charge-offs as a percentage of average total loans have remained significantly below the level of all FDIC-insured banks since before the 2008/9 financial crisis. Moreover, WaFd has reported net recoveries on an annual basis since 2014. The bank’s policy of retaining all originated loans on balance sheet and the tying of incentive compensation to credit quality further promotes prudent underwriting and strong asset quality.
              ….Notice their bonuses are tied to credit quality….not excessive earnings from risk.
              Its a bank, I get it, they could be doing everything right that SVB wasnt and still go under from an economy going bad and the commercial loans go belly up. It is what it is as they say.

                1. Nothing you didnt already know that its also a loan originator that is a portfolio manager holding their own loans. It was an all cash deal and gets their footprint established in CA, the one state missing in their geographic area. Since regulators smarter then me cant properly evaluate the ins and outs of a banks finances in totality, I certainly cant either. The WaFed CEO would certainly disagree with me as he thinks he has a conservative bank, but I got him in my high risk bucket! Thus as we all know the one true defense a person can control in investing is allocation size.

                    1. I’ve been doing some work. All things considered, it does not look too bad- a lot of banks are in much worse shape.

                      From LBC’s most recent 10K:

                      “As of December 31, 2022, we estimated that $1.3 billion of our deposits exceeded the insurance limits established by the FDIC.”


                      Deposits, according to a recent press release-


                      “Deposits totaled $5.8 billion at December 31, 2022, an increase of $301.1 million, or 5.4%, from December 31, 2021.”

                2. Mark, not sure if the same person is still there but do a background check on the management at Luther Burbank on Linkedin. One of the management at Exchange who caused Exchange to have its first loss in 50 yrs in 2008 by doing loans on bare development property outside of its historical footprint resigned and took a job at Burbank savings. Burbank was mostly doing retail customers and catering to small business, not sure what they do now.
                  Just bought 200 shares of EXSR at 98.00 and hoping they make it another 100 yrs.
                  I was at the Burbank Ctr. last night with all the other old rockers for the George Thorogood Concert.

                    1. Exchange Bank is my kind of bank. Picked up a few shares this morning. Thanks for the suggestion.

          3. Still using C-N under $27….. WTFCM and WTFCP …. ALL-B when arnd $25.20-area …. AND due to you…. bot WAFDP on the late fade Wed. at $15.12 & $15.05. Great ideas offered to crew.

          4. Grid, Three, or more, decades ago, I had a caller who called about once a week from CA, obviously after Happy Hour and asked for me. He was a known-character. I continued to get his called shunted over to me because I was the only one of the brokers who could find humor-value in dealing with him and had been a bartender for years. It was the advent of full-blown e-trading, but he could get logged in. I would never enter an order for him. He wanted tips for his “Gamblin’ Money”. I gave him my conservative direction. I came to believe he was a garbage man, had gotten married now and had to come home by a certain time. He was ‘workin’ the numbers’.
            There was another one like that…Dr. Gross who worked ER in CA. I could hear him walk to his car, the bells, door close, start the engine and drive off eventually talking his way into his garage, door and closer and all. He wanted to place leveraged options orders. I could hear the LIFE behind the late-shift call.
            I will leave you with these Parables of a Broker. Maybe Tex and Comp, Inspy, BobDE, or Whiteroses has some other insights to our very own behavioral actions. I am GLAD to have learned, mirrored myself, in all of the ‘transactions’ here at Tim’s site.
            Make sure you and yours are good….that is my shout out to everyone here.

            1. Joel, I guess I cant ask you for gambling advise since it would be of conservative nature thus defeating the purpose of the request, ha. I got things pretty locked down and I would bet now Im 80%-85% in CDs, IBonds, Tbills, IG utility bonds, and GBIL which is only 12 month and under Tbills fund. Then throw in the fact a fair amount of the rest is either cash, or ALL- B and CNTHP, I pretty much need an old maids dress despite a few recent flyer buys. At just around plus 8% YTD Im not looking to rock the boat too much.
              Actually my real gambling money is on the Calgary Flames to miss the playoffs at plus 125 odds and Jets covering 86.5 points. I will be busy tonight on watching those “investments”, ha. Hopefully my lady wont mind me retreating to the big screen downstairs.

      2. I dumpster dove too early. I got some of the Keybank preferreds a couple days before the SVB failure. So I’m fairly underwater on those. Although I did dive some others such as Oceanfirst that rebounded pretty well.

        1. Porcupine, we all could be early. This may take some time to play out. Im going to assume the worst and it does. The violent movement of the bond market is concerning. And of course I am not going to put so much in any one of them that I lose sleep owning them. I willing to risk a couple percent of my gains this year on a few of these, but not doing a lot. I dont even like bank preferreds to begin with.

      3. My pure guess is that these five bank are “too big to fail”: BAC, C, GS, JPM, MS. So I would consider their preferred payments to be more secure than the smaller banks. Obviously, there is NO way for anybody to definitely know if/how/when, smaller banks might fail and what would happen to their preferreds. These five have 36 $25 preferreds/babys trading. Here they are listed, sorted by highest current yield:

        C-N, 7.12%, Fixed
        C-J, 7.08%, FixFloat
        MS-E, 7.02%, FixFloat
        MS-F, 6.93%, FixFloat
        BML-J, 6.92%, Variable
        C-K, 6.9%, FixFloat
        BML-H, 6.86%, Variable
        BML-G, 6.78%, Variable
        BML-L, 6.65%, Variable
        MS-I, 6.52%, FixFloat
        MER-K, 6.42%, Fixed
        MS-P, 6.38%, Fixed
        GS-K, 6.32%, FixFloat
        BAC-E, 6.18%, Variable
        MS-A, 6.16%, Variable
        BAC-B, 6.08%, Fixed
        BAC-K, 6.06%, Fixed
        BAC-M, 6.01%, Fixed
        MS-K, 6%, FixFloat
        JPM-C, 5.98%, Fixed
        BAC-N, 5.94%, Fixed
        BAC-S, 5.91%, Fixed
        JPM-D, 5.88%, Fixed
        BAC-Q, 5.81%, Fixed
        BAC-P, 5.75%, Fixed
        BAC-O, 5.74%, Fixed
        JPM-L, 5.71%, Fixed
        JPM-J, 5.64%, Fixed
        JPM-K, 5.64%, Fixed
        GS-J, 5.6%, FixFloat
        MS-O, 5.57%, Fixed
        JPM-M, 5.55%, Fixed
        MS-L, 5.46%, Fixed
        GS-D, 5.24%, Variable
        GS-C, 5.08%, Variable
        GS-A, 4.84%, Variable

        1. Tex, I am using the regional bank preferreds for gambling yield juice. I have me plenty of 5% CDs. Which I would much rather have than 5% plus bank perpetuals. It’s just amazing how low these yields are with safe yields higher now.

          1. Grid, statistically I would expect most of the smaller bank preferreds to survive. The problem is separating out the few that are the most likely to NOT survive. If you had asked any of us three weeks ago if Silicon Valley and/or First Republic would not survive, I am guessing all of us would have said yes. And even when SIVB reported problems on Wed/Thurs, I strongly thought they were TBTF, but was 100% wrong on that.

            So more power to you if you can separate the winners from the losers. I should take a look at how ~ 180 of them have performed since this all started. .

            1. Im just saying Im going to take a flyer on a couple in high risk bucket. The too big to fail serve no purpose in the risk bucket for me. I already have over 60% of my cash in safer areas of CDs, TBills, and Ibonds. The too big to fail hold no allure because many pay what a CD does, and I can get just as safe and as good or better yield not be in the bank sector with other safe preferreds. So I guess what I am saying is “no risk it no biscuit” with these controlled purchases.

              1. similar here – 50% in T-bills and some FHL Bonds averaging 5.2% yield. Some high grade preferreds (prob 30%), divvy stocks (10%), and higher risk preferreds (10%). Also a small trading account separate.

        2. Wells fargo is considered by most analysts to be in the too big to fail category. In addition to those you listed.

          1. Steve, Wells Fargo has more ill will that any of the other possible TBTF banks. Think of all the times they got grilled in Washington for their blatant abuse of customers. Recall when their standard policy was to open accounts for their customers without their knowledge? Or how about when they somehow forced insurance polices onto mortgage borrowers? Or how about when Senators called for the CEO to be removed during live testimony?

            So while they should be TBTF, I think the push back from Washington might tip the boat to let it sink. What better way to get rid of “bad” management? Pure speculation on my part but that is why I did not include it. We really do NOT know what Treasury/Fed/FDIC will do with any particular bank

            I could have listed all of the “smaller” banks instead of the five that I did show.

            To be 100% clear, we have about a .001% allocation to bank preferreds and have NO open buy/sell orders for any of them in any account. We are over the $250k FDIC limit with one of the TBTF banks in one account. So if they let it fail, it would be ugly.

        3. Going by the FSB’s G-SIB list, here are the US banks that are (probably!) too big to fail:

          Bank of America
          Goldman Sachs
          Bank of NY Mellon
          Morgan Stanley
          State Street
          Wells Fargo

          1. I do not show that BNY Mellon and/or State Street have any $25 preferreds/babys tradings. So the only debate is Wells Fargo which I purposely did not include in my TBTF list.

            Here are the 8 WFC issues if you want to include them.

            WFC-R, 6.77%, FixFloat
            WFC-L, 6.64%, Fixed
            WFC-Y, 6.32%, Fixed
            WFC-Z, 6.31%, Fixed
            WFC-A, 6.27%, Fixed
            WFC-Q, 6.26%, FixFloat
            WFC-C, 6.19%, Fixed
            WFC-D, 6.05%, Fixed

            Let me add one other comment that I have previously posted. The underlying assets of a bank have ~ NO bearing on whether a bank run happens or not. When you have 5% uninsured deposits or 95% uninsured deposits will NOT stop iPhone users from withdrawing ~ 25% of a banks assets in a few hours.

              1. Dick, you are correct, my mistake. STT has STT-D @ 6.28% and STT-G @ 5.44%, both have fixed coupons.

                  1. Mr C, you are correct they are both Fix-Floa. Inexcusable errors on the STT preferreds in my database.

                    1. Tex, Go easy on yourself. You contribute an enormous amount of informative, reflective and actionable intel. One little correction doesn’t move the meter. We’ve all been there.

                    2. Tex, as Mr T says… “your fired.” 🙂

                      No worries. Thanks for everything you do.

        4. Hard to tell what figure to use to calc yld on that C-N trust- has it over 9%.
          eyeballs spinning….

          1. Looks like 3mo term sofr now – approx 4.89 + 6.37%. At today’s price it’s about 10.18% current yield? Also- is this included in or subtracted from term sofr ? –
            ” The 3 Month Tenor spread adjustment is listed as 0.26161%. for this secuirty.”

            strange stuff

      4. Grid,
        Bought just a bit more of MS-P last week, holding some C-J and C-K also.
        Not a preferred, but bought a new issue of 6% 5yr Goldman Sachs BBB+ bonds. Bought a bit more of JPM-C for wife’s IRA, probably have a bit too much in there now. Sticking to the bigger banks for now.

  22. Powell & Yellen simultaneous news conferences at “odds”:

    * Powell ~ banks are safe
    * Yellen ~ no need to increase FDIC insurance limits to stabilize banks
    * Result ~ banks & financials tanking post dual meetings

  23. Winner, winner tax free dinner, I (ate) bought:
    Davie, Florida Water & Sewer Revenue 3.5% due 10/1/2042 @ $87.99 YTW/YTM 4.417% YTS 4.70% AGMC Insured CUSIP 238676EW6 just building my tax free ladder as the Federal Government is going to be coming with a ski mask in the dark/night to take what money you have through increased taxes on everything not nailed down. Think about just what our elected leaders will need to do to keep up with the higher interest payment with all the borrowing and printing Just all digital illusions of wealth 🙃
    Smile, I am Azure

    1. Azure,
      Not tax free, but I bought some of this GS new issue today for my Schwab IRA, thought it was a decent offering even if callable ?
      CUSIP 38150ARY3
      Security Type Corporates
      Seniority Senior
      Issuer Name Goldman Sachs Group Inc Series N Medium Term Nts Book Entry
      Company Name The Goldman Sachs Group, Inc.
      Issuer Location New York
      Sector Financials
      Industry Capital Markets
      Maturity Date 03/22/2028
      Coupon Rate 6.000%
      Coupon Type Fixed
      Coupon Frequency Semi-annually
      Accrual Day Count 30/360
      Dated Date 03/22/2023
      First Settlement Date 03/22/2023
      First Coupon Date 09/22/2023
      Next Coupon Date 09/22/2023
      Underlying Stock Symbol —
      DTC Eligible Yes
      Evaluated Price 100
      Call / Put / Sink Features
      Call Type Callable
      Call Method —
      Call Details Callable in whole Quarterly beginning 03/22/2024 with 5 days notice.

  24. Another Bank Domino Falling…PacWest Bank

    * Common & Preferred stock continue their fall ~ 12% down today
    * 20% deposit migration
    * Announced $1.4B loan from Atlas Partners for capital infusion
    * Borrowed 15B from federal programs

    1. Thank you to all and particularly Tim. Great site. Now that I am retired I hope to give it the attention it deserves

    2. I had the good fortune (smarts?) to not sell my 500 shares when CORR stopped the dividend. Watched a trickling increase of interest two weeks ago and bought 100 shares at $5.81.

      Very enjoyable surprise this morning.

    3. Does anyone know if QVCD has suspended dividends? It sure looks like it is trading that way.

  25. % Uninsured Domestic Deposits at US banks as of (12/31/22)

    * Silicon Valley Bank ~ 93.3%
    * Signature Bank ~ 89.7%
    * Citibank ~ 77.0%
    * First Republic ~ 67.7%
    * JPMorgan ~ 52.5%
    * Fifth Third Bank ~ 52.2%
    * US Bank ~ 51.7%
    * Wells Fargo ~ 51.5%
    * Goldman Sachs ~ 47.7%
    * Bank of America ~ 47.1%

    1. If one is wanting to dabble in bank preferreds at an entry point of your liking you may want to research the WaFed (Washington Federal out of Seattle) 4.875% perpetual WAFDP. They just announced last month their 160th consecutive quarterly divi. So I guess that means the 08-09 crisis didnt overly stress them. This quick interview by CEO with CNBC last week clarified from him that they run a conservative investment portfolio and used hedges on any longer duration. He said they expected deposits coming from SVB at the time and was incredulous about SVBs long duration book.
      I bought in around $15 and got plus 8% and then bought some more yesterday as it fell back down in $15.10s late in day and I bought some more. It jumped some today so watching to see if it drops may be of value if it is of any interest to begin with. Its a smaller super regional just inside the top 100 biggest banks in US.

  26. Grid, et al – was curious if you feel SR-A (Spire) is currently one of the more compelling “buys” available in the preferred utility world? I don’t have any UTE preferreds in my portfolio. Looking for an investment grade, low worry issue that may have gotten caught in the recent financial downdraft. Thanks in advance

    1. Compelling maybe in sense of current yeild of “whats out there” in uteville preferred land. Its going to catch wind of market swings over time too, unlike the illiquid sisters who dont have any real compelling value in terms of present yield environment. Its basically derived of 90% regulated subsidiary entities of Missouri and smaller Ala and Mississippi areas. Plus unfortunately about 10% of stupid stuff hold cos seem to always waste time and money with. Its already back up into the 23.40s now I see. My preference is to buy in the 23 teens and twenties like I did this morning.
      My preference would be to own all utility preferreds, but the relative value just isnt there for me. I only own 2. But I got a mess of 6% plus utility subsidiary debt that matures in 10 years or so.

  27. I think it was on this page last week that someone was asking if the SJIJ divy had showed up – mine finally did on Schwab today

  28. Is there anywhere on site YTM calculator for Baby Bonds or Term preferreds ? if not where can i get one that updates with streaming prices ? Thanks

    1. I don’t believe you can find what you’re looking for for free, and if you could I’m not sure you’d want to trust it.

    2. Just do a quick YTM estimate yourself. Current pay rate plus (%gain to par divided by numbers of years to maturity). Then deduct a small amount to account for compound interest. Don’t forget to adjust the price for accumulated dividends before starting your calculation. Most published YTMs don’t do that so you’re already more accurate than they are.

    3. Hi Nikolas, here is one from Fidelity:
      It does not work (for me) if I am logged in my Fidelity account so I use it in a different browser.
      A poster here, 2whiteroses, is a master in these matters. As he has explained in prior post, and as Martin G stated Re: compounded interest (i.e., accrued interest), run the calculator a first time, then subtract the accrued interest from price and run a second time.
      Note that if between ex-date and pay date, to be correct, one would add the missed interest (calculate by hand) to price.

  29. Anyone willing to dabble in bank prefs may want to take a look at FHN-D.

    As has been discussed on this board, FHN is scheduled to merge with TD Bank of Canada later this year. TD is one of the best credits out there, so most of the FHN Preferreds would get much closer to par if the merger passes. But there is some uncertainty with the merger, so one needs to look at FHN as a standalone.

    Now, I’m not even close to being a decent bank analyst, but FHNs loan book looks OK.

    As shown on page 10 of their 2022 annual report, almost 80% of their loan book is commercial, with the majority being to businesses.

    The current coupon is 6.1% and then it floats at LIBOR + 3.86% next May. Assuming a conservative LIBOR OF 2.5% results in a coupon of 6.36%, or a div of ~1.6.

    1.6/ 18 (current price) = 8.8% current yield, and a much higher YTM which comes into play if td merges or the bank run risk subsides.

    A nice kicker is that it pays semi-annual until it floats next year, meaning the dividend that goes ex on of April 13 will be a whopping 76 cents.

    1. Mr. Market is telling us that TD will ask for a lower merger price, $25 is almost certainly out. Still risk that merger doesn’t go through, but can also make the case that letting it fall into the stronger TD hands makes sense.
      I agree with your assessment that FHNprD makes sense, but only if some type of merger is consummated.

  30. I’ve followed this site for about 10 years but rarely comment. Maybe some change can be made on the oddball securities and small $25 issues that get a lot of attention here but I don’t get it. Why? Why bother except for the entertainment value?

    If you’re a growth investor you look to growth stocks. If you’re a true conservative investor you look to high quality bonds….and not these $25 issues and most certainly not the preferreds. Playing in the market is a fun pastime but the chances of anybody doing it successfully on a sustainable basis are slim. Why not just invest in a portfolio of high quality cooperate bonds with laddered maturities and call it a day?

    I’ve constructed just such a portfolio with nothing rated lower than A3 from Moody’s. I watch the market for entertainment (and read sites like this one) but I don’t worry about my holdings. Instead, I just go about doing what retirees do. Seems like a smarter way to invest relatively worry free instead of trying to outsmart the market trading around in relatively low volume issues from mostly (not all) sketchy companies.

    1. Aloha,
      A couple of things come to mind.

      Some people like hunting for bargains. It’s not a chore, it’s fun!

      The preferred market can be very inefficient at times, creating opportunities to add a few extra percentage points in return a year. That can add up to a lot of trips to hawai if done consistently.

      1. Well, like I said, it can be entertaining. Just like gambling. I guess if you gamble with what you’re willing to lose, then you’re getting something for your entertainment dollar but be honest, isn’t Vegas more fun?

        I normally make one trip per year to Hawaii and I stay for about 5 months.

        1. Ok, fine. I’ll play along.

          It can be both entertaining AND lucrative the majority of the time. The same can’t be said for vegas..

          But hey, you should only do what you are comfortable with. I agree, many investors would be better off with your approach. This site is clearly geared towards the “do it yourself” crowd.

    2. Aloha, Thank you for visting us and sharing your thoughts.

      By way of introduction, I’m sitting on 40-something issues. Many are boring. None are sketchy. My average hold is a low A or north of BBB+; significant when considering where they fit in the stack v bonds. Based on timing of the buys, the average yield (w/o cap gain) is still well north of 6%. Throw QDI in the stew and the taxable-equivalent crushes bonds.

      The inefficiencies in the preferred market noted by Maine are real – and many of us here are yanking returns near double than that curently available on LT bonds. Just the same, some here including yours truly added a few wagons more of your referenced bonds when they started melting down in Oct and Dec. providing doorways to 6.5% yield A-paper and a further diversification of holdings.

      The depth and breadth of conversation and viewpoints here are extraordinarily unique and cannot be found with similarly consistent-competence and civility elsewhere. The group is also reactionary to current events; we might reference the recent IBond, UST and Muni phenomenon we roundtabled here many times as examples.

      I do agree wholeheartedly with your contention that there is much too much consternation resulting from ongoing lower quality yield chasing. But that’s just me. There are many viewpoints, but outside of some person to person abuse in the name of fun, none of us makes too big of a deal of ourselves and respects each others viewpoints. From tenured WS experts to day-1 novices, we are all learning here. Hope that provides some clarification for you.

      We keep it light “mostly”, self-discipline the forum and are cross-supportive from top to bottom. You might value dropping in more often and you might offer valued bond insight and perspective – but you should know in advance that broad-brushing my friends and what we do here is probably not the optimal path. Best to you and hope we here more from you.

      1. Well stated Alpha – while I still consider myself a novice to many of the folks on this site, the ability to diversify utilizing preferreds and BB’s is welcome. The conversation here help me to find those proper diversifying issues. BTW – I too have a very healthy chunk of my income portfolio in A- and above rated issues. Was feeling good until the Credit Suisse debacle came along – they were rated A3 (A-).

      2. Alpha, thanks for your comment. I’m well aware of the focus here. I enjoy reading what others are doing with their investments. I guess what it boils down to is, is it all worth taking the risk inherent in trading mostly low liquidity securities when accepting a little less potential return can be had in higher quality instruments? If someone plays in this space for entertainment, I can see that but if someone plays in this space because they truly need the extra change, then I question their investment approach.

        I like that this forum takes a light hearted approach but still, it seems like people are scratching for a little extra chicken feed here. Good discussions and entertaining. Way better than the serious discussions from the so called experts on SeekingAlpha.

    3. A.R. – A couple of other thoughts:
      1. Not everyone classifies themselves as growth, income, bond, etc. at all times. There are times to be in each one of these investments, and there are definitely times to not be in them (see 1 year charts of Apple, Intel, Meta, Alphabet, Netflix, etc.). 2022 was a great time to be in commodities, and short-term CDs and treasuries were a good investment. Preferreds could be a very good investment when rates and the economy stabilize but they haven’t been good investments for the past year, and the banks are off to a bad start for 2023.
      2. Until the last few months, it was very difficult to get high quality corporate bonds with laddered maturities paying above 4.5% Some people can survive on less than 4.5%, but others can’t, so they gotta do what they gotta do. I’ve been very happy to pick up high yielding agency and corporate bonds in the last 2 months, and I’m glad I had the cash from other investments to do it.
      3. Long corporate bond prices generally dropped significantly in 2022, and they were a terrible investment if you had to sell them to cover unplanned expenses such as medical, job loss, house, etc. (see SV Bank but think on a smaller scale). Most people have very low savings rates and small IRAs, and unplanned losses like the 2022 bonds could wipe them out.
      4. Preferred stocks are the primary goal of this site, with some side discussions about bonds and common stocks. But, they definitely do have a time and place, and they require some work.

      You seem to be missing the point of this site. It isn’t a website that lists Top 10 Growth Funds or Top 10 ETFs or Top 10 Corporate Bonds. It is a classroom where you can learn much about how investments work from many knowledgeable and hard core people, and I am very grateful that it exists. There have been many times that I have been about to pull the trigger on a trade, then I remember what someone wrote several days or weeks prior, and I stop and think. That is the point.

      1. goin2cali, I have to get going too. Off to work. Things are slow and remind me of June 2007 when the phones quit ringing. Makes me nervous.
        A lot of what Alpha and Aloha Richard say is true and what you point out also.
        IG stocks and bonds are good until they are not. Its a matter of holding and knowing when to sell like anything else.
        Personally I wish I was in more bonds, but its hard to find good quality at the right price and I wish there was more talk about them here.
        My dad worked for NCR and Honeywell and Piper and GM all great companies at certain points in time. My father-in-law was a ATT guy and gave my wife stock. She also worked for Albertson’s and COST.
        All IG stock at one time or another, But my wife can’t live off 3/4% dividend from COST. Over the years we have had many great vacations including Hawaii paid for by that ATT stock but finally my wife sold the last shares when it was over 30. Where is it now?
        What I have learned from all the people here has been some of the most valuable experiences in my life and I want to thank them for sharing.
        One is patience, don’t panic. If your investments and decisions where right then hold tight and the storm will pass. Other times knowing what people here have shared has spared me some grief.
        Over time things can change and you need to change with them.

        1. My opinion is everyone has a different need and comfort level and as long as they know the pros and cons to what they are doing, that is where they need to be. For me, people wanting A bonds are wanting either absolute relative safety in payment or hopefully a decent slice of recovery if company goes belly up. I dont buy bonds of companies that are in danger of going under. But I dont want to pay up and get low yield of A rated seniors. So I buy in assumption company isnt going under and piggy back off the high credit rating of a company buy purchasing their subordinated debt. For example ComEd is a strong T&D and biggest Illinois ute. I bought a little more of their 2033 subordinate debt to top off the tank at 6.06%. So for this issue its collect the coupon until 2033. I get the higher yield and ride til maturity, or if it goes bankrupt the seniors above me get to fight over whats left with the senior secured, bank loans, and DIP that likely sits above it right before it went under.
          I wont have to worry about that because I know I would get a handshake and thanks for playing.

    4. AR. I do agree that you can sleep better with high rated “cooperate” bonds. My public storage 2.2% coupons are pretty safe and I rarely look at them. If I had a small retirement fund, not sure that it would cover Mama’s egg money though. But it sure does free up more time for Calvin and Hobbes.

      1. Mr. C
        With my small property I could put in a chicken coop so we could defray the cost of the eggs we buy in a year. Last time I bought them at Safeway it was 7.00 a doz. not sure its a good trade off? 18.00 for a bag of 50# feed at Tractor Supply. Also the hassle, but the manure is good for the garden. The neighbor was going to give me a free chicken coop and chickens. But my wife put her foot down. She likes collecting the dividends compared to the hassle of the chickens.
        But I agree with Tim who runs this site. My wife and me need at least a 6% return to cover our expenses. This means some of our investments are out of the comfort zone of no worry sleep well at night.
        But I also like the idea of collecting the dividends 4 times a year and no expenses buying and selling preferred and BB’s
        I agree with Grid and said it before, the commission buying and selling bonds only makes sense if you hold to maturity or your getting a discounted bond which isn’t A rated. Course I could of bought CS bonds last week A rated.

    5. AR, how about putting some meat on this?

      Can you point to any research showing that investors get better returns from corporate bonds than $25 issues?

      How do you deal with the poor liquidity and wide spreads? Do you just hold everything to maturity? What are the rungs of your ladder?

      Any favorite issues that you think are good buys right now?

    6. Aloha Richard,
      Good idea, I better get rid of my sketchy JPMorgan, Morgan Stanley and Citigroup preferred stocks paying 7%, way too risky for a retiree. Also my Allstate H paying 6% just keeps me from getting a good nights sleep, better sell it fast.

      1. Bill, I was watching Fast Money last week and money manager Steve Weiss who has been a huge bear for at least 6 months stated buying Citi preferreds and collecting 7% income was a wise purchase. He of course didnt go into any specifics though, just a passing comment about income.

        1. Grid,
          Thanks for the info, so happy it wasn’t Jim Cramer who said that 🙂
          I bought of little of C-K and C-J last fall, hoping they don’t get called later this year, but I thought if they do, it’s still a worth doing.

  31. A flip of the bird to every brokerage who met their deadline by delivering WRONG 1099’s, etc. All of them! Now all the flowchart preparation has to be done again. So my time is worthless?
    BIG penalties for NOT meeting the deadline accurately. Right, that will happen.

    1. I never bother to start anything until March, by which time I always have received at least one correction. Last year.

      Latest one I have received: Schwab sent me a corrected 1099 in October — for 2018.

      1. Any correction from 2018 is because the company likely made a mistake, not your broker.
        and most funds/REIT’s are pretty predictable as to when they issue final information (which can be AFTER) the statutory deadline of February 15, necessitating a correction. (this especially happens with funds that invest in REIT’s, or funds that invest in other funds)
        Pay attention to WHAT was corrected. Some companies are notorious for having corrections that go back years, like COTY.

    2. I routinely file for an extension every year. I overpay my estimated so I just use last year’s final numbers as preliminary for the current year. This way I can sit back and collect the inevitable revised 1099s I get from Fidelity. Sometime in May or June I’ll bring all that stuff to the accountant. Works for me.

    3. What do you mean by flowchart preparation?

      I have trouble blaming the brokers, or the data vendors they use – I think the main problem is clueless small REITs etc. who don’t supply the right data promptly, and their know nothing IR departments who cover their ears in horror when an investor has a question about tax treatment.

      Anyway, I don’t find it takes much time to re-import updated 1099s into TurboTax. My main complaint is that I have to calculate/enter USG interest, TE state breakdown, and foreign income by hand. If Intuit would finally fix that, it would take no time at all.

    1. And again Bask Bank -up –
      “Because of anticipated upcoming Federal Reserve action, we have increased the interest rate on your Bask Interest Savings Account. You are now earning an interest rate of 4.35% with an Annual Percentage Rate (APY)* of 4.45%.”

      1. I thought I’d try them out, but their account opening website malfunctioned so badly I was unable to do so, even with the help of customer service, so I’m too wary of their operation now even if it had worked out.

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