Well we have been getting earnings reports from the big banks, but I am most interested in the small bank reports. While I exited most of my small bank holdings (too early of course) I still have a couple holdings left and thus have an interest.
I’ll be looking for new allowances for loan losses and commentary on the commercial real estate segment from these banks–this would include any issues with multi family lending which seems to be a favorite of the small community and regional bankers.
It is likely we will see some commentary on the special assessments from the FDIC since all bankers are paying these because of previous bank failures and no doubt we will find out how their net interest income margins are holding up. I have some concerns that these banks have been kicking the can down the road on some bad loans–renegotiating etc ‘hoping’ for a miracle. We’ll see.
Most of the small banks will be reporting on the 23rd, 24th and 25th.
Also see MTB TFC NTRS CMA FITB HBAN STT RF on calendar
I sold my ZIONl at a decent profit. One of the things I noticed that bothered me, was when I looked at their long term bonds the bond market was pricing them at higher risk. Decided to pass on the 1000 bonds and get out of the BB ones.
If you’re holding some of the short term BB bonds of regionals might want to compare the yield to their longer term bonds.
1000 pfds can be significantly higher yields compared to $25 land, as you know. Also I see Zions is ranked in the bottom 1/3 of some regional bank ratings/groupings I’ve reviewed. But for whatever reason I like them and still long their 25’s…..
Saw Key was announcing this week, not sure who else. For now we are in holding patterns until the next big event.
Random thoughts –
— Back in August, Wells Fargo estimated 1.8 billion for the FDIC assessment. BankAmerica estimated 1.9 billion. The FDIC Rule appears to temporarily bump the assessment rate by 9%. As I read it, the increase is in effect for 2 years, more or less depending on adjustments, and does not apply to banks with assets below 5 billion. The first quarterly payment is due June 2024, although Wells said it would expense the charge up front.
https://www.marketwatch.com/story/wells-fargo-bank-of-america-to-pay-fdic-up-to-3-7-billion-combined-for-bank-failure-special-assessment-85693de6
— The Federal Reserves bank asset support program is scheduled to expire in March. IMHO, it will not be renewed. The banks have figured a way to arbitrage it. Borrow from the Fed under the BTFP at a low rate then turn right around and loan it back to the Fed at a higher rate under another program. Pay 4.8% get 5.4%. Nice work if you can get it.
There was a huge 30% jump in the program in November not because of a bank panic but because the free money was just too good. . Wolf Street blog had an item on this. Should be good for bank earnings.
— Reports are that there are a lot of real estate loan maturities in 2024 and 2025, vacancies are higher than usual and the expected rent increases are lower. Impacts on banks tba.
JMO. DYODD,
You might be interested in the chart in this.
https://www.mba.org/news-and-research/newsroom/news/2024/01/16/delinquency-rates-for-commercial-properties-increased-in-fourth-quarter-2023#:~:text=%22Delinquency%20rates%20jumped%20to%206.5,were%20unchanged%20during%20the%20quarter.
Walnut, I don’t doubt the accuracy. As one that has served on two bank boards, the “pretend and extend” will no doubt occur. A friend advises me NYC portfolios are already being extended.
I purchased KRE last spring during the bank crisis. Have a great return; Buffet predicted the banking crisis wasn’t over. Thankfully, so far all good. I plan on selling once this is a L-T gain (hope all remains well until then). I am a Buffet disciple and don’t like being contrary to his wisdom.
KRE? Key?
Thank you for sharing.