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Watch First Republic Bank

FRC needs to be watched – their preferred issues are trading around $10 premarket – some under $10.

Are these a buy? Of course they are non-cumulative so a suspension hurts.

I will be watching closely to see if a small nibble is in order. NOT a recommendation that ANYONE listen to what I do. I simply think the risk/reward at $10/share is coming into an attractive range–with the Fed backstop in place.

21 thoughts on “Watch First Republic Bank”

  1. The chairman/ceo of CUBI bought 45k shares of the common at $11 today. He owns over 1mm shares.

  2. For what it is worth, I am going back and revisiting HBAN Series J and the RWT Series A . I don’t need to catch a falling knife in here, but the HBAN J is priced to yield 7.5%, and I like the 5 year reset feature.

    A couple of weeks ago the SLG I was yielding about 7.2%…

  3. I reduced exposure to CUBI-F in the mid-16s here. Took a decent black eye but it actually traded below $10 and CUBI itself was also down more than 60% at one point. If the market is right then CUBI may have an outsized exposure to fail compared to the rest of the banks – I reverted my funds to MS-E for now because, if MS fails then all bets are off! I still have 200 sh of the CUBI-F.

  4. I’m inclined to stick with/buy preferreds of banks where the common stock is holding up. So I buy/hold bank preferreds of say MBIN (common was down 7% today, now back to unchanged) . My favorites are MBINO, which floats at libor plus 4.5%+ next year and MBINM with a current yield of 9%+. Both go ex tomorrow.

    1. @RetiredBroker, Took a look at MBIN. MBINM looked like a good bet. Thanks for bringing it to my attention. Plenty of opportunities this morning but not enough time for DD.

  5. Wouldn’t CUBI and the other at-risk banks be taking full advantage of the bank term funding program? Is the market saying that’s insufficient in CUBI’s case?

    1. Yeah, I thought the bank term program announced over the weekend would prevent the panic. We will see if things calm down later in the week.

      I think all of these banks are as viable as they were last week, but no bank can survive a run once panic starts. The Fed would have been smarter to backstop the banks that were in trouble instead of closing them and I think that would have helped psychologically. Heck, I am not even sure people are trying to pull their savings out of some of these banks yet. Investors are just stampeding for the doors in anticipation.

    2. I think maybe it’s a reaction to Biden’s “investors will not be protected in these situations” (paraphrase) comments. Also, that the c-suite would get fired. That’s for the banks that need this backstop? Or were these SPECIFIC comments related to Silicon Valley and Signature?

  6. Market thinks CUBI is going belly up. Common is down ~ 60%, -E and -F are down 50% to 60% also. . .

  7. Tim,
    Time to bring out the saying
    “The beatings will continue till the morale picks up”

    My bank preferred issues are dropping like the OSCAR winner “Everything, everywhere, all at once”
    Like “Navalny” my issues are in Jail.
    A “Whale” of selling has me in shock.
    Now, I go to work to try to make up a fraction of the 13k I’m down so far today.
    Hard for me to type using a pencil held by mouth. as my fingers were cut off catching falling knives.
    I hope the Fed will announce a suspension of rate hikes and calm the markets.
    I will be fine, just having some fah fah fun at my own expanse.

  8. My worst position in this is CUBI-F – looks like halted now. 500 shares so not a huge part of my portfolio but, still…

    1. I sold -E and -F the day after they went ex, but am wondering now if they will even pay the Mar 15 div.

    1. CUBI appears to be among them. I will admit, that hurts me pretty good.

      I also had some stink bids hit on Friday for some bank preferreds that have not helped me any.

      I have to think the baby is getting thrown out with the bathwater on some of these as everyone is heading to the exits so I guess I will just have to ride it out. Not sure what else to do, but I am open to advice.

      1. call me crazy but I actually nibbled more CUBI-F for $11.50 (only 100 sh) for a trade knowing full well that $1150 is at full risk. We’ll see.

      2. Scott R – I had a couple sink bids in GTC mode which I cancelled–don’t want to own more at these levels.

        I tried to buy some FRC preferred at $9.xx – now they are at $7.xx. Funny I had an order in a couple pennies above the ask and it wouldn’t execute so I cancelled it.

        1. Yeah, I didn’t get to my stink bids soon enough on Friday, and of course no one knew if it would be just a blip then or if the contagion would spread so… End up with some ZIONO, FITBI and a couple of others.

          I just have to take my spanking on CUBI and move on like everyone else. I wonder if the preferred holders will get anything if the FDIC closes them down? Not sure how that usually goes.

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