MUScoop
MUScoop => The Superbar => Topic started by: Not A Serious Person on April 28, 2023, 04:28:58 PM
-
Another big bank going down
First Republic most likely headed for FDIC receivership, sources say; shares drop 40%
https://www.cnbc.com/2023/04/28/first-republics-stock-poised-to-rise-for-second-day-as-regional-bank-searches-for-rescue-deal.html
So, why did I start this thread?
The CEO of First Republic is Michael J. Roffler
He is a 1993 graduate of Marquette.
-
Another big bank going down
First Republic most likely headed for FDIC receivership, sources say; shares drop 40%
https://www.cnbc.com/2023/04/28/first-republics-stock-poised-to-rise-for-second-day-as-regional-bank-searches-for-rescue-deal.html
So, why did I start this thread?
The CEO of First Republic is Michael J. Roffler
He is a 1993 graduate of Marquette.
PHEW! We were all on pins and needles waiting for this answer.
-
Another big bank going down
First Republic most likely headed for FDIC receivership, sources say; shares drop 40%
https://www.cnbc.com/2023/04/28/first-republics-stock-poised-to-rise-for-second-day-as-regional-bank-searches-for-rescue-deal.html
So, why did I start this thread?
The CEO of First Republic is Michael J. Roffler
He is a 1993 graduate of Marquette.
Low standards in the early 90's I guess. Roffl
-
He has sold about $2.3 million worth of shares since November. I hope he's OK.
-
JP Morgan Chase has bought First Republic.
https://seekingalpha.com/news/3962512-jpmorgan-chase-pays-106b-to-fdic-for-first-republic-bank-acquisition
JPMorgan Chase (NYSE:JPM) will pay $10.6B to the Federal Deposit Insurance Corp. for its acquisition of First Republic Bank (NYSE:FRC), the Wall Street Bank said Monday in slides posted on its website. Earlier, regulators took possession of FRC and the Wall Street bank agreed to acquire the struggling San Francisco-based bank, marking the third seizure of a regional bank by a regulator since early March.
In addition, JPMorgan (JPM) will repay $25B of deposits from large U.S. banks and eliminate a $5B deposit from JPM on consolidation. All regulatory approvals were received and the acquisition of First Republic (FRC) has closed, JPM said.
The acquisition of First Republic (FRC) complements its J.P. Morgan and Chase franchises, accelerating growth in U.S. wealth strategy and adding locations in affluent markets, JPMorgan (JPM) said. First Republic's top markets are San Francisco (with 32 branches), New York (13), Los Angeles (10), and Boston (5).
As part of the deal, the FDIC will provide a new $50B five-year fixed-rate term financing to JPMorgan (JPM).
For JPMorgan (JPM), the deal results in more than $500M of net income accretion, adds to its tangible book value per share, and has an internal rate of return of more than 20%, it said.
Under the agreement, the FDIC will provide loss-sharing agreements to most acquired loans. For single-family residential mortgages, JPM will get 80% loss coverage for seven years. For commercial loans, including CRE, it will get 80% loss coverage for five years.
JPM is up 4% premarket.
-
So JP Morgan Chase has acquired First Republic fifteen years after acquiring both Bear Stearns and Washington Mutual.
Are these actually good acquisitions for them or are they basically doing the Fed and the larger economy a favor? I got the impressing that Jamie Dimon wasn't terribly pleased about what they acquired in 2008.
-
So JP Morgan Chase has acquired First Republic fifteen years after acquiring both Bear Stearns and Washington Mutual.
Are these actually good acquisitions for them or are they basically doing the Fed and the larger economy a favor? I got the impressing that Jamie Dimon wasn't terribly pleased about what they acquired in 2008.
I think you're right about the 2008 acquisitions, but it sounds like JPM feels it got a good deal this time.
A big difference: In '08, the biggest banks were all but forced to take troubled assets; this time, there were several bidders for First Republic. While JPM has significant financial responsibilities to cover, they also get considerable favorable treatment (as well as $$$) from the government.
This paragraph in that article is telling, and it's why JPM stock is well up:
For JPMorgan (JPM), the deal results in more than $500M of net income accretion, adds to its tangible book value per share, and has an internal rate of return of more than 20%, it said.
-
So JP Morgan Chase has acquired First Republic fifteen years after acquiring both Bear Stearns and Washington Mutual.
Are these actually good acquisitions for them or are they basically doing the Fed and the larger economy a favor? I got the impressing that Jamie Dimon wasn't terribly pleased about what they acquired in 2008.
I would hypothesize that the visibility to asset quality is much better in this case. You never know if some segment of the loan economy goes poorly in the future, but broadly the bank crisis this time isnt because loans have gone bad yet. In '08 that was a completely different story.
-
Thank you both. Makes sense.
-
Did they acquire First Republic, or acquire First Republic's depositors/book? I've read both I've the weekend, but it's my understanding that they just acquired the depositors and First Republic itself has entered receivership and shareholders have been wiped out
-
I think you're right about the 2008 acquisitions, but it sounds like JPM feels it got a good deal this time.
A big difference: In '08, the biggest banks were all but forced to take troubled assets; this time, there were several bidders for First Republic. While JPM has significant financial responsibilities to cover, they also get considerable favorable treatment (as well as $$$) from the government.
This paragraph in that article is telling, and it's why JPM stock is well up:
For JPMorgan (JPM), the deal results in more than $500M of net income accretion, adds to its tangible book value per share, and has an internal rate of return of more than 20%, it said.
Yep. As I mentioned, SVB's biggest competitor was JPM, so I'm imagining JPM had some overlap with First Republic as well which would make it attractive.
As Ive said before, Dimon is a shrewd and legendary banker by this point. When it comes to things like this, I'll assume he's making the right and savvy call until proven otherwise.
-
I think you're right about the 2008 acquisitions, but it sounds like JPM feels it got a good deal this time.
A big difference: In '08, the biggest banks were all but forced to take troubled assets; this time, there were several bidders for First Republic. While JPM has significant financial responsibilities to cover, they also get considerable favorable treatment (as well as $$$) from the government.
This paragraph in that article is telling, and it's why JPM stock is well up:
For JPMorgan (JPM), the deal results in more than $500M of net income accretion, adds to its tangible book value per share, and has an internal rate of return of more than 20%, it said.
First Republic was part of Merrill. They bought it in 2007.
When Bank of America acquired Merrill in 2008, it was forced to divest FRC. It did that in 2010.
Now it is part of JP Morgan.
So in the last 15 years, FRC has been:
Public
Part of Merrill
Part of BofA
Owned by VCs
Public Again
Failed
Part of JPM
Nice quiet stable company
-
Another big bank going down
First Republic most likely headed for FDIC receivership, sources say; shares drop 40%
https://www.cnbc.com/2023/04/28/first-republics-stock-poised-to-rise-for-second-day-as-regional-bank-searches-for-rescue-deal.html
So, why did I start this thread?
The CEO of First Republic is Michael J. Roffler
He is a 1993 graduate of Marquette.
Yeah but he's an ex KPMG partner, so it cancels out
-
A very attractive strategic deal for JP Morgan. Picks up a lot of good quality assets with government sharing in losses.
-
First Republic was part of Merrill. They bought it in 2007.
When Bank of America acquired Merrill in 2008, it was forced to divest FRC. It did that in 2010.
Now it is part of JP Morgan.
So in the last 15 years, FRC has been:
Public
Part of Merrill
Part of BofA
Owned by VCs
Public Again
Failed
Part of JPM
Nice quiet stable company
Jesus.
-
A very attractive strategic deal for JP Morgan. Picks up a lot of good quality assets with government sharing in losses.
MUFINY was in the room overnight working the deal. Jamie Dimon had good body language.
-
Is our banking system in jeopardy?
-
Is our banking system in jeopardy?
Its all gonna be AI driven bitcoin
-
A very attractive strategic deal for JP Morgan. Picks up a lot of good quality assets with government sharing in losses.
A very attractive strategic deal for JP Morgan. Picks up a lot of good quality assets with tax payers sharing in losses, but no one making under $400 k of course
-
A very attractive strategic deal for JP Morgan. Picks up a lot of good quality assets with tax payers sharing in losses, but no one making under $400 k of course
Is that the case? I thought JPM assumed all assets and loans with the Fed providing some loan guarantees.
-
nm
-
Need to have a telethon and set up some Go Fund Me accounts for those with more than $400K in taxable income.
why should they have to pay ANYTHING toward a bank failure? what about the mom n pop hardware store that goes down when they buy too much "stuff" that doesn't sell or pay themselves too much or...
you assume anyone who makes $400k or more just need to suck it up and pay. btw, if you think $400k is a lot of money, it's all relative and so what...i don't care if they made a million. most failed businesses need to be held accountable for themselves and/or their shareholders. too much "monkey business" can be allowed to occur with the golden parachutes available
if ceo's and shareholders knew the ship was going down and sold shares ahead of time to make BANK while others lost their ass, they should be made to pay back ALL of that plus a stiff penalty and maybe a little time with harey weinstein
-
Are we railing against FDIC insurance now?
-
why should they have to pay ANYTHING toward a bank failure? what about the mom n pop hardware store that goes down when they buy too much "stuff" that doesn't sell or pay themselves too much or...
you assume anyone who makes $400k or more just need to suck it up and pay. btw, if you think $400k is a lot of money, it's all relative and so what...i don't care if they made a million. most failed businesses need to be held accountable for themselves and/or their shareholders. too much "monkey business" can be allowed to occur with the golden parachutes available
if ceo's and shareholders knew the ship was going down and sold shares ahead of time to make BANK while others lost their ass, they should be made to pay back ALL of that plus a stiff penalty and maybe a little time with harey weinstein
7 of 10
Really wasn’t feeling it until the harey weinstein drop. Really saved it at the end
-
why should they have to pay ANYTHING toward a bank failure? what about the mom n pop hardware store that goes down when they buy too much "stuff" that doesn't sell or pay themselves too much or...
you assume anyone who makes $400k or more just need to suck it up and pay. btw, if you think $400k is a lot of money, it's all relative and so what...i don't care if they made a million. most failed businesses need to be held accountable for themselves and/or their shareholders. too much "monkey business" can be allowed to occur with the golden parachutes available
if ceo's and shareholders knew the ship was going down and sold shares ahead of time to make BANK while others lost their ass, they should be made to pay back ALL of that plus a stiff penalty and maybe a little time with harey weinstein
The answer is financial stability. For those of you who don't understand this, you need to go back and read the history of the Depression.
The combination of no deposit insurance, extremely tight money supplies and a financial panic that lasted for much of the 1930s caused enormous hardship for millions and millions of ordinary Americans. Sadly, most of the people who directly faced the consequences of the Depression are deceased. Many of us Boomers felt it because of the deeply conservative approach our parents took with money.
If it were not for the FDIC, the economy would have gone into a tailspin and millions upon millions of Americans would be lined up to get their money. The banks couldn't pay it and the hardship would be a calamity leading to war.
The great accomplishments of the Franklin Roosevelt era were FDIC and NCUSIF insurance, bank and securities regulation and much research into how we bring fairness and equality to the securities markets.
For those of you who don't understand, let me recap as to why these few banks are failing. Unlike 2008-2010, where asset quality from bad loans was a key issue, this is more about growth and regulatory oversight. SVB, for example, had untold billions in uninsured deposits. It grew like mad after its acquisition of Boston Private. But despite all the new deposits, it had no place to put it all -- the loan demand wasn't. So they bought intermediate to long-term securities at historically low prevailing interest rates. When rates went up, these securities were worth far less than SVB paid for them.
Further, banks have capital requirements. If they fall below the requirement, they can be seized by the FDIC.
When the panic started, SVB could not raise enough liquidity fast enough to satisfy depositor withdrawals. Had they sold securities, they would have been insolvent.
In my view, Management horribly mismanaged SVB. The regulators should have realized how much underwater the securities portfolio was and ordered SVB to cease and desist immediately. They didn't and the prevailing thought is that SVB's close connections with California's political elite was a factor.
-
FDIC is a good thing. Need consumer confidence in banking.
Too big to fail is a bad thing.
Sub-par regulation is a bad thing.
Any fraud or illegal activity is a bad thing.
Think we can all agree on the above.
-
Sub-par regulation is a bad thing.
The question you have to ask is, "What is sub-par regulation?"
Think about it in the context of the current banking environment. The last time we had large scale disintermediation in this country was the savings and loan crisis between 1979 and 1981.
The last time we had interest rate risk problems in the banking business was the 1990s.
The average bank regulator wasn't even egg and sperm yet when the savings and loan crisis hit. They probably were in diapers, if not en utero, when the last time anyone seriously paid attention to interest rate risk. Anyone from the 1990s era who is still around either is behind a desk ordering a battalion of 20-somethings into the field or is so incompetent they could not find a job outside government.
Good regulation requires taking risk. In the case of SVB, the fear was that if anyone wrote the bank up for interest rate risk, Gavin Newsom and the California political elite would be on them like a GAO cost cutter with a bayonet. You aggravate the wrong people and, God forbid, you might have to work for a living. Same thing happened before, which is why Charlie Keating kissed John McCain's backside and operated a failed thrift for so long.
The result is that bank regulators get experience doing examinations and then either move into the private sector if they're good and into management if they're not.