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First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

ir.firstrepublic.com

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Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#101

Post by [deleted] »

hackernewds wrote: post #49
huitzitziltzin wrote: post #38

Earlier quoted context omitted.

Another interpretation is that this is generally how the FDIC likes to do things: take over on Friday and reopen on Monday. Not sure that will happen in this case but the regulators get two days to prepare to reopen, which at least in recorded US history is seamless and without risk for retail depositors.

The 2-day shutdown is hence critical for the functioning of the financial system. Same for reporting earnings afterhours. Those calling for 24/7 trading are aloof of how entrenched systems need change management

[deleted]

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#102

Post by eclipticplane »

hedora wrote: post #96
mdorazio wrote: post #48

I'd really like to know where people are withdrawing their money from these banks to . They're not taking suitcases of cash, so it must be flowing to some other financial institutions. Is it going to traditional big banks (BofA, Wells, Chase, etc.)?

I’m thinking our diversified stock portfolio is safe (in that the number of shares we hold should not change, and it’ll go back up before we need the money decades from now). I’m hoping that’s not naive. I’m curious about Wealthfront’s strategy of spreading savings across many partner banks to get $2M in FDIC insurance per account though.

I can't speak to Wealthfront specifically, but what you're describing with them is very commonly called a sweeps account. They are explicitly understood under FDIC's rules as automated balance accounts.

Where you can run afoul is if you personally have accounts at the same banks that your sweep accounts use. And you might not even know it. E.g., Mercury isn't a bank: they use Evolve Bank and Choice Financial Group. So if you also had an account at Evolve bank, you're capped at 250k across the total of both accounts.

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#103

Post by dannyw »

sroussey wrote: post #60
nemo44x wrote: post #37

Earlier quoted context omitted.

> Multiple people were calling me to ask whether they should get their money out of their bank Should we? At minimum keep as close to $250k or less spread across however many banks as practical, right now.

I thinks lots of small companies with a sudden $4m influx of cash are not in a good position to open accounts at 16 banks. Now that said, there are hot money managers that will do this for you.

Open an account at one of the biggest banks (JPM Chase, Wells Fargo, etc).

You don't need 16 banks when you can bank with a "too big to fail".

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#104

Post by mediaman »

loopdoend wrote: post #92
digitaltrees wrote: post #85

Earlier quoted context omitted.

Not really the money can and will be clawed back if a bank is placed into bankruptcy or receivership. The legal system disincentivizes runs on the bank by enforcing a 90 day look back period where withdrawals have to be repaid so that funds can be distributed more broadly and fairly.

Which legal system has a claw back period on withdrawals? Can you imagine rolling back wire payments 90 days old!

It’s not always 90 days, but the American federal bankruptcy system does allow for clawbacks on payments made immediately leading up to a filing.

Meaning, the bankruptcy administrator will absolutely file and get a judgment on your assets, which will be forcibly collected, if you received a payment from a bankrupt entity within the window established by the court.

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#105

Post by ketzo »

dannyw wrote: post #79
resource0x wrote: post #71

Earlier quoted context omitted.

> If there was a bank run, First Republic probably would not be able to meet all depositors. If everyone knows this, why keep your money there? Tech exposure has nothing to do with it. "In a bank run, he who runs first, runs best".

Tech businesses tend to have more direct access to information (e.g. Twitter, emails), and listen to VCs and investors. Regular people and businesses don't hear about these things. Today, only 1 other person in my friend group of 6 heard about SVB.

I have to imagine that if you have enough money in First Republic for your withdrawal to actually be a problem for them… you at least have a dim awareness of, say, the WSJ front page.

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#106

Post by dannyw »

reducesuffering wrote: post #56

Uhhh, are they next? Their balance sheets says $17B assets more than liabilities, but $120B of those assets are in consumer loans and only $4B in cash... What kind of liquidity is that? $42B was just pulled from SVB. What are these banks doing? https://www.cnbc.com/quotes/FRC?tab=financials

The balance sheets of banks are very weird. They have a lot of special rules and exemptions.

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#107

Post by zzleeper »

dannyw wrote: post #89
fairity wrote: post #77

Earlier quoted context omitted.

All true, but they have a $60b debt facility to draw down on before they'd consider liquidating their HTM bond portfolio. Given that they have $120b in uninsured deposits diversified across a disparate client portfolio, it seems like they're truly in a much stronger position than SVB. I feel like a very likely outcome on Monday is that the FDIC announces a buyer, SVB depositors realize they're going to be made whole,…

SVB was only able to borrow $15B from their FHLB debt facility, before they got cut off. The FHLB total capacity is ~$60 billion. Is First Republic stating actual numbers they are guaranteed to have access to? Their shareholders are already panic selling (FRC down 36%), their bonds appear to be sinking, and few private parties wants to throw good money after bad. When you have to put out an emergency statement to rea…

Off-topic but it really BAFFLES me why people don't pay more attention to FHLBs. It's like we don't learned anything from the last 10 crises...

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#108

Post by naijaboiler »

csomar wrote: post #61
gonehome wrote: post #24

Earlier quoted context omitted.

Sort of the other way to handle it would be to say “we can’t find risk-free yield for the volume of cash we just had deposited, so deposits now get 0.8% instead of 1.0%” Which is kinda fine? Means you might lose some business as others chase yield. But I feel like most startups don’t actually have that much cash in the bank so they shouldn’t really be chasing yield anyway. It didn’t take a genius to predict interest…

> It didn’t take a genius to predict interest rates were going to rise. Locking cash away for 10yrs in very low % return vehicles seems stupid? Everyone is a genius in hindsight. You could have made millions out of a few thousands if you were able to predict an interest rate regime change. But where are your millions?

you don't need a to be a genius to have known that the 2.4% interest rate won't last for ever. Everyone in america with a mortgage knew that and rushed to re-finance. So why did bank managers not know. i think its more like, they had no other good options to park their cash. So they took the best of a bunch of bad options

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#109

Post by hnthrowaway0315 »

V-eHGsd_ wrote: post #100
hackernewds wrote: post #49

Earlier quoted context omitted.

The 2-day shutdown is hence critical for the functioning of the financial system. Same for reporting earnings afterhours. Those calling for 24/7 trading are aloof of how entrenched systems need change management

matt levine has a tongue in cheek post from ... march 2020 (jesus, nearly 3 years ago to the day) that the markets should only be open for 30 minutes. do your research in the other 23 hours and 30 minutes, and trade in the small window. ( https://www.bloomberg.com/opinion/articles/2020-03-12/the-bu... the section is called "thirty minutes")

Let's do something different. Market opens for all day but you are not allowed to cover a trade in under 6 months.

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#110

Post by bombcar »

mediaman wrote: post #104
loopdoend wrote: post #92

Earlier quoted context omitted.

Which legal system has a claw back period on withdrawals? Can you imagine rolling back wire payments 90 days old!

It’s not always 90 days, but the American federal bankruptcy system does allow for clawbacks on payments made immediately leading up to a filing. Meaning, the bankruptcy administrator will absolutely file and get a judgment on your assets, which will be forcibly collected, if you received a payment from a bankrupt entity within the window established by the court.

This is mainly but not limited to trying to prevent a bankrupt entity from “getting rid” of all its assets.

I don’t know if it would apply to a bank wire transfer of “your own money” unless it was a literal fraud situation (pyramid scheme).

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