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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%

#131

Post by rurp »

gonehome wrote: post #68
csomar wrote: post #61

Earlier quoted context omitted.

> 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?

I locked in a 30yr fixed mortgage at 2.49% right before the spike because it seemed obvious? Not sure if that counts, but that should be enough cred that I made a large bet on my prediction when it mattered.

Yeah plenty of folks I know felt similar, myself included. I bought a home during the pandemic. Prices had increased a fair amount in my area which worried me, but the ability to lock in such a low rate for 30 years more than offset that concern.

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

#132

Post by arcticbull »

nico wrote: post #123
obblekk wrote: post #5

The fact that they filed a last minute report on a Friday night speaks volumes about the amount of withdrawals they must be experiencing. This is about as strong as a signal they could put out to stop a possible run.

> This is about as strong as a signal they could put out to stop a possible run. Or a desperation signal, which might actually trigger a run. Like what happened with SVB. The minute the CEO of SVB tried to reassure investors and told them everything would be ok if they just kept their deposits with them, immediately everyone started withdrawing. Are the “safe” banks all putting out statements about the strength of th…

The SVB guy said it in the worst possible, least reassuring way.

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

#133

Post by bhhaskin »

vineyardmike wrote: post #113
ptero wrote: post #67

Earlier quoted context omitted.

FDIC insures $250k per account, so most retail clients have no reason to bolt, which provides a lot of stability for traditional banks.

True, but can you imagine having rent money in your account when the bank collapses... edit: apparently getting your money is fast and easy

What kind of nonsense is this. if you are under the $250k there is no disruption at all. The average person's money is perfectly safe and protected.

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

#134

Post by stephen_g »

vineyardmike wrote: post #113
ptero wrote: post #67

Earlier quoted context omitted.

FDIC insures $250k per account, so most retail clients have no reason to bolt, which provides a lot of stability for traditional banks.

True, but can you imagine having rent money in your account when the bank collapses... edit: apparently getting your money is fast and easy

FDIC says SVB customers will have access to insured funds on Monday, so seems like the answer to your question of how long it takes is “next business day”.

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

#135

Post by zenmacro »

It's trippy to see my own tiny contribution to tidal waves like this:

> First Republic’s funding relies in large part on wealthy individuals who increasingly have a range of options to seek higher yields on their cash at other financial institutions as interest rates have risen.

Over the last year I kept my FRC checking account at 100 (not the real number). A month back or so I dropped it down to 50 and moved the other 50 into T-Bills.

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

#136

Post by stephen_g »

sroussey wrote: post #50
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…

Yeah, I would not have done it. You always go short maturity at low rates. Unless you are borrowing, then the opposite. Depositors weren’t getting anything. I’m guessing SVB wanted yield for shareholders.

That’s a sign of mismanagement if true. Commercial/retail banks (as opposed to investment banks) usually make basically all their money on lending. Deposits (as liabilities) need to be so low risk that they basically don’t do much more than break even.

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

#137

Post by coredog64 »

ericd wrote: post #69
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.)?

idk how many companies are doing this right now, but recurring investment on 4 week T-bills are safe, can absorb arbitrary amounts of cash, and yield much more than the large banks. But it can take a bit to set up a TreasuryDirect account.

Everyone and their mother aping into T-bills will also have the effect of lowering the rates on Treasuries, making 1.5% bonds a reasonable choice again.

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

#138

Post by ThrustVectoring »

zenmacro wrote: post #130

I have a mortgage with FRC. What happens to that mortgage if FRC goes under?

The mortgage is one of the assets seized by the FDIC and sold off to meet bank liabilities. On your end little should change in the short term, and you may have a different owner for the mortgage at some point (and as I understand it, your mortgage changing ownership is a fairly common occurrence in general). As far as payment and servicing goes, there should be continuity in how that is handled.

In short, you'll still owe somebody, it just won't be a bank that doesn't exist anymore. Over the short run, the FDIC or an acquiring bank will take over the back-end of the payments, which will be made much the same way as they are today.

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

#139

Post by ramesh31 »

fairity wrote: post #77
metacritic12 wrote: post #53

Counterpoint: This WSJ Article [1] and their latest 10Ks confirm that: - Their actual assets market-to-market (sold on the fair market) is about $26 bln less than the amount they're carried at on their books. This is as of year end 2022, probably more today. - This would wipe out all their equity, loans, and start hitting depositors. - If there was a bank run, First Republic probably would not be able to meet all dep…

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,…

>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, and all the panic subsides.

Everyone saying "they will be made whole" is completely missing the fact that money has a time value. There's nothing "made whole" about getting access to your money weeks or months from now.

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