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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%

#171

Post by WatchDog »

colechristensen wrote: post #148
zzleeper wrote: post #107

Earlier quoted context omitted.

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...

Everybody got bailed and and essentially nobody went to jail. Of course no lessons were learned. SVB though sounds like nobody should go to jail it was just really bad investment decisions.

The CEO of SVB sold $3.6 million of stock a couple of weeks ago.

I’m sure the SEC will have some questions about that.

https://fortune.com/2023/03/10/silicon-valley-bank-ceo-greg-...

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

#172

Post by ok_dad »

WanderPanda wrote: post #117
dannyw wrote: post #89

Earlier quoted context omitted.

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…

Can't they claim the money back if you withdrew shortly before the insolvency anyways?

Sure but that takes time. Time that you have to spend that money as quickly as possible on valid business expenses in order to be indemnified from the claw back.

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

#173

Post by bloodyplonker22 »

cortesoft wrote: post #119
twblalock wrote: post #93

Earlier quoted context omitted.

> - If there was a bank run, First Republic probably would not be able to meet all depositors. That's true for all banks, even JP Morgan Chase. Every single one of them has some withdrawal limit, past which they are screwed. And that limit is definitely lower than 100% of deposits.

Of course it is lower than 100%. Our whole modern banking system is built on this fact. https://en.wikipedia.org/wiki/Fractional-reserve_banking

FYI, all major banks switched off of fractional reserve banking more than a decade ago and have moved to another system that uses a multitude of different variables.

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

#174

Post by somsak2 »

anxman wrote: post #149
alfalfasprout wrote: post #94

Earlier quoted context omitted.

Strangely I’ve heard about a lot of deposits to first republic in the last 24 hours. It’s unclear your assumption is correct.

I can confirm knowledge of this as well

i cannot confirm this

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

#175

Post by somsak2 »

cormacrelf wrote: post #15
JshWright wrote: post #3

I’m not super well informed about this space, but my understanding was that SVB’s issue wasn’t that its depositors were from the tech sector, but rather that it had put a ton of capital into investments that are significantly less valuable (on the open market today) now than they were a year ago due to increasing interest rates. I’m curious how the tech sector matters here specifically?

Read Matt Levine’s column from today. https://www.bloomberg.com/opinion/articles/2023-03-10/startu... The tech sector isn’t an issue in itself, it’s that (1) all their deposits all came in at once because it’s one sector, so there was a huge demand surge for deposit interest, leading to a supply shortfall of loans they could issue and hence kinda desperately parking the money somewhere, which ended up putting their r…

https://archive.is/Ger2q

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

#176

Post by twblalock »

lordnacho wrote: post #169
dannyw wrote: post #98

Earlier quoted context omitted.

Institutions deemed relatively safer (e.g. JPM Chase) are the banks that people withdraw to. Nobody is taking out $20M in cash, they're moving it to the "too big to fail" banks.

That got me wondering why anyone leaves amounts over 250k anywhere else. If you have 5m are you going to open 20 bank accounts? If there's a wobble you'll need to dig out a lot of credentials to move your money, and you'd end up moving it to a TBTF anyway.

If you have that kind of money in cash you pay someone to do that for you. If you want access to your money you don't juggle credentials, you call your banker and ask.

Actually even if you don't have millions you can use sweep accounts that automatically spread money across multiple bank accounts. Fidelity has one that anyone can use.

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

#177

Post by r_hoods_ghost »

ptero wrote: post #67
sroussey wrote: post #54

Earlier quoted context omitted.

If people don’t get their access to their cash by Monday (or a week later at latest), then any rumor of liquidity issues at any bank will lead to a bank run. Once you know / experience it, bank runs feel like a legit thing to do.

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

No rational reason, however during bank runs rationality tends to go out the window and even banks that are perfectly safe on paper can find themselves in trouble.

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

#178

Post by dragonwriter »

digitaltrees wrote: post #81
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…

Why would they sell the mortgages now? Why not just hold them. When they originated and funded the loan they did it with deposits or fed funds, why not just hold and collect the payments? If there is a run, then selling is actually the worst thing to do because theoretical losses become irreversible actually losses. It’s highly likely interest rates will go down in a year or two but.

> If there is a run, then selling is actually the worst thing to do

The “demand” in “demand deposit” accounts means that selling isn't optional as the cash runs out in a run.

A bank is not an unregulated crypto exhange that can just impose arbitrary withdrawal limits to protect the absence of liquidity.

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

#179

Post by jgalt212 »

ramesh31 wrote: post #139
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,…

>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.

> missing the fact that money has a time value

You mean like Roku, who was keeping $500MM at a depository institution instead of in T-bills or a money market fund.

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

#180

Post by jgalt212 »

This is all the fault of the fed and ZIRP. It's the S&L crisis all over again. Any bank that has not hedged their interest rate exposure is a lot of trouble right now. I don't want to claim zero big banks are in trouble, but I would claim that zero big banks are in trouble due to unhedged interest rate risk.
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