The Institutional Risk Analyst

JPM is really a large mutual fund with a bank attached, as shown in the table below.

If the FOMC raises the target rate for fed funds further, then banks like CMA are likely to come under renewed selling pressure.

We look for lower prices for legacy MBS and MSRs as new allocations are used up and P&Ls sink deeper into the red...

If we assume that asset returns will continue to rise, but that bank funding costs will rise 5x asset returns, then US banks have a problem

To survive long-term, both WAL and PACW need to get that beta back down below 2 and closer to 1, but the hawks on the FOMC may not cooperate

When interest rates eventually fall those late vintage mortgage loans with 6% coupons will evaporate like spring snow in the sunshine

Until Chairman Powell comes clean with the Congress and the American people, more banks will inevitably fail.

The Treasury and Fed cannot admit fault for fear of bringing the whole house of cards crashing down.

The funding crisis affecting US banks is not over and very definitely not limited to smaller banks.

The issue is not whether your bank is getting smaller, but whether credit expenses are being managed as funding costs inevitably rise.

Given that the US Treasury is paying 4% for 90-day T-bills, you can see how far banks have to go to become competitive on rates

The Fed by definition cannot make a profit and is always an expense to the Treasury, thus operating losses are a expense to the taxpayer

We liked the NYCB + Flagstar story prior to the transaction with the FDIC for the assets and deposits of Signature Bank.

We recently added Western Alliance (WAL) and GHLD to our portfolio

Last week not a single member of the Big Media managed to ask Fed Chairman Jerome Powell about the state of the US banking system

GS is a securities dealer first and foremost and has no comparative advantage as a bank.

Our view is that the BKI purchase is a horrible deal for ICE shareholders, a value killer of epic proportions

The risk-adjusted return on capital for BK is negative and probably lower than Goldman, the highest risk large US bank

The big take away from Q4 2022 earnings is that credit expenses are headed higher and at a brisk pace

Ally is still more finance company than bank and really has no core deposit base worthy of the name.