The Institutional Risk Analyst

“Moynihan is trying to demonstrate that the business can grow and hedge funds different investors in stock want price appreciation not just dividend. The decision to host the investor day was made long ago - JPM does it every year. Jamie Dimon has taken away the excuses of big banks that they can’t grow.”

In this edition of The Institutional Risk Analyst, we ponder the world of credit and investing as sovereign nations see their debt ratings sinking below that of global corporations. Meanwhile, the price of gold is reaching new highs. Then we set up the Q3 earnings of the top-seven US depositories for subscribers to our Premium Service as we surge into quarter end with equity markets at all-time highs and global central banks turning the money spigots wide open.

PNC went down less in April, but then lagged the leaders in our bank test group, not exactly a rousing vote of confidence in the $550 billion bank. The acquisition of FBHC may not help. The traditional rule of thumb in banking is that paying anything more than 1.25x book for a bank is usually not recovered.  We do not have a position in PNC.

The largest bank loan portfolio increases reported by the FDIC were in loans to non-depository financial institutions and broker-dealer loans to purchase or carry securities, including margin loans. This situation is inherently unstable.

Citi has grown corporate loans 10% to $330 million at the end of Q2 2025. In fact, Citi increased its full-year net interest income guidance and raised its revenue forecast to the high end of its previous range. Citi saw assets and NII grow in 2025, but efficiency remained in the low 60s, a tangible indication that Fraser is making progress.

We noted in the most recent IRA Bank Book that the Q1 2025 banking industry data from the FDIC was showing improvement in certain commercial line items, particularly non-owner occupied real estate. But is this another head fake by desperate banks trying to conceal rancid commercial real estate exposures?

If we consider the larger picture, we already have years of pent-up credit expenses awaiting realization, but add to the sauce Donald Trump.

Citi seems to be tracking the group now, whereas pre-COVID the stock significantly underperformed in terms of market beta. But performance?

In dollar terms, the moves in 2023 were tiny vs the post March rally in 2020.

Banks lose money every single day by holding onto a below market security from the 2019-2021 period.

Citigroup leads the pack with a net loss rate of 133 basis points (bp) that is almost five times the average for Peer Group 1 at 27 bp.

BK and Vanguard are above the 4.9% legal limit on ownership of voting shares of a bank. This fact gives the FDIC et al the power...

What does PNC tell us now about commercial loan exposures in 2024?

The Q2 2023 disclosure for PACW suggests an institution that is bleeding cash and operating in extremis...

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

Most major banks grew larger during quantitative easing. Now many of these banks will shrink in terms of assets and also earnings in Q1 2023

The Fed’s de facto embrace of inflation encourages misallocation of economic resources on a grand scale....

The largest banks continue to serve as a haven for refugees from crypto fraud schemes and the fintech swoon, but are not cheap

Many of the better managed financials that we track have become sellers of assets rather than buyers in the past several months.

Which US financial will best weather the coming equity market correction?