Author Topic: Bank Stocks  (Read 3549 times)

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Bank Stocks
« on: December 14, 2018, 06:15:42 PM »
I'm going to lay this out there...I'm normally in mostly index funds, but I went in pretty big on bank stocks.  Specifically a basket of regional banks, minus my current employer.

These valuations seem insane to me.   The banks are basically a ward of the state like a utility company, are taking minimal risk in their lending books, and fund 30-40% of their loans with no cost demand deposits.  Even a poorly run company can squeak out some earnings growth.

These are trading at an 8 - 12x Price to Earnings.  In other words, their earnings equate to 8.3% to 12.5% of their current stock price.  The banks are returning near 100% of their capital to shareholders, 3-4% in a dividend then the rest in stock buybacks.

Earnings probably won't grow more than 2-5% per year, but utility companies operate the same way and get nearly 2x multiples. 

Happy to take opinions, its just rare I see these types of sales.  Hasn't happened since the oil fears in late 2015 and early 2016.

jacoavluha

  • Bristles
  • ***
  • Posts: 270
Re: Bank Stocks
« Reply #1 on: December 14, 2018, 07:41:21 PM »
This would be interesting to track and revisit down the road. How about you post some details: tickers, number of shares, price paid, dates. Then we can follow along, itíll be interesting to hear your thoughts as price change, see when you exit. Let us know again if you buy more, or sell.

ILikeDividends

  • Bristles
  • ***
  • Posts: 405
Re: Bank Stocks
« Reply #2 on: December 14, 2018, 08:29:58 PM »
These are trading at an 8 - 12x Price to Earnings.  In other words, their earnings equate to 8.3% to 12.5% of their current stock price.  The banks are returning near 100% of their capital to shareholders, 3-4% in a dividend then the rest in stock buybacks.

Earnings probably won't grow more than 2-5% per year, but utility companies operate the same way and get nearly 2x multiples.

You might be looking at the wrong metric for valuing banks.  Banks are typically valued based on price-to-book ratio, rather than P/E ratios.

You might find this article interesting:
https://www.bis.org/publ/qtrpdf/r_qt1803h.htm

"What's special about valuing banks? One key factor is regulation, which is much more stringent for banks than for corporates. Specifically, banks are typically required to maintain predefined regulatory capital adequacy ratios based on their book value of equity. More importantly, however, the accounting treatment of banks and their activities can differ substantially from that of non-financial corporates. As a result, book values are often more meaningful measures of value for financial firms than for non-financial ones."

In short, banks and utilities are treated radically differently from regulatory and accounting standpoints.  Banks and utilities exist in two distinctly separate valuation silos.  I wouldn't expect their P/E based valuations to intersect for any other reason than pure coincidence.
« Last Edit: December 14, 2018, 08:42:28 PM by ILikeDividends »

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #3 on: December 15, 2018, 06:15:27 AM »
@jacoavluha I'll follow this up with the tickers and prices from yesterday.

@ILikeDividends The banks purchased are trading for right above 1x price to book. 

@maizeman Banks can setup their balance sheet to be asset sensitive or asset neutral, funds management is important whenever interest rates are changing.   I went with predominately large regional banks that like to be asset neutral or are a little asset positive, where rising rates help them.  The commercial banks funds 30-40% of their loan book with deposits that cost zero (checking accounts, demand deposits), so when interest rates go up, the spread increases some.  The flat yield curve means they don't get paid much of a premium on the smaller dollar loans that they offer fixed rates to.

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #4 on: December 15, 2018, 06:23:00 AM »
Here are my tickers and prices

FITB:  $24.11
STI:  $52.28
PNC:  $120.20
JPM:  $101.51
USB:  $49.11
BAC: $24.68
RF: $13.82
CFR: $93.70

Berkshire Hathaway went in big with banks in the 3rd quarter, I agreed with his premise but thought it was too early.

Now we wait and see.  I am confident I'm right, but the challenge is you can be right but right too early and still get smashed.


ILikeDividends

  • Bristles
  • ***
  • Posts: 405
Re: Bank Stocks
« Reply #5 on: December 15, 2018, 02:44:05 PM »

@ILikeDividends The banks purchased are trading for right above 1x price to book. 


From the article I linked, above:

"Average bank PBRs hovered around a level of two times book value right before the GFC, indicating large valuation premia. They then plummeted to values below one in 2008-09, and recovered only recently - while remaining below their pre-crisis levels."

Taking the article at face value, the implication seems that a P/B of 2 is a rich valuation, and a P/B below 1 is a discounted/depressed valuation.  Sitting just above a P/B of 1 right now is possibly a fair valuation given a nearly flat yield curve and an anticipated slowing in economic growth?

By way of comparison:
http://siblisresearch.com/data/price-to-book-sector/

As of June of this year, the utilities sector was sporting a 1.87 P/B; which, with the flight to safety trade since October, I would expect to be a bit north of there now (though I can't find more recent stats on those at the moment).

Financials were at a 1.46 P/B in June, which would seem to have gone down since then, as suggested by your own analysis.
« Last Edit: December 15, 2018, 03:12:06 PM by ILikeDividends »

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #6 on: December 15, 2018, 03:28:36 PM »
In 2005-2006, some of the merger transactions and stock prices were closer to 3x.

One thing that's wacky depending on the specific bank you look at is what "other" lines of business do they have.   Regions, SunTrust, and 5/3 trade at the lowest PEs and Price/Book because they're as close as you can get to a pure retail/commercial Bank.

US Bank has a huge payment processing business and gets a premium
JPM gets a premium for so much of their additional business
BBT is expensive because 20% of the company's value is an insurance brokerage that if spun off is about an $8bil market cap business (those trade around 20x).

I appreciate the feedback, I want to think about this from an outsider's view.  I see flatish earnings but at a 3-4% dividend and 5-8% share buybacks per year during a time when credit quality is outstanding as a good investment.

Now for the dream:  I think there's so much shareholder value locked up because of the restrictions on activist investing in this sector.  I can't fathom why Regions, SunTrust, and 5/3rd all exist independently.  They could get together and strip out so many duplicate costs and reward shareholders.  Three C-suites, three marketing departments, three compliance/policy groups, its mind boggling. 

ILikeDividends

  • Bristles
  • ***
  • Posts: 405
Re: Bank Stocks
« Reply #7 on: December 15, 2018, 04:19:21 PM »
I see flatish earnings but at a 3-4% dividend and 5-8% share buybacks per year during a time when credit quality is outstanding as a good investment.
Greater capital requirements since the crisis probably accounts for some of that slower growth, but they also make banks a pretty safe equity investment right now.  No doubt you will eventually be proven right.  In the meantime, you get paid a decent dividend to wait.

Good luck!
« Last Edit: December 15, 2018, 04:23:57 PM by ILikeDividends »

dividendman

  • Handlebar Stache
  • *****
  • Posts: 1088
  • Age: 36
Re: Bank Stocks
« Reply #8 on: December 15, 2018, 05:57:57 PM »
I think they might be attractive but the bigger problem is going to be competition.

Just wait until Apple, Google, Amazon and Wal-mart start large banking operations. It's only a matter of time, and it will be bad news for bank margins.

PDXTabs

  • Pencil Stache
  • ****
  • Posts: 749
  • Age: 35
  • Location: Vancouver, WA, USA
Re: Bank Stocks
« Reply #9 on: December 15, 2018, 09:26:25 PM »
Would it be easier/better to invest in KRE?

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #10 on: December 16, 2018, 05:35:20 AM »
Would it be easier/better to invest in KRE?

Yes.

I work in the industry, there are a couple of banks I don't want to own that are part of that index.  There are a number of smaller regional banks that (in my opinion) are taking too much risk relative to the money they're earning.  Their deposit costs are higher with fewer retail customers and they're taking large positions in riskier private equity backed loans.  I was aiming for a basket without these institutions.  5/3 and Regions do some of this, but trade at a deeper discount and have a lot of other ways they make money even if/when this goes sideways.

Grafter

  • 5 O'Clock Shadow
  • *
  • Posts: 14
Re: Bank Stocks
« Reply #11 on: December 16, 2018, 09:54:56 AM »
Yeap, I'm a fan of bank stocks as well.  Though the current deals aren't quite as good as back in 2011, especially with community banks (which were trading at P<NBV, a number at .4 to .5 and single digit P/E ratios).

Chases fish - Though I am curious which names you aren't interested in that are part of KRE.

kenaces

  • Stubble
  • **
  • Posts: 228
Re: Bank Stocks
« Reply #12 on: December 16, 2018, 09:55:42 AM »
I saw a few solid banks selling well below book last week and it made me think of buying, but I am trying to stick with indexing these days.

I wonder if some of the this is the market pricing the increase competition from fintech.  I have long felt that banks were one of the few industries that hasn't really been crushed by tech(real-estate being another) since they still manage to make a very large amount from really high fees that smart tech/competition should largely eliminate.  i.e. US banks made something like $35B in just overdraft fees last year!

Of course this applies less to banks with large investment banking business.  In those case is the market pricing in some risk of increased regulation?
« Last Edit: December 17, 2018, 01:49:17 PM by kenaces »

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #13 on: December 16, 2018, 02:09:30 PM »
I'm trying to stick with banks with more than $50bil in assets that I have some experience with their credit quality.   All these banks play around in the $30mil - $40mil size credits, the larger the bank the more of them they have and more diversity that brings to the portfolio.   KRE has 126 banks, many of which are $25bil or so in size.  Those smaller ones also tend to have to take more risk in their commercial real estate book to win deals (look at Bank of the Ozark's stock chart)

I could tell you what I avoid more so than what I like:

I avoid Citi and Wells because of management issues.
Mellon:  Too much concentration in the Northeast
Comerica:  Odd geographic mix (Michigan, Texas, California?)
Capital One:  Not really a bank, may be an attractive credit card play
Zions:  Outsized energy risk
Key, M&T, Huntington:  Don't love their geography


Frost is in my  under $50bil in asset size, they're at $30bil with a large insurance operation.  I have personal experience competing with them and they run a great shop.

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #14 on: December 17, 2018, 05:37:47 AM »
I ran across this on Yahoo Finance, this is why Iím avoiding the $50bil and under banks unless they have a huge core transaction deposit base:

https://finance.yahoo.com/news/small-banks-brace-deposit-wars-160000110.html

bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #15 on: December 17, 2018, 03:39:52 PM »
Normally the time to own banks is at the beginning of the tightening cycle, as this allows banks to increase the interest rates they charge, while the interest rate they pay out lags. Net interest margin is the metric you are looking for in a profitable bank. And, if you can find one with good underwriting that doesn't have many charge-offs, then you have a winner.

This tightening cycle has been really slow, so it doesn't follow the usual pattern. Also, the short and long term bond rates are both climbing up in tandem, which is ultimately the sign of a healthier economy than what we've had up to now. The unwelcome side effect for banks is a steady (as opposed to increasing) net interest margin.

If the Fed pauses and/or we tip into recession, this will be the worst possible time to pile into bank stocks (Which is why they appear so cheap now). As the fed lowers rates, the net interest margin gets crushed and earnings drop through the floor. If bank stock valuation appears cheap now, it is because the market is flashing this signal.

Bank stocks = Caveat emptor

bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #16 on: December 18, 2018, 04:44:04 AM »
After thinking about it some more, I think that if you work in the banking industry that it is not wise to invest in bank stocks. The reasoning is simple: any economic downturn that could result in a job loss would also hammer the entire banking sector and drive all those stocks lower. So, at the time when you most need a cash/dividend cushion would be the time when it is least available.

If you're looking for a safe dividend play with upside potential then go with consumer staples as they do well all the time, especially in a downturn; Kellogs, General Mills, Hershey, Nestle, P&G, Church and Dwight, Kraft, Heinz, Altria, British Am. Tobacco, Diageo, Constellation, Brown Forman, etc.

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #17 on: December 18, 2018, 05:01:25 AM »
:)  An involuntary job loss is worth a fortune to me in deferred comp, ect, that parachutes me out.  I'm unfortunately in a revenue producing role that doesn't get laid off.

Fortunately I'm financially independent so I'm not worried about the job/investing concentration.  I would generally agree with you otherwise and avoided all banks except for $BOH until now.

bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #18 on: December 18, 2018, 05:10:49 AM »
ok... well, as long as you've considered all the risks involved, then no worries.

Happy investing!

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #19 on: December 18, 2018, 06:09:00 AM »
ok... well, as long as you've considered all the risks involved, then no worries.

Happy investing!

I'm enjoying the conversation.

The biggest question(s) out there for the class of Bank's I'm picking are:

- Are we heading into a recession or just slower GDP growth?   Buying banks at the end of a cycle is usually not a good idea.
- How insulated are the larger regional banks from rising deposit costs?  Those costs are slaughtering earnings for the $30bil and under banks
- How is the industry going to handle less talent and operating a more boring business as fintech moves most of the innovation out of the system.

Best case scenario, many of these banks start doing combinations without paying much in premiums and strip out costs.   Worse is the industry continues to enrich executives and have way too many institutions.   The industry needs to get to the grocery store model, anywhere from five to fifteen players in the market.

trollwithamustache

  • Pencil Stache
  • ****
  • Posts: 611
Re: Bank Stocks
« Reply #20 on: December 18, 2018, 07:22:18 AM »
wait until next year. A lot of banks were bid up in the expectation of a wave of bank acquisitions that hasn't happened yet. These positions will likely continue to get unwound into the end of the year.

Your wards of the state comment is spot on, but if a bank stops paying its dividend... it doesn't mean in 10 years your share price will be back up to where you bought it. (assuming rescission case)

bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #21 on: December 18, 2018, 08:31:02 AM »
I'm enjoying the conversation.

The biggest question(s) out there for the class of Bank's I'm picking are:

- Are we heading into a recession or just slower GDP growth?   Buying banks at the end of a cycle is usually not a good idea.
- How insulated are the larger regional banks from rising deposit costs?  Those costs are slaughtering earnings for the $30bil and under banks
- How is the industry going to handle less talent and operating a more boring business as fintech moves most of the innovation out of the system.

Best case scenario, many of these banks start doing combinations without paying much in premiums and strip out costs.   Worse is the industry continues to enrich executives and have way too many institutions.   The industry needs to get to the grocery store model, anywhere from five to fifteen players in the market.

I can sometimes be a bit overbearing and tend to end threads unintentionally, so I'm glad to you enjoy the back and forth.

Here's how I see the banking industry; Banks are absolutely too s*** scared to lend money to anything OTHER THAN REAL ESTATE. It drives me nuts, but, whatever. As a result, as goes the interest rate (and mortgages) so goes the banking industry. Powell is tightening, home price appreciation is over, new buildings are slowing. I think that we are at the end of the cycle and soon the delinquencies will begin. . . .

As far as financing a growing company like in the old days, I think banks stopped doing that about 20-25 years ago.

This year my company would have paid $50k in risk-free bank fees to a bank willing to advise Letters of Credit for our export business. I couldn't find a US bank willing to do this, but I did find a bank in Europe that will advise our LC's. In 2016 I referred a huge industry leader to a local bank, the bank charged $250k in fees in a year and compliance still shut the account after about a year.

So, with that in mind, I'm hoping for as many bank corps. to be open as possible. Consolidation is the worst thing I could experience as it limits my ability to find new partners to work with.

I do agree with the analysis that the upper management is way-overcompensated and out of touch with the banking industry and the coming changes (Fin-tech). The Chinese are already years ahead of us in Fin-tech (Alipay & WeChat wallet) b/c they're looking to add value. In the USA banks are looking to monetize customers at every possible step, so necessary innovation isn't occurring.


Johnny Aloha

  • Bristles
  • ***
  • Posts: 310
Re: Bank Stocks
« Reply #22 on: December 18, 2018, 05:50:58 PM »
Ptf

Grafter

  • 5 O'Clock Shadow
  • *
  • Posts: 14
Re: Bank Stocks
« Reply #23 on: December 18, 2018, 09:43:26 PM »
If you're looking for a safe dividend play with upside potential then go with consumer staples as they do well all the time, especially in a downturn; Kellogs, General Mills, Hershey, Nestle, P&G, Church and Dwight, Kraft, Heinz, Altria, British Am. Tobacco, Diageo, Constellation, Brown Forman, etc.

That may have historically been true, but all of the CPG type stocks have had major issues over the past few years, with store brands taking a fair bit of margin/sales from the big brands.  The Tobacco industry continues to have issues as well, from declines in US smokers, regulators taking aim at menthol cigs (granted, they have offset it by getting into vaping, e-cigs, investments into alcohol and MO's stake in Juul/cannabis).  Booze stocks continue to do well though.

Quote
Here's how I see the banking industry; Banks are absolutely too s*** scared to lend money to anything OTHER THAN REAL ESTATE. It drives me nuts, but, whatever. As a result, as goes the interest rate (and mortgages) so goes the banking industry. Powell is tightening, home price appreciation is over, new buildings are slowing. I think that we are at the end of the cycle and soon the delinquencies will begin. . . .

That's fair.  The few banks that I dig into much have a lot of CRE exposure and it seems like that has been where most of their lending growth over the past 2-3 years.  It will be interesting to see how many banks loosed lending standards to chase growth, but you don't know until the downturn hits a specific area. 

As an aside, I continue to be curious how OZK will fair.  Though I know they have dropped from the 50s at the beginning of the year, to roughly $21/share now.  But I'm not surprised given their slowing loan growth (And so much of their growth over the past few years has been Development in NYC and Miami, and that has slowed considerably, so that most of their Q3 growth was in RV, not real estate loans). 

bwall - I know that you said that the chinese are far ahead of the US in fin-tech.  Are there any particular reasons you think that way and what do you think is holding the US back?  Be it the alphabet soup of regulators, federal and state banking regulations, lack of profit (which would be a little surprising, given how much VC money seems to be chasing fin tech companies; as well as a number of companies making it easier to bank and invest, even if they get ahead of the regulators like Robinhood stating that they were SIPC insured, where as the SIPC disagreed with them).   

Though, I suppose one way to play that is to invest in banks that provide the back office/account holding for such fin-tech companies (As opposed to those companies investing in fin tech directly, as there will be winners and losers there, so might as well let someone else spend their money making the market; though there is the whole first mover advantage/branding to).

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #24 on: December 19, 2018, 04:47:33 AM »
bwall - Its interesting the perspective as a borrower.

That frustrates me to no end on the lending side.  I work in that niche that's between the really small loans that are score carded and the really large loans that are to companies that have investment ratings.

The amount of documentation and justification required now is unbelievable.  There are at least four different people/departments internally that have to touch the loan and assign risk to it.  The process is maddening for those trying to loan money as much as its maddening for borrowers.

I've only been doing this for 15 years, so I started on the tail end of this, but its tough to replace the decision process of someone sitting across from your desk and making a rational decision of "can they pay, will the pay, and if they don't pay what is my collateral?"

I think there's risk in the sector, but loan losses are still only 0.5% to 0.6% while the banks still have healthy reserves and decent margins.  Regionals like RF, STI, PNC, and FITB just don't make sense at an 8-10x PE right now, that's priced like we're going to have a moderate recession with some serious credit issues.  I just don't see it.

Today is going to be wild on the market, I expect the fed to talk about how healthy the US economy is while watching headwinds around the world.  If I were the king of the fed, I would probably announce the economy is healthy and not raise the short term rates but accelerate the unwinding of QE into these lower long term rates to prevent the yield curve from inverting

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #25 on: December 19, 2018, 04:48:44 AM »
Oh, and either smartly or stupidly, I bought some March 2019 call options on KRE when the prices fell through the floor yesterday.  I already have a limit sell 75% of them at a price that would recover my bet, it'll be interesting to see if this works or was setting a couple grand on fire

Blueberries

  • Stubble
  • **
  • Posts: 108
Re: Bank Stocks
« Reply #26 on: December 19, 2018, 08:11:24 AM »
I wouldn't make those trades, but that doesn't mean much. 

Here is what I think:

1.)  Don't convince yourself you're right.  Billions of dollars are lost on this alone (I'm looking at you Bill Ackman!).
2.)  Calculate your risk and stick to your plan on when to exit.  This becomes even more important because of #1.


chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #27 on: December 19, 2018, 12:08:33 PM »
I weenied out on the option strategy.  Sold and got my money back, left all of $300 of profit in.  I just don't have enough wealth/risk tolerance to do much in options.

I'm fine buying the Banks long.  They can absorb more drops, but if I'm too early, they pay me 3.5% to 4% to wait.  I just don't have that big of a SWR I'll need to support in early retirement.  Yeah, they could cut their dividend but there's a pile of loss reserves they would have to burn through first then slow down the buybacks before the dividends start being at risk.  The feds are capping their payouts around 40% of earnings to prevent another dividend cut/financial market panice.

You're right on Bill Ackman, he can be right and loose.  Almost all of his positions are correct, but it doesn't mean the market is rational long enough to payoff.  Also don't bet against companies that have massive amounts of cash flow, regardless of how immoral they are (hey Herbalife!).  Look at Tobacco, its awful and has provided great shareholder returns for years.  He was dead on with his ADP analysis and made 40% recently, made up for numerous missteps.


Johnny Aloha

  • Bristles
  • ***
  • Posts: 310
Re: Bank Stocks
« Reply #28 on: December 19, 2018, 01:15:48 PM »
Here are my tickers and prices

FITB:  $24.11
STI:  $52.28
PNC:  $120.20
JPM:  $101.51
USB:  $49.11
BAC: $24.68
RF: $13.82
CFR: $93.70

What about GS?  Currently trading at ~$173 and book value, per 2017 annual report, is $181 which is after the one-time $4.4B tax charge.  Without the one time tax charge, book value would have been $11.31 higher (~$192).

bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #29 on: December 19, 2018, 01:23:53 PM »
The CRE is down 2.5% (and at a 52 week low) after Powell's speech. Word on the street was that he was in an impossible situation. Economic facts would call for a pause, but political facts (not least #45 spouting off his opinion) called for a raise. One set of facts won out and the market is tanking.

I get the joy of being paid 3.5% -4% to wait. But why not get paid 4.5% -5% for the same wait? Once defaults start, you might be surprised how quickly dividends are lowered. Just saying.

Grafter:Fin-tech means mobile banking. Paying everything with your cell phone. Groceries, taxis, water bill, restaurants, everything. I even heard that beggars in China accept mobile payments (!) via their phone. The only thing we have in the USA that is similar is paypal, but that is sent to an email address, not a mobile phone number. I believe that the banks in the USA haven't adopted the new technology b/c they don't want to ruin their perfectly good business model, just like the unions didn't want to adapt in the late 20th Century.

The Chinese have two companies competing for the entire Chinese mobile payments market; alibaba with Alipay and WeChat with WeChat Wallet. They both do the same thing; you send your 'spare change' to your account and they give you interest. I'm not exactly sure how it works as it's not set up in the USA and I don't have a Chinese SIM-card.

bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #30 on: December 19, 2018, 02:28:32 PM »
Chases: Interesting also to hear from the perspective of the lender. All the lenders I've met seem pretty detached and don't seem to care if the money is lent out or not. I guess that's the nature of the business, though.

The paperwork is a result of all the consolidations, etc. No one at my local bank knows me, or how much money I have in my account, or what flows through the account, or how many thousand I pay each month in bank fees. I've already been reduced to a number via my credit score, so why should anyone care about me as a potential client? I bought a new house a few months ago and paid cash, mainly b/c I didn't want to go through the paperwork. I'd have been equally happy to have a $100k or $200k loan, just for the extra liquidity in my taxable accounts.

Johnny: I wouldn't touch GS with a 10ft pole. Malaysia is trying to indict a few GS big-wigs and I think that Malaysia may have a legitimate case. Dunno, tho.

In any case, I still firmly believe that we are at the end of the tightening cycle and soon we'll tip over into recession. Not a good time to own banks.

bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #31 on: December 19, 2018, 05:19:03 PM »
PSSSST! Don't look now, but Altria is yielding 6.3%, at 80% payout it's a safe dividend. They also just bought 1/3 stake in the best vape company (Juul) and cannabis Canada. Lots of profits in the future to keep the dividends rolling in.

A side benefit of investing big in tobacco; second hand smoke doesn't bother you as much.

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #32 on: December 19, 2018, 06:09:51 PM »
@Johnny Aloha I like keeping it simple with the spread business.  Borrow deposits at an all in cost of under 1%, now a Libor + 0.80% investment grade credit is going to pay 3.3%.  Not bad for a leveraged return!

@bwall Completely agree with you about the payment industry, massive disruption.  Technology and information is stripping out all the excess profits that used to be in bank's fee income centers.  No big money transfer fees, square attacking merchant services, Vanguard attacking investment revenue, independent mortgage players out hustling the banks, and even some niche shops cutting into their derivatives income. 

All that's going to be left is the spread business.  The winners will be large regional banks with low cost deposits.  Credit quality is still running near all-time lows and the industry can absorb some losses.  I actually think buybacks will be reduced long before the dividends, but just my two cents.  I see pain in the under $50bil banks.

I could be wrong, I was certianly right too early.  Bought more today, need to set some limit orders for tonight.  Fortunately I have a few assets that are up big this year (REITs) that I plan on trading out as soon as the gains become long term.

This is going to be interesting for sure!  Lots of signs of a slowdown, but I don't see the credit bomb.  The traditional banks are not taking the risk levels they were in 2006-2007. 

The most interesting part is if values stay low and the economy slows, there are combinations that will make too much sense to occur.  There's real shareholder value when c-suite executives stop defending their jobs and do whats right for the shareholder.  It'll take some activist activity to make it happen.

I expect Berkshire to soon report a 10% stake in every top 15 bank.  They're about halfway there and that was on Q3 prices

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4655
Re: Bank Stocks
« Reply #33 on: December 19, 2018, 07:57:54 PM »
@Johnny Aloha I like keeping it simple with the spread business.  Borrow deposits at an all in cost of under 1%, now a Libor + 0.80% investment grade credit is going to pay 3.3%.  Not bad for a leveraged return!

@bwall Completely agree with you about the payment industry, massive disruption.  Technology and information is stripping out all the excess profits that used to be in bank's fee income centers.  No big money transfer fees, square attacking merchant services, Vanguard attacking investment revenue, independent mortgage players out hustling the banks, and even some niche shops cutting into their derivatives income. 

All that's going to be left is the spread business.  The winners will be large regional banks with low cost deposits.  Credit quality is still running near all-time lows and the industry can absorb some losses.  I actually think buybacks will be reduced long before the dividends, but just my two cents.  I see pain in the under $50bil banks.

I could be wrong, I was certianly right too early.  Bought more today, need to set some limit orders for tonight.  Fortunately I have a few assets that are up big this year (REITs) that I plan on trading out as soon as the gains become long term.

This is going to be interesting for sure!  Lots of signs of a slowdown, but I don't see the credit bomb.  The traditional banks are not taking the risk levels they were in 2006-2007. 

The most interesting part is if values stay low and the economy slows, there are combinations that will make too much sense to occur.  There's real shareholder value when c-suite executives stop defending their jobs and do whats right for the shareholder.  It'll take some activist activity to make it happen.

I expect Berkshire to soon report a 10% stake in every top 15 bank.  They're about halfway there and that was on Q3 prices

I have heard that a number of CDO offerings have no takers and the loans are staying on the books instead.  Is this an indication of problems for the issuing banks in your opinion?

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #34 on: December 19, 2018, 09:25:43 PM »
Yes.  Stay away from the investment banks.  I only own a little of the Big 4 for the same reason.

When you get a bank stock price drop of 25%, banks naturally get tight and risk tolerance goes down and pricing goes up.  There's no ability to raise capital without heavily diluting their shareholders, so banks charge more for their loans and don't like taking on others risk.   

Some of the experts are mentioning a liquidity squeeze.  I think its a product of insurance reserves being deployed after Harvey, Michael, and the California Wildfires.  Insurers are a huge buyer of non-bank debt, or what snarkey bank CEO's call the "shadow banking market".   Add in a little unwinding of QE plus marginal deposit costs going up incents banks to have a smaller bond portfolio.  Add all this up and its a lot of noise for banks.  It doesn't change the fundamentals of:

- Banks have the liquidity
- They should make more on the loans generated via higher loan yields that come from a liquidity squeeze and higher rates.
- There aren't any major economic cracks to really weaken the traditional bank loan portfolio, especially above and beyond what they can't handle in loss reserves.

I could be wrong, but its more likely I'm too early in what could be an outright market panic selloff.  Six years without a 20% drawdown means there's a lot of people who don't have the physchological will to withstand this and could unload stock.  Hit 25% and there's a lot of margin debt out there that'll have a day of reconing.

I don't see it going much below 20% for the total market, but I could be wrong








bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #35 on: December 20, 2018, 05:09:13 AM »
The most interesting part is if values stay low and the economy slows, there are combinations that will make too much sense to occur.  There's real shareholder value when c-suite executives stop defending their jobs and do whats right for the shareholder.  It'll take some activist activity to make it happen.

I expect Berkshire to soon report a 10% stake in every top 15 bank.  They're about halfway there and that was on Q3 prices
Bold mine.

I've had this same opinion for years. Bank CEO's are massively overpaid compared to the value they bring the shareholder. I remember Ken Lewis, CEO of BoA, getting $50million/year for such gems as the takeover of Countrywide. Losses at Countrywide eventually exceeded $30 billion. I've suggested many times I could have done a better job as CEO of BoA during the financial crisis just by not showing up for work and I'd have been willing to do this for oh, say, only $2million/year. Of course, no one would take the suggestion seriously, no matter that it would have been the best strategy for Ken Lewis to follow that year. And, as a US taxpayer, I was happy that Ken did that deal. Better for BoA to absorb those losses than the taxpayer.

I hadn't considered Berkshire staking positions across banking. If so, it just confirms that incumbent banks are ripe for disruption.

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #36 on: December 20, 2018, 06:01:31 AM »
The enrichment at the top is astronomical.  Good commercial bankers/managers can earn $200,000 - $350,000, but they're directly covering that revenue via production or group production.

At smaller banks, that means the c-suite level they report to make a little more.  At the large banks its the same, except the EVP level makes what c-suite does at the smaller banks.  They're solid mid six figure jobs.

The acceleration above that is absurd. 

bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #37 on: December 20, 2018, 06:13:17 AM »
Chases: Most people are interested in defending their industry instead of calling it as they see it. Perhaps in the mis-guided hope that one day they can snare one of those sweet pay packages? Dunno. Congrats for speaking out.

I read a bit of your blog/journal. Congrats for having the discipline to save money and get off the merry-go-round. It's not easy to do this, especially at your age. FWIW, I think that working until 2019 is/was the right decision.

I still think that bank stocks are a bad investment at this point in the cycle! :) :)

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #38 on: December 20, 2018, 06:41:34 AM »
@bwall

I appreciate it.  I made the decision a couple years ago that the time and political investment was not worth it to try to climb the pyramid further.  I had a direct path to EVP level, but the extra $50k - $100k in the beginning that turns into $200k - $300k more long term wasn't worth selling 60 hours a week to the company.  This would include potentially moving 3-4 times over the next six to twelve years for the 10-20% chance of making the c-suite....provided the company is even still there.

Its sad for me to see these loyal lieutenants not be told until 50 that "its not you", then they work another 10-15 years checked out.

Its not surprising that my opinion changed when I hit FI...the incremental money wasn't valuable enough to me and the politics started wearing me out.





It

bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #39 on: December 20, 2018, 08:24:04 AM »
Its sad for me to see these loyal lieutenants not be told until 50 that "its not you", then they work another 10-15 years checked out.

Its not surprising that my opinion changed when I hit FI...the incremental money wasn't valuable enough to me and the politics started wearing me out.

I met a former banker in Mexico City once. He was a great guy. Mid 50's. Smart. Great English language skills. I asked him why he was now driving a taxi. "When two banks merge, some positions are duplicated. How do you decide which person gets the job? Both people are exactly the same on paper. Who decides? And how?" "Hmmm.... not sure. How was it decided for you?" "The bank that bought ours, he got the job." I can't fault his logic.

He didn't sit still, either. After being laid off, he pulled out his rolodex and called up the people he'd loaned money to "Do you remember the loan I gave you? It was MY decision. That loan saved your company! Do you have any work for me?" "You are right. The loan did save my company and I thank you again. But, I do not have a position I can offer you."

Was it his fault that his bank was the merger target? A moral shortcoming of his? No. Someone else decided to do a deal and he lost a job that he'd performed very well at for many years.

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #40 on: December 20, 2018, 11:53:21 AM »
So many people in banking think the $250k+ jobs will continue in perpetuity.  They eventually get too removed from the customer, roles are duplicated, and boom, there they are unemployed.  The $100k - $200k jobs producing revenue will remain, but once you get past there its a career risk.

I bought some more today, Bank selloff seems to be slowing but another bloodbath on the market today.  Closing in on the S&P 500 bear market number.

The market goes up more often than it goes down, but it goes down faster than it goes up.

bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #41 on: December 20, 2018, 12:43:36 PM »
So many people in banking think the $250k+ jobs will continue in perpetuity.  They eventually get too removed from the customer, roles are duplicated, and boom, there they are unemployed.  The $100k - $200k jobs producing revenue will remain, but once you get past there its a career risk.

I bought some more today, Bank selloff seems to be slowing but another bloodbath on the market today.  Closing in on the S&P 500 bear market number.

The market goes up more often than it goes down, but it goes down faster than it goes up.
Italics mine

As Jeff Bezos once said 'your margin is my opportunity'. The attitude you're describing sounds like how the unions viewed manufacturing jobs by the 1970's. We all know how that ended. Everyone was all for free trade and deregulation when it was the blue collar jobs at risk. I bet very smart college grads will sing a different tune when it's their white collar job on the line.

Market is going to drop a lot more, maybe even go below 20k. Keep plenty of powder dry.

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #42 on: December 20, 2018, 06:57:51 PM »
I'm slowing my buys.  Still have dry powder in the form of some incoming bonuses and I'm not afraid to buy on a little margin in advance of those for a few weeks. 

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #43 on: December 21, 2018, 01:42:59 PM »
Ladies and gentlemen...I'm still convinced I'm right, but will be right too early.  I'm about out of buying capacity at this point, I can't/won't leverage up and risk the early retirement fund.  Now its time to sit back and see if this was a good idea or not over the next quarter

Blueberries

  • Stubble
  • **
  • Posts: 108
Re: Bank Stocks
« Reply #44 on: December 21, 2018, 01:52:30 PM »
I hope this comes across the way I intend it (kind and not at all patronizing).  What you're doing is often the reason retail investors lose money.  You don't have a plan in place.  You're convincing yourself you're right.  You're analyzing data to back up your choices, which is only reinforcing to you that you're definitely right.  Then you're buying additional shares while you're already down on your initial purchase.  All of these steps are a recipe for disaster.  Now, Iím not saying youíre going to lose all your money, but I am saying that youíre making it harder on yourself.  Add in that youíre purchasing during a down-trending market (where no uptrend has been established) and youíre just throwing darts.  I sincerely hope it pays off for you.

What if there is a larger drop, will you wait?  What if one of those banks dives deeper than the overall market?  What if just one of your positions loses 75%?  It's hard to come back from a loss like that.  Losses work against you and big losses will destroy an account.  Mathematically, anything up to 8-10% will keep you alive to trade another day.  After that and you're going to struggle.  A 50% loss requires a 100% gain to break even, a 60% loss requires a 150% gain, etc.  Warren Buffett can sink money into a stock and lose 50% because he has an account big enough to absorb that while he waits (and he often purchases over weeks, months, and years).  Most of us cannot say the same thing, even those with a handful of millions.  Please just be careful and take a look at what you're doing.

Bill's problem was that he was so convinced he was right.  He could have been wrong multiple times, taken his small losses, and let those big winners ride to the point that he retained his reputation.  But, no, he's Bill Ackman, he's intelligent, a billionaire, the best, good picks, blah, blah, blah.  Wrong.  We're all the same when we go into the market*.  Thatís precisely why you can win at this game, but it means you MUST have risk management in place because I could be the biggest idiot you've never met and I can still take your money in the market.

Edited:  *Not literally.  We're all human and the market doesn't care who you are.
« Last Edit: December 21, 2018, 01:56:41 PM by Blueberries »

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #45 on: December 21, 2018, 03:12:51 PM »
@Blueberries It was only a little condescending, but I put myself out there on the thread and asked for it :)

It doesn't look like I'm down yet any worse than I would have been just holding the index funds.  Regional Bank Index was actually slightly less down than the total market index.

It'll be months if not a year or two to determine if this was a right/wrong move.  I am a retail investor and this is still within my risk tolerance

bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #46 on: December 21, 2018, 06:54:05 PM »
Good post, Blueberries.

I've been guilty of destroying my account once or twice before I had the humbling realization that I know nothing.

Now I stock pick in my IRA for fun, mainly. Accumulate some shares and then write/sell front month out-of-the money calls. It's enough to buy beer and cigarettes, so to speak and keeps me attuned to the market. Why out of the money calls? I read an article that mentioned that buying at the money calls were the suckers' bet. Dirt cheap and everyone dreams of a big payout, but they always expire worthless. Well, what better to do than to take that side of the bet? Last week I sold $800 worth of options that expired worthless today. If I'd been more aggressive, I could've sold $10,000 worth of options that expired worthless today, but hey, if I could see the future I wouldn't be writing covered calls.

On occasion I go big on bio-tech stocks. My wife used to work at a university cancer research department so she'd see quite a few companies' research cross her desk. Did well once (tripled my money while the market went up 20%) and now I'm hooked. Patience is the name of the game. Invest where you have an edge, like Chasesfish.

Grafter

  • 5 O'Clock Shadow
  • *
  • Posts: 14
Re: Bank Stocks
« Reply #47 on: December 21, 2018, 09:58:12 PM »
Ladies and gentlemen...I'm still convinced I'm right, but will be right too early.  I'm about out of buying capacity at this point, I can't/won't leverage up and risk the early retirement fund.  Now its time to sit back and see if this was a good idea or not over the next quarter

Curious, but after reading Blueberries response, I am sort of curious as to your exact thoughts as to how you arrived at this conclusion (of the banks being really cheap).  I mean, when compared to the overall market, with some bank sporting single digit P/E ratios, they look cheap on a relative basis.  Some event look cheap when comparing P/E and P/NBV over the past 7-8 years. 

Personally, I sort of do want to attempt to time the market a bit, as I think they are looking very cheap and certain banks appear to have decent asset mixes (though I really can't speak to the quality of their underwriting, and that will not really matter until their areas have some sort of downturn in the economy that impacts local businesses or CRE; at least those that have a good deposit mix and are mostly in the spread business).  Like you, I don't think that I would buy anything on margin, but may throw some money at it in my fun money account (where I keep cash outside of the rest of my asset allocation, that I will not need over over 10 years). 

But, I do think that banks will continue to consolidate, due to every increasing regulations (and achieving efficiencies of scale) and the need for such services (especially as not everyone is comfy using online only banks or the array of other financial type products out there).

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2675
  • Age: 36
  • Location: Texas
    • Years in the making, I created a journal!
Re: Bank Stocks
« Reply #48 on: December 22, 2018, 06:03:39 AM »
Good morning thread...

I appreciate the response from @bwall and @Grafter .  A good nights sleep also helps after chaos at work and watching the account.  I stick with 60% or more in index funds and am not risking my retirement in this.  I also started doing a few things to my portfolio in 2017 attempting to get a little less volatility for lower return.

Right now I'm down 11.9% from the peak vs. 18% for the S&P.  I didn't get the returns of the market in 2017 because I stayed partially away from tech stocks that didn't make money, this lower volatility portfolio and some strategic buys have helped this year.

What Grafter said is SPOT ON.   This strategy is not for anyone.  If you're going to play, play where you have an edge.  I finance real estate and privately held businesses in boring industries.  Some of my strategic buys this year have been:  A couple of specific low leveraged REITs when the price collapsed over interest rate fears..  A specific restaurant chain with barely any debt and owning all their properties had their earnings flatten out and its underlying qualified dividend hit 7%.   Why did it collapse?  The entire sector did, taking down an otherwise good company with it.  Even after the entire market going down nearly 20% those positions are up double digits.

Bank stocks have been hammered as a whole.  There's lots of reasons to worry.  The big guys can't grow anymore, continue to have to squeeze costs out, and at least one of them has an awful reputation.  You don't want to be in the investment banks when economic activity slows and their fee business is under assault.  I also think the Banks under $20bil are dead companies walking unless they have a core deposit base of 35-40% or more funding their loans.  Those facts along with a total market decline caused the financials to lead this downturn (although that started turning Wednesday, their decline is decelerrating.  I think the large regional banks are being tossed out and thrown into these same buckets.  Their issues just aren't at the same level and there's a bunch of fat they can still cut out of the business.  Instead of just loaning into this industry, I work in this industry and I haven't seen a discount like this since February of 2009.

Here's the math I wanted to share on why I've chosen a basket of regional banks as my next strategic move.

Hypothetical Bank - Lets call it FISH Bank

Earnings Today:  $2/share/year
Regional Bank P/E:  8x
Stock Price: $16
Payout Ratio:  40%  (This is basically restricted by the government through a process known as CCAR)
Dividend:  $0.20/quarter, $0.80/yr
Shares Outstanding:  1.25bil

Since payout ratios are capped, banks return the rest of their earnings in share buybacks.  The math works out to be $1.20 available for share buybacks times 1.25bil shares is 93.7 mil shares redeemed.  Thatís 7.5% of total outstanding float.  Banks have been trading in the 15-16x PE before this, so theyíve only been able to reduce their float by 3-4% over the past through years.  Earnings have grown from interest rates and lower corporate taxes, so the buyout amount has doubled.

To continue this example, next yearís shareís outstanding: 1.156bil.  Earnings would have to decline by more than 7% for EPS not to grow at these prices.  Thereís lots of headwinds to top line growth, but the big 4 consulting companies are in all the major backs whacking out costs.  Thereís a LOT more costs they can eliminate too.


So what will happen to earnings:

- Interest rates are going up, regional banks tend to be weighted more towards variable rate loans than fixed rate loans
- Deposit costs will go up.  Regional banks have more transaction accounts than other banks, so their deposit costs will go up slower than loan rates
- Defaults will go up in a bad economy.  Correct.  Problem loans / chargeoffs would actually have to double before banks have to increase their loss reserves.   This gets into more complex accounting, but basically when problem loans tick up, the bank expenses more money into reserves.  My math is showing they would need to double.
- Regional banks mainly do loans with asset coverage.  These are loans on commercial real estate or to operating companies to buy a building, equipment, fund receivables.  When they go bad, the entire loan isnít charged off, only a portion of it.
- If we get inflation, it reduces problem loans.  The bankís loan amount is fixed while the underlying collateral increases in value.  Inflation doesnít hurt this industry as much as others.
- Regional Banks also do most of their business domestically.  The trade wars may drag on the economy, but if it helps manufacturing then it helps producers.

My summary:

The huge risk as a shareholder and what happened to a lot of banks in 2008-2009 is they had to issue equity at the bottom to raise capital and it crushed the shareholder.  The restriction of payout ratios means they can slow their buybacks if they need some capital.  It would require a cataclysmic collapse for banks to have to issue equity at the bottom again.  We just arenít anywhere near that insanity on dumb loans.  (I worked for this revered bank in 2008 that didnít have to issue equity and still made money, this ďreveredĒ bank was still making 100% financing loans on spec houses to homebuilders!!).


I think many of these banks can still get 5-10% more in total top line earnings before the peak, then the buyback power will far offset any flattening of earnings.   I also think once weíre through whatever this slowdown/recession/dip looks like and the banks prove themselves stable, the feds let that payout ratio tick up to 60-65%.  At that point theyíll start getting utility style multiples at 14-20x PE .   

Where real money is made is there is an entire generation of bank leadership retiring.  Nobody went into this industry between the mid 80s and mid 90s because they didnít pay.  All the pre 1985 start bankers are retiring and thereís not enough people in the 20 year or less experience range to operate all these banks.  They have to consolidate and are consolidating at the smaller end.  Weíve gone from 7,000 to around 5,500.   This should look like the grocery store business with a couple of competitors in small markets and 10-15 in the big metro cities.  Today banking has 15 competitors is small markets and 150 in metro markets.  Thatís a ton of duplicate management, facility, and IT costs that will eventually be stripped out of the industry.

Iím long the basket of regional banks:  BOH, CFR, KEY, RF, STI, PNC, USB





bwall

  • Bristles
  • ***
  • Posts: 471
Re: Bank Stocks
« Reply #49 on: December 24, 2018, 06:08:02 AM »
Thanks for the long post and explanation, chasesfish.

Your premise is certainly well thought out. My only concern with the logic is the part about loan losses having to double before banks get into any trouble. I don't have access to loan losses in a typical recession, but I think that they do a lot more than double. Do you have access to this type of information through your job?

How much did loan losses go up in 1991-92 recession? In 2001-02? And, of course, the worst case, 2008-09?

Is it possible for you to access this information and let us know?

P.S. WTH is Mnuchin talking about this a.m. by saying that banks are all well capitalized? It never crossed my mind until I read the headlines.