Is this bank systemically important?

Big real estate? Anybody know anything?

Banc of California and PacWest to merge, raise $400 million in equity
https://www.reuters.com/markets/deals/banc-california-talks-buy-pacwest-bancorp-wsj-2023-07-25/

Twitter rumor from Wallstreetsilver is that the two banks were both in trouble and are merging in order to be big enough to get a bailout

It looks like they have high exposure to commercial real estate loans. Likely problematic portfolio

kingj3 said:

---

Twitter rumor from Wallstreetsilver is that the two banks were both in trouble and are merging in order to be big enough to get a bailout

---

Both are poorly managed and in trouble yet they merge and are magically all better. What a wonderful financial system we have......

Why's this **** all start in California?

I mean, do you know how hard the commies had to work to destroy a state that has 600 miles of ocean coastline, gold, oil, some of the most productive agricultural land in the world, and a huge population?

Tired of these idiots that bet big on bonds or commercial real estate getting bailed out by the leftist Marxist aholes that run this country.

Logos Stick said:

---

Tired of these idiots that bet big on bonds or commercial real estate getting bailed out by the leftist Marxist aholes that run this country.

---

Actually, even the leftist Marxist aholes are tired of it. They can't get student loans bailed out but banks that make awful decisions get saved every time

pacw has been on life support for a few months now.

hate to break it to the board but the problems that reared their head 3 months ago have not gone any where. they are just glossing it over right now. there will be a cascade of mid size bank failures over the next 18 months. it's just starting trillions of CRE terms are up in the next year and a half.

kingj3 said:

---

Twitter rumor from Wallstreetsilver is that the two banks were both in trouble and are merging in order to be big enough to get a bailout

---

Also rumor that we about to see the bond market come unglued and those undercurrents run deeper than people realize.

Stat Monitor Repairman said:

---

kingj3 said:

---

Twitter rumor from Wallstreetsilver is that the two banks were both in trouble and are merging in order to be big enough to get a bailout

---

Also rumor that we about to see the bond market come unglued and those undercurrents run deeper than people realize.

---

if financial doom preppers are to be believed, the bond derivative market makes the wild betting of the MBS market look like a child's lemonade stand.

Predmid said:

---

Stat Monitor Repairman said:

---

kingj3 said:

---

Twitter rumor from Wallstreetsilver is that the two banks were both in trouble and are merging in order to be big enough to get a bailout

---

Also rumor that we about to see the bond market come unglued and those undercurrents run deeper than people realize.

---

if financial doom preppers are to be believed, the bond derivative market makes the wild betting of the MBS market look like a child's lemonade stand.

---

the derivative market is massive hundreds of trillions of dollars. but don't worry at least derivative holders won't butt in line in front of depositors for fdic coverage with banks.

or will they?

We got a quick peek at it in 2008, but they put a band-aid on it and installed what they thought were stop-checks.

So, we'll see.

On a related note, it's this posters opinion that the FDIC is fools gold.

If the FDIC ever comes into play, everybody is ****ed. there ain't enough money in the world to make that a workable backstop.

If the FDIC ever comes into play on a large scale we talking total collapse of the global economy.

The FDIC is the equivent of a seatbelt in an airplane crash. Either you dead or you ain't.

How's that for some doomerism?

kingj3 said:

---

Why's this **** all start in California?

I mean, do you know how hard the commies had to work to destroy a state that has 600 miles of ocean coastline, gold, oil, some of the most productive agricultural land in the world, and a huge population?

---

Not to mention the best weather in the wealthiest country in the world.

Printers going brrrrrr for the right people.

captkirk said:

---

It looks like they have high exposure to commercial real estate loans. Likely problematic portfolio

---

Commercial real estate is going down hard

everyone notice two major hotel properties in Plano were turned back into the Bank last week, and like 15 properties in the DFW area.

that can't be good when such a wealthy area can't even afford commercial real estate- much less the midwest.

LMCane said:

---

captkirk said:

---

It looks like they have high exposure to commercial real estate loans. Likely problematic portfolio

---

Commercial real estate is going down hard

everyone notice two major hotel properties in Plano were turned back into the Bank last week, and like 15 properties in the DFW area.

that can't be good when such a wealthy area can't even afford commercial real estate- much less the midwest.

---

The CRE problem is highly concentrated in office and some hospitality. All classes are made much worse because of interest rate movements. Properties are mostly performing as expected, outside of office and hotel, but the price of debt is exceptionally higher than when the deal was financed which greatly reduces the value on these capital intensive investments.

CRE for banks would mostly heal tomorrow if rates fell even 100bps. That won't happen but everyone is hoping it will over the next year. The Fed is already giving guidance to "work with borrowers" on CRE debt just like during the great recession.

PACW is back to trading around $10 in pre-market trading. Offer price is at $9.60.

Quote:

---

But Wedbush analyst David Chiaverini warned of a potentially tepid response from some PacWest shareholders.

"We question whether or not longer-term PACW shareholders will view this as a strong enough deal price for shareholder approval... We wouldn't be surprised if there were some dissent among a minority of shareholders and possibly open the door to the potential emergence of a rival third-party bid."

---

kag00 said:

---

LMCane said:

---

captkirk said:

---

It looks like they have high exposure to commercial real estate loans. Likely problematic portfolio

---

Commercial real estate is going down hard

everyone notice two major hotel properties in Plano were turned back into the Bank last week, and like 15 properties in the DFW area.

that can't be good when such a wealthy area can't even afford commercial real estate- much less the midwest.

---

The CRE problem is highly concentrated in office and some hospitality. All classes are made much worse because of interest rate movements. Properties are mostly performing as expected, outside of office and hotel, but the price of debt is exceptionally higher than when the deal was financed which greatly reduces the value on these capital intensive investments.

CRE for banks would mostly heal tomorrow if rates fell even 100bps. That won't happen but everyone is hoping it will over the next year. The Fed is already giving guidance to "work with borrowers" on CRE debt just like during the great recession.

---

Wouldn't surprise me in the least to see the gov't try to prop some commercial and even residential real estate with "guaranteed low interest rates" for certain markets. A similar attempt to what they tried for student loans....and it will end in similar disasterous fashion.

kingj3 said:

---

Why's this **** all start in California?

I mean, do you know how hard the commies had to work to destroy a state that has 600 miles of ocean coastline, gold, oil, some of the most productive agricultural land in the world, and a huge population?

---

This is true and there will be a significant case study on how socialism/communism destroy a functioning government.