Any reason to worry about Frost Bank, specifically? Other than the fact that they are a regional bank whose depositors are probably not powerful Democrat donors, are any of you aware of any weaknesses/risks with them?

I'm trying to figure out if I need to move my balances to a "too big to fail" lender.

Just open enough accounts at different banks such that no bank has more than 250k. Problem solved.

Some years ago, Frost was the main US bank for Mexican money. Don't know if that is still the case or whether that is a good or bad thing

Invest it all in stock and make sure your brokerage has SIPC coverage. If Merrill Lynch goes broke and you have an account with 10,000 shares of Exxon you'll still have 10,000 shares when it all shakes out.

aunuwyn08 said:

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Just open enough accounts at different banks such that no bank has more than 250k. Problem solved.

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While this sounds like excellent advice, I have clients whose cash reserves are significant enough that this doesn't make sense. They would need accounts across 36 banks! These aren't permanent situations, funds will be invested but must stay liquid for the short term.

I guess this is the true definition of a 1st world problem.

I think any regional bank has risk right now, to say otherwise would not be looking at the situation correctly. I have not looked to see what Frost has on books relating to cash sorting/duration mismatch but I'm not sure that matters right now.

No clue if this is the info you are looking for. Back in 2015 when I started a new job another new hire employee came from the banking industry (Bank of America, Wells Fargo). He said if you are planning on staying in Texas that Frost bank is the best. No idea of that still holds up 8 years later.

The Fed has basically implied that they will backstop all assets (insured and uninsured) with this new program.

The big banks are winners when the dust settles on this deal, but I think your deposits are fine with Frost.

Frost is a great bank.

If the market goes crazier, all bets are off. But, it's a very well run bank.

Saw this interview w/ Frost's CEO on Friday if you are interested:

https://www.cnbc.com/video/2023/03/10/main-street-community-banks-have-business-models-that-are-very-solid-says-frost-bank-ceo.html

Frost and smaller/regional banks (Prosperity) are apparently more heavily exposed to high volatility commercial real estate, which might be a thing going forward due to economic slowdowns and return to office plans being shelved compared to remote work... that issue is potentially on the horizon.

Flipside on that might be that HVCRE represents the riskiest part of their portfolios (secured by physical collateral instead of funds to startups harvesting unicorn farts and crypto) and they are offset by large amounts of highly liquid holdings like the Frost ceo just mentioned in the video.

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/us-banks-exposure-to-high-volatility-commercial-real-estate-loans-falls-in-q3-73480508

ETA: I don't know anything more about this than anyone else. Just doing my own research and came across this because I was shocked that Frost was even mentioned in this banking mess.

SWCBonfire said:

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Frost and smaller/regional banks (Prosperity) are apparently more heavily exposed to high volatility commercial real estate, which might be a thing going forward due to economic slowdowns and return to office plans being shelved compared to remote work... that issue is potentially on the horizon.

Flipside on that might be that HVCRE represents the riskiest part of their portfolios (secured by physical collateral instead of funds to startups harvesting unicorn farts and crypto) and they are offset by large amounts of highly liquid holdings like the Frost ceo just mentioned in the video.

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/us-banks-exposure-to-high-volatility-commercial-real-estate-loans-falls-in-q3-73480508

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Underwriting standards on commercial real estate have tightened significantly over the last few years. The problem now is that the increase in rates has impacted the takeout market. So construction loans are sticking at the bank level longer than usual. Combine that with shrinking deposits, banks will be levered.

Compare that to SVB - RE loans are usually match funded to deposits which mean banks will actually make money even if rates rise.

I'm not sure how CRE can be labeled as "highly volatile" as the market clearing cycle takes months to shake out from a pricing standpoint.

Sure, REITs are clearing on a daily basis, but that's not necessarily indicative of the the value of the underlying assets.

aunuwyn08 said:

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Just open enough accounts at different banks such that no bank has more than 250k. Problem solved.

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That is inconvenient. Means I have to use about 100 banks for just my liquid $.

NBA All Star Giannis Antetokounmpo did this, he had 50 banks with money spread across to max the 250k. One of the teams co owners stepped in and talked to him about this. I can't even imagine how many banks accounts a guy who makes 40MM from his salary plus another 50MM from endorsements has

If you're concerned about your millions, look into this. https://en.m.wikipedia.org/wiki/Insured_Cash_Sweep

The biggest risk for Texas regional banks is their CRE office exposure and their loan to deposit ratios (combined with their NIM if rates continue to go up). The banks that have been smart and loaned mostly on multi and industrial assets will be fine. If a majority or near majority of their CRE book is office - then watch out. Those charge offs are really starting to hit this year and will accelerate over the next two years as 5-10 year lease terms signed in 2019 or earlier start to come up.

difference between oil and gas lending and CRE. Oil and gas always leaks reserves through time, CRE is clean for a decade then all at once.

My business accounts are at VeraBank. CEO posted his cell number this weekend to call if we had any questions. I was marginally reassured but will be opening up accounts at other banks to move some stuff around and provide some flexibility.

The problem with all of this, if the mob decides a bank is in trouble then the bank is in trouble. Even if they have great financials.

Exactly. FDIC needs to make limit 10x what it is now.

Ridiculous for their to be any legit concern with relatively small amounts of money being "safe".

I mean, they kind of just did with their "don't call it a bail out" guarantee

Heard the CEO (I believe) of Frost on CNBC yesterday morning talking about how they were positioned to avoid issues like SVB. Sounds like a safe place to have your money.

If this has taught us anything, it is the need to have at least two bank accounts so you can immediately wire money from one to another in a pinch.

Aggie09Derek said:

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Exactly. FDIC needs to make limit 10x what it is now.

Ridiculous for their to be any legit concern with relatively small amounts of money being "safe".

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Asking just because I honestly do not know....but....i wonder how many people / entities you are adding "security" to when you increase from say $250,000 to $2,500,000?

Are we not talking about mainly medium size businesses and up? Do that many mom and pop shops carry cash over $250K at any time? Maybe they do and I can finally realize how poor I am but I feel like I do well financially and save a lot but $250K in just cash is a lot for almost all families, right???

So now its covering for companies...should then they be on some sort of "commercial" account and possibly pay extra for extra insurance?

Small companies are frequently owned by a husband and wife.

Make it so that the limit doesn't apply to companies, if necessary.

There are unusual situations where an individual or family may find themselves with excess cash. One is when that family is trying to liquidate an estate and funds haven't been distributed to the heirs. Or perhaps someone has sold an asset and hasn't had the opportunity to do to invest those funds. Having to create multiple accounts at different banks to keep all that money insured is a PITA.

I guess what I am wondering is how many people / institutions are impacted by this?

Should banks separate commercial vs personal?

Commercial accounts maybe carry higher 'cost' for unlimited insurance? Personal accounts maintain lower cost and the $250K insurance limit (which surely is enough of 99.9% of personal accounts).

I am also assuming insurance is a cost bore by banks that would ultimately be passed to those who deposit with them.

Exactly.

Not so common for in an average month for the W2 + 401k + 2.5 kids and a house type, but its actually quite common especially around (generally infrequent) liquidity events (selling house, selling business, liquidating company stock, deferred compensation payout, inheritance, lease bonus).

Someone sells a house, and is holding cash in preparation to build the next one over the next 12-18 months...Over the limit inside of a checking or savings account. Thankfully, it's easy enough to do a CD ladder to earn more & cover this or use ISA or buy T Bills inside of a brokerage account if worried about FDIC.

planoaggie123 said:

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Aggie09Derek said:

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Exactly. FDIC needs to make limit 10x what it is now.

Ridiculous for their to be any legit concern with relatively small amounts of money being "safe".

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Asking just because I honestly do not know....but....i wonder how many people / entities you are adding "security" to when you increase from say $250,000 to $2,500,000?

Are we not talking about mainly medium size businesses and up? Do that many mom and pop shops carry cash over $250K at any time? Maybe they do and I can finally realize how poor I am but I feel like I do well financially and save a lot but $250K in just cash is a lot for almost all families, right???

So now its covering for companies...should then they be on some sort of "commercial" account and possibly pay extra for extra insurance?

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I'm a one man practice that has been open about 6 months. I work out of my mudroom and truck. Depending upon timing of payroll, payments to suppliers, savings for CapX, and payments by customers, I can easily have 150k plus in the bank. I can see in 1-2 years that I would have times with more than 250k, and I am not a large operation. I am the smallest of businesses, and the 250k FDIC limit is already on my mind.

planoaggie123 said:

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Aggie09Derek said:

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Exactly. FDIC needs to make limit 10x what it is now.

Ridiculous for their to be any legit concern with relatively small amounts of money being "safe".

---

Asking just because I honestly do not know....but....i wonder how many people / entities you are adding "security" to when you increase from say $250,000 to $2,500,000?

Are we not talking about mainly medium size businesses and up? Do that many mom and pop shops carry cash over $250K at any time? Maybe they do and I can finally realize how poor I am but I feel like I do well financially and save a lot but $250K in just cash is a lot for almost all families, right???

So now its covering for companies...should then they be on some sort of "commercial" account and possibly pay extra for extra insurance?

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They always have covered companies.

And to answer your question, lots of companies have $250,000+ in a bank account at any given time. That doesn't equate to savings. A significant chunk of that money goes out the door each month. Just think about the overhead mom and pop companies pay. Among other things you have to make payroll and pay rent.

There doesn't need to be a separate category, but I do agree with Derek that it's time to raise the insured deposit amount.

In my opinion the government made the right decision regarding SVB and Signature. This is the system working.

planoaggie123 said:

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Aggie09Derek said:

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Exactly. FDIC needs to make limit 10x what it is now.

Ridiculous for their to be any legit concern with relatively small amounts of money being "safe".

---

Asking just because I honestly do not know....but....i wonder how many people / entities you are adding "security" to when you increase from say $250,000 to $2,500,000?

Are we not talking about mainly medium size businesses and up? Do that many mom and pop shops carry cash over $250K at any time? Maybe they do and I can finally realize how poor I am but I feel like I do well financially and save a lot but $250K in just cash is a lot for almost all families, right???

So now its covering for companies...should then they be on some sort of "commercial" account and possibly pay extra for extra insurance?

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Tons of small mom-and-pop companies have WELL over $250k in cash at any given time due to a lot of reasons. Lots of individuals have well over $250k sitting on the sidelines as well, waiting for the next opportunity to purchase something (stocks, businesses etc).

Bocephus said:

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Heard the CEO (I believe) of Frost on CNBC yesterday morning talking about how they were positioned to avoid issues like SVB. Sounds like a safe place to have your money.

If this has taught us anything, it is the need to have at least two bank accounts so you can immediately wire money from one to another in a pinch.

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Having 2 accounts is fine, but I hope it encourages people to look more into a bank when making a selection. If a bank is paying a super high interest rate on a savings account, there's probably a reason why they are paying a premium for those deposits.

Will be interesting to see what all comes out of this deal.

Frost, First Financial and any locally owned community banks are going to be in solid shape and are a great bet on the Texas economy.

Does Amegy fall in that category in your opinion?

halfastros81 said:

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Does Amegy fall in that category in your opinion?

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Ultimately I think it will be ok, but Amegy is a subsidiary of Zions Bank which has been downgraded and is one of a handful of banks on the potential failure watch list.

I definitely think Amegy is the weaker of the two. You can monitor them by their parent corp.

cgh1999 said:

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Frost is a great bank.

If the market goes crazier, all bets are off. But, it's a very well run bank.

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You all need to check out the stock markets thread and seek out Bonfire1996's posts. Go back a few pages. Frost is around 35% (unrealized losses vs capital). For comparison sake, SVB was 100% and major chains like Wells Fargo and Bank of America are around 6%.

I'm not suggesting you all do anything, it is your money and certainly your decision. This thread just caught my eye.

https://texags.com/forums/57/topics/2721405/6025