In those types of communities, it doesn't take a lot of people to change their mind to cause a big outflow. So while I would still think it to be unlikely...if two or three large and well known depositors headed for the exits, you would see a big outflow.TREX01 said:
From the little bit of research i've done on this, it doesn't seem that it would take a huge exodus of deposits to get them into trouble. Industy's footprint affects the area that i live and it would be a huge ordeal if things were to go south. many of the small communities in this area would be hurt.
Part 2 of the bank story is online today:
— Michael_Taylor (@Michael_Taylor) November 15, 2023
Taylor: Here's how Industry Bancshares can dig itself out of a Silicon Valley Bank-like hole https://t.co/Kihj6POks4 via @expressnews
Very unfortunate for existing shareholders. But there are some positives:Quote:
In January, bank management communicated to shareholders that shares were worth an estimated $37.25 per share, down from about $44 in 2022. That was despite a Dec. 31, 2022, equity capital position of negative $159.7 million across all six banks combined. Management has suggested that a new share offering after this December would be in the range of $1.50 to $2.50 per share. Even before the issuance of new shares, existing shareholders are facing a 95% loss in value over the past year.
RockOn said:Very unfortunate for existing shareholders. But there are some positives:Quote:
In January, bank management communicated to shareholders that shares were worth an estimated $37.25 per share, down from about $44 in 2022. That was despite a Dec. 31, 2022, equity capital position of negative $159.7 million across all six banks combined. Management has suggested that a new share offering after this December would be in the range of $1.50 to $2.50 per share. Even before the issuance of new shares, existing shareholders are facing a 95% loss in value over the past year.
1. The federal reserve is still running the Bank Term Funding Program (BTFP) so the bank can tap in to liquidity from the treasuries without selling/realizing losses. Very different era from others past where credit losses were the culprit.
2. Raising capital will be the cheaper option on ever-squeezed NIM (net interest margin). I didn't look up their call report, but I'm sure their NIM is thin.
3. The deposit base of community banks tends to be stable, existing shareholders can probably protect their investment by going along with and contributing to this equity raise.
You are absolutely correct on banks in small communities. I live in one, and we have one locally owned bank; we own a small percentage of that bank. I know every member of the bank's board of directors and have known most of them for 40 or so years. Only a couple of them are "new" directors and I have known them before they became directors (generally, they inherited a significant ownership position). Some were clients, and for some of them we had mutual clients and had worked together from time to time. I know their other business ventures and of course their real estate holdings are known to everyone who wants to know. All of them are millionaires a few times over, some of the multi, multi-millionaires. They keep their money in the bank they serve.WorkerBee said:
In those type of small communities, I would assume the biggest depositors, other than the school districts, are probably serving on those banks BOD. Probably not a good look if they started taking their money out and I'm sure banking regulators would not take kindly to that. I'm not a banker but would be curious from someone that knows how that would work.
That's the way it always is until there is a run on the bank next door. For further reading, see: Prisoner's Dilemma, incentive to cheat in game theory, cartel cheating behavior, and simple self-interest and self-preservation.one safe place said:You are absolutely correct on banks in small communities. I live in one, and we have one locally owned bank; we own a small percentage of that bank. I know every member of the bank's board of directors and have known most of them for 40 or so years. Only a couple of them are "new" directors and I have known them before they became directors (generally, they inherited a significant ownership position). Some were clients, and for some of them we had mutual clients and had worked together from time to time. I know their other business ventures and of course their real estate holdings are known to everyone who wants to know. All of them are millionaires a few times over, some of the multi, multi-millionaires. They keep their money in the bank they serve.WorkerBee said:
In those type of small communities, I would assume the biggest depositors, other than the school districts, are probably serving on those banks BOD. Probably not a good look if they started taking their money out and I'm sure banking regulators would not take kindly to that. I'm not a banker but would be curious from someone that knows how that would work.
I also know many of their biggest depositors (individuals and businesses) that are not on the board, a few own stock in the bank, most don't. I don't see any that I know pulling their money out.
Bonfire.1996 said:
The bailout will be the FED dropping rates prematurely, before their current stated goal of taming inflation is completed.
We are going to get a double top of inflation as global instability, Chinese weakness, and an incompetent American admin allows a second set of oil price spikes, supply chain instability, and domestic logistical nightmares.
Nothing has been fixed on the supply side of the inflation calculation, so we are going to get it again when the Fed juices everyone's purchasing power with lower rates to bailout the banks.
Diggity said:
guy seems like a complete ********. Totally steamrolls that poor moderator.
Bonfire97 said:
Does any of the news on Industry Bancshares really matter? Any issues due to devalued low interest rate bonds they hold will just be wiped away with a bailout like they did for SVB and others. I think all regional banks across the US are probably in the same trouble. That's going to be the headline of 2024 - a major regional bank bailout.
