Sims said:

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It's a fine option. Comes down to what your time is worth at some point. If that 25 point fee keeps you freed up to make more than that and keep your peace of mind sounds like a good way to go.

See if they'll do it for 12 points

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To me it does seem like the path to least resistance while solving the problem. Opening countless new accounts across different banks seems like a nightmare endeavor and a headache to manage...

BoDog said:

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Banker is suggesting an Insured Cash Sweep. Would only cost me about 25 bps. Seems pretty cheap for peace of mind and ease. I like SPAXX but the fee is almost double and at the end of the day it still isnt guaranteed (although in reality what is?).

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Are they charging you directly for ICS?

BoDog said:

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Banker is suggesting an Insured Cash Sweep. Would only cost me about 25 bps. Seems pretty cheap for peace of mind and ease. I like SPAXX but the fee is almost double and at the end of the day it still isnt guaranteed (although in reality what is?).

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I had some large deposits at a small bank and they offered up a repurchase agreement. Essentially, the bank will pledge certain securities to your account to make it fully insured. I would imagine for a regional bank, your deposit would need to be very large. Also, they probably have their securities pledged under the Bank Term Funding Program.

At the end of the day, I didn't want to go through the headache. I was on the board, so I knew the financial stability.

cgh1999 said:

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BoDog said:

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Banker is suggesting an Insured Cash Sweep. Would only cost me about 25 bps. Seems pretty cheap for peace of mind and ease. I like SPAXX but the fee is almost double and at the end of the day it still isnt guaranteed (although in reality what is?).

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Are they charging you directly for ICS?

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Just 25 bps....

why not VUSXX Vanguard Treasury Money Market Fund?

What do you define as a regional bank?

I am on a bank board of a local bank - roughly $700mil in assets. We recently had our quarterly ALCO meeting - this is where we discuss bank strategy - and the key takeaway I got from the meeting was that local banks are fine. CRE is the looming problem but most local size banks do not have CRE on the books unless it is a participation loan (we have none). Yes, all banks are feeling the pinch of current margin in this rate environment, but that is why they do their due diligence and risk assessment on the loans they are funding.

Your local banks are fine. Its the major capital banks that are a carrying the bulk of the CRE load.

Really? No CRE loans? I'm on a board of a similar size bank. I would consider us fairly conservative. We have mostly CRE as do most of our peers.

Maybe they mean non-owner occupied RE?

I think it would be really difficult to have never loaned money to the local dentist or family doctor for their office building.

gigemhilo said:

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What do you define as a regional bank?

I am on a bank board of a local bank - roughly $700mil in assets. We recently had our quarterly ALCO meeting - this is where we discuss bank strategy - and the key takeaway I got from the meeting was that local banks are fine. CRE is the looming problem but most local size banks do not have CRE on the books unless it is a participation loan (we have none). Yes, all banks are feeling the pinch of current margin in this rate environment, but that is why they do their due diligence and risk assessment on the loans they are funding.

Your local banks are fine. Its the major capital banks that are a carrying the bulk of the CRE load.

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What's the current status of your deposit inflows and outflows? How much are you borrowing for liquidity and at what rate? What's the current equity position tied up in treasuries that's threatened by duration mismatch?

Those questions are equally as important as CRE.

Analyst saying that local and regional banks are a problem.

gigemhilo said:

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What do you define as a regional bank?

I am on a bank board of a local bank - roughly $700mil in assets. We recently had our quarterly ALCO meeting - this is where we discuss bank strategy - and the key takeaway I got from the meeting was that local banks are fine. CRE is the looming problem but most local size banks do not have CRE on the books unless it is a participation loan (we have none). Yes, all banks are feeling the pinch of current margin in this rate environment, but that is why they do their due diligence and risk assessment on the loans they are funding.

Your local banks are fine. Its the major capital banks that are a carrying the bulk of the CRE load.

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We may be struggling between ourselves with the definition of local bank but SMALL banks in terms of absolute asset size (following the chart above) absolutely hold a very meaningful portion of CRE. That was the aim of legislation as far back as 1920 to keep things local.

There is some comfort in FDIC insurance and there's real value to it. However, the modern FDIC is less about insurance on balances less that $250k. Since the savings and loan crisis of the late 80's, the FDIC has been played the role of matchmaker, putting failed banks together with acquirers who assume 100% of the deposits of the failed bank. So risk to depositors is practically nil.

Troglodyte said:

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Really? No CRE loans? I'm on a board of a similar size bank. I would consider us fairly conservative. We have mostly CRE as do most of our peers.

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I should have been more clear. do we have local CRE? yes. Do we have a lot of major CRE (the ones to worry about), No.

Heineken-Ashi said:

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gigemhilo said:

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What do you define as a regional bank?

I am on a bank board of a local bank - roughly $700mil in assets. We recently had our quarterly ALCO meeting - this is where we discuss bank strategy - and the key takeaway I got from the meeting was that local banks are fine. CRE is the looming problem but most local size banks do not have CRE on the books unless it is a participation loan (we have none). Yes, all banks are feeling the pinch of current margin in this rate environment, but that is why they do their due diligence and risk assessment on the loans they are funding.

Your local banks are fine. Its the major capital banks that are a carrying the bulk of the CRE load.

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What's the current status of your deposit inflows and outflows? How much are you borrowing for liquidity and at what rate? What's the current equity position tied up in treasuries that's threatened by duration mismatch?

Those questions are equally as important as CRE.

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Great questions. We have had to borrow some but mostly have relied on deposits. our NIM is sitting 2.9-3.1. We are positioned very conservatively on treasuries and have done well in the inverted rate environment.

Sims said:

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gigemhilo said:

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What do you define as a regional bank?

I am on a bank board of a local bank - roughly $700mil in assets. We recently had our quarterly ALCO meeting - this is where we discuss bank strategy - and the key takeaway I got from the meeting was that local banks are fine. CRE is the looming problem but most local size banks do not have CRE on the books unless it is a participation loan (we have none). Yes, all banks are feeling the pinch of current margin in this rate environment, but that is why they do their due diligence and risk assessment on the loans they are funding.

Your local banks are fine. Its the major capital banks that are a carrying the bulk of the CRE load.

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We may be struggling between ourselves with the definition of local bank but SMALL banks in terms of absolute asset size (following the chart above) absolutely hold a very meaningful portion of CRE. That was the aim of legislation as far back as 1920 to keep things local.

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I worded that very poorly. Yes we have CRE, but mostly of the small town variety. We do not have any major retail or office space on the books -which was the concern of the analysts we use. We do have some manufacturing, but not sure if you would consider that CRE.

RockOn said:

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Maybe they mean non-owner occupied RE?

I think it would be really difficult to have never loaned money to the local dentist or family doctor for their office building.

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Yes, our CRE is probably 95% owner occupied.

Azeew said:

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There is some comfort in FDIC insurance and there's real value to it. However, the modern FDIC is less about insurance on balances less that $250k. Since the savings and loan crisis of the late 80's, the FDIC has played the role of matchmaker, putting failed banks together with acquirers who assume 100% of the deposits of the failed bank. So risk to depositors is practically nil.

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