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#10,501
#10,501
walkenvol said:
I used to trade First TN on its swings but banks have gone through some tough times with near zero interest rates and tougher regulations
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I was on a community bank board and chairman of the loan committee 1998-2011. We turned down loan after loan because the borrowers did not qualify, usually because of income/debt. We watched other banks gladly loan them money. Often they would not even get proof of income. When the poop hit the fan in 07-08 many of those banks failed. It's a long story, but it was clear that what was needed was tighter regulations that were enforced.
2021 was our best year ever.
 
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#10,505
#10,505
Go aeiou said:
I was on a community bank board and chairman of the loan committee 1998-2011. We turned down loan after loan because the borrowers did not qualify, usually because of income/debt. We watched other banks gladly loan them money. Often they would not even get proof of income. When the poop hit the fan in 07-08 many of those banks failed. It's a long story, but it was clear that what was needed was tighter regulations that were enforced.
2021 was our best year ever.
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I've got a few stories for you when it comes to the 07-08 banking problems. First, I worked for a institutional small cap value manager that was typically ranked in the top 3 or 5 in the country. We had a 20 year annualized net return in the range of 12.8%. So to the story, our offices were directly across the street from the local FDIC offices. On Friday morning, we'd look across the street and if we saw a bunch of Big Black Suburban's we knew a bank was going to get shut down that day. They always shut them down on Friday's.

We also heard rumor through the grapevine that one local bank was told that they had to buy another local bank or the FDIC would shut them down.

07-08 wasn't our finest hour.... We were large holders (top 10 holding) of New Century when as you say "the poop hit the fan". There was a reference in The Big Short to a boutique west coast investment firm that held a very large position in New Century. I'm pretty sure that reference was to us...
 
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#10,508
#10,508
GoDucks349 said:
I've got a few stories for you when it comes to the 07-08 banking problems. First, I worked for a institutional small cap value manager that was typically ranked in the top 3 or 5 in the country. We had a 20 year annualized net return in the range of 12.8%. So to the story, our offices were directly across the street from the local FDIC offices. On Friday morning, we'd look across the street and if we saw a bunch of Big Black Suburban's we knew a bank was going to get shut down that day. They always shut them down on Friday's.

We also heard rumor through the grapevine that one local bank was told that they had to buy another local bank or the FDIC would shut them down.

07-08 wasn't you finest hour.... We were large holders (top 10 holding) of New Century when as you say "the poop hit the fan". Their was a reference in The Big Short to a boutique west coast investment firm that held a very large position in New Century. I'm pretty sure that reference was to us...
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HELOCs were very profitable before the collapse. We hired a lender from Countrywide expecting him to increase our portfolio.
90 % of what he brought in did not meet our criteria. He was shocked. Credit worthiness was was a concept he couldn't grasp.
He lasted about three months at our bank, and he went back to Countrywide.
HELOCs unfortunately were often misused by the borrower. They became popular when interest from other than home mortgages could not be used as a deduction for income tax. Unfortunately, they were used for cars, vacations, clothes etc. People living above their means. I have a friend who is 70 Y.O. who says he will be working the rest of his life to pay off his home.
I suspect that the same thing is happening today, and most people do not have enough itemized deductions to use the interest as a deduction.
 
#10,509
#10,509
walkenvol said:
I used to trade First TN on its swings but banks have gone through some tough times with near zero interest rates and tougher regulations
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The post-financial crisis era has not been kind to them. JPM, WFC, TFC were better positioned for the post-crisis world.
 
#10,510
#10,510
Go aeiou said:
HELOCs were very profitable before the collapse. We hired a lender from Countrywide expecting him to increase our portfolio.
90 % of what he brought in did not meet our criteria. He was shocked. Credit worthiness was was a concept he couldn't grasp.
He lasted about three months at our bank, and he went back to Countrywide.
HELOCs unfortunately were often misused by the borrower. They became popular when interest from other than home mortgages could not be used as a deduction for income tax. Unfortunately, they were used for cars, vacations, clothes etc. People living above their means. I have a friend who is 70 Y.O. who says he will be working the rest of his life to pay off his home.
I suspect that the same thing is happening today, and most people do not have enough itemized deductions to use the interest as a deduction.
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Yea, HELOCs were definitely being abused. Alt-A's (aka Liar loans) were another good one from that period that got abused.
 
#10,512
#10,512
05_never_again said:
The post-financial crisis era has not been kind to them. JPM, WFC, TFC were better positioned for the post-crisis world.
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Disagree a bit. Their largest presence was heavily weighted in 2 high growth states (TN and FL). Compared to other regionals, that was a huge tailwind. Their issue was they had the crappy customer service of the large banks while having relatively poor product offerings. It's telling when they were losing market share in the city they were HQ'ed for a dozen years straight. I mean when a piss poor bank like Regions is outperforming you....
 
#10,513
#10,513
BigOrangeMojo said:
Disagree a bit. Their largest presence was heavily weighted in 2 high growth states (TN and FL). Compared to other regionals, that was a huge tailwind. Their issue was they had the crappy customer service of the large banks while having relatively poor product offerings. It's telling when they were losing market share in the city they were HQ'ed for a dozen years straight. I mean when a piss poor bank like Regions is outperforming you....
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I mean those other banks like JPM and WFC (perhaps not TFC) were not as neck-deep in residential lending as First TN and Regions were. If its stock price is any indication RF and FHN didn't truly start to recover from the GFC until about 2012/13. Other banks were able to bounce back quicker and exploit what more or less was a first mover advantage, because the industry was so decimated during the financial crisis. Regions in particular had massive losses in Florida if I remember correctly.
 
#10,514
#10,514
05_never_again said:
I mean those other banks like JPM and WFC (perhaps not TFC) were not as neck-deep in residential lending as First TN and Regions were. If its stock price is any indication RF and FHN didn't truly start to recover from the GFC until about 2012/13. Other banks were able to bounce back quicker and exploit what more or less was a first mover advantage, because the industry was so decimated during the financial crisis. Regions in particular had massive losses in Florida if I remember correctly.
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Regions had huge FL losses and they also had to unload Morgan Keegan, which was a huge drag on them.
 
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#10,516
#10,516
05_never_again said:
Yep - forgot about that, had to unload a profitable asset to stay afloat. That was their equivalent of Lehman selling Neuberger Berman.
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By that point, Morgan Keegan was largely worthless. They got busted stuffing their mutual funds full of subprime crap and got caught and were being litigated over it.
 
#10,522
#10,522
Fun times. I lost half my net worth twice, just investing in boring non-sector mutual funds. Good lessons.

The best moral, I think, is to understand that the peak in Y2K and the valley in 2009 were significant extremities. They'll never recur exactly the same way (although, I think it's fair to say that banks are just as suicidal as they ever were). The distance between them is meaningless, and the height and depth are also meaningless. You can't learn anything from that except "hang on" and "don't be stupid" and you already know that. Once in a while, somebody will tell you something about the "decade" between these points as if they're brilliantly a way to illustrate their brilliant insight. Then they'll step back expecting to leave you in the glow of their brilliance. Don't listen. They say humans are designed to look for patterns. could be.
 
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#10,523
#10,523
Firebirdparts said:
Fun times. I lost half my new worth twice, just investing in boring non-sector mutual funds. Good lessons.

The best moral, I think, is to understand that the peak in Y2K and the valley in 2009 were significant extremities. They'll never recur exactly the same way (although, I think it's fair to say that banks are just as suicidal as they ever were). The distance between them is meaningless, and the height and depth are also meaningless. You can't learn anything from that except "hang on" and "don't be stupid" and you already know that. Once in a while, somebody will tell you something about the "decade" between these points as if they're brilliantly a way to illustrate their brilliant insight. Then they'll step back expecting to leave you in the glow of their brilliance. Don't listen. They say humans are designed to look for patterns. could be.
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huh, did you sell when we had a drop of 50% ?
 
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