Brief Note: The overlooked tools distressed banks are using to improve income and solvency.
Good afternoon,
Today’s note should be the final short note before we get back on schedule for the beginning-of-month free version. This edition is premium, but on the flip side the monthly sub costs about as much as a Modelo.
Over the past few weeks, the banking sector has been covered by a wet blanket as a string of failures have scared generalists away. To help remove the blanket, the shortseller favorites below must find ways to ease burden of some combination of not enough capital, bad rate positioning, or excess credit risk.
America’s Most Disliked Bank Stocks:
The good news: Financial Engineering Season is here
This morning PacWest shares rallied on a loan sale. Everyone understands loan sales. But did you notice their March deal with Atlas SP?
Put yourself in the shoes of the PacWest CFO today or the Zions Bank CFO in mid 2009. Below we look at:
Swaps and Interest rate collars
Backdoor capital / liquidity raise
Stealth deposit gathering
Work the capital markets / repurchase debt.
BTFP