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Pacman's looking good again today. let's go PACW...
But as banks try to prevent the withdrawals, they’re raising the rates they pay depositors and all of a sudden their earnings are way down.
The arrears and defaults are rising for student loans, for automobile loans, for credit card loans. Commercial property is not only defaulting, but large companies are simply walking away from their office buildings. Many banks are in the same position that Silicon Valley Bank was in. There’s almost a negative equity because the mortgage holdings and their long-term bond holdings market value has gone way down below what they owe their depositors. As long as depositors don’t take their money out, banks don’t have to report how much they’ve lost and how much their acquisition price of mortgages and stocks exceeds the actual market price today. But Americans are pulling their money out of banks because banks don’t pay very much interest. When you have the government paying 4 to 5% on your money, why would you leave your money in banks that are paying maybe 0.2%? But as banks try to prevent the withdrawals, they’re raising the rates they pay depositors and all of a sudden their earnings are way down.
Nice of them to announce this at 4:30 PM on a Friday during after hours trading....funny how that works
PacWest Bancorp Announces Second Quarter Earnings Release Date and Conference Call
July 07, 2023 16:30 ET
| Source: PacWest Bancorp
LOS ANGELES, July 07, 2023 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq: PACW) (the “Company” or “PacWest”) will report its financial results for the quarter and year-to-date period ended June 30, 2023 after the close of the stock market on Tuesday, July 25, 2023. The Company will file its quarterly financial results with the SEC via Form 8-K and issue a press release via newswire, which will also be posted on the SEC Filings section of its website at http://www.pacwestbancorp.com. Management will host a conference call at 8:00 AM PT/ 11:00 AM ET on Wednesday, July 26, 2023 to discuss the Company’s performance.
Participants may access the conference call/webcast at:
Participant Dial-in: (866) 575-6539
Participant Webcast Link: https://event.webcasts.com/starthere.jsp?ei=1622826&tp_key=30f3d2eb22
Confirmation Code: 3118261
Please visit the site approximately 15 minutes before the start time to register, download, and install any necessary audio software. Audio will stream through your laptop, tablet, or mobile device. The call will be recorded and made available for replay on July 26, 2023, after 12:00 PM PT. You may access the recording through the link above or at https://www.pacwestbancorp.com/news-market-data/presentations/default.aspx.
I'm out right now as well ...hoping for a bigger pullback
It's coming back. I hestitated at buying 500 shares at 7.67 and 7.70. Looks like I made a bad decision!
Federal Bank authorities freaking out as commercial real estate fallout reaches critical levels. Hail save the banks!
https://youtube.com/@eurodollaruniversity
The big picture: Big banks get a lot of attention, but there are about 4,800 banks in the U.S. — and the small ones play a large role in the economy, as a recent Goldman Sachs report notes.
Small and midsized banks, defined as domestically chartered banks not among the 25 largest, currently hold 67.2% of all outstanding commercial real estate loans, and 37.6% of loans overall. (h/t: Wall Street Journal for chart inspiration.)
These small players grease the wheels of the economy in all kinds of ways, particularly in specialized areas and regions. Think, Signature Bank's lending to Broadway or SVB's lending to startups.
Zoom out: By the end of last year, banks were already pulling back on lending, as they saw more deposits head out the door, said Chad Littell, CoStar Group's national director of U.S. capital markets analytics.
Regular consumers had burned through excess savings, and needed money to pay the bills. And some companies — like the tech startups who banked at SVB — were seeing a greater need to access their cash, too.
About 40% of loan officers said they had tightened lending standards in the commercial real estate space during the last quarter of 2022, per an analysis of the Fed's most recent quarterly survey of loan officers by CoStar. Only about 5% said they were tightening at the end of the previous year.
Meanwhile: Another huge area of office building financing — the market for commercial mortgage-backed securities (CMBS), where banks bundle the loans and resell them to investors — is seizing up. Sales of these deals were down 85% in February, compared with last year, per Bloomberg.
Between the lines: The failures of SVB and Signature are likely to accelerate the pullback. "The banking sector, which was already limiting its exposure to real estate, may look to restrict lending even further after the recent collapse, especially among regional and community banks," Littell wrote in a recent report.
The banks in the 2023 stress tests hold about 20% of the office and downtown commercial real estate loans held by banks.
“The projected decline in commercial real estate prices, combined with?the substantial increase in office vacancies, contributes to projected loss rates on office properties that are roughly triple the levels reached during the 2008 financial crisis,” the Fed said in a prepared statement.
Open book test bank
?
Pretty misleading as worst bank failures in history happened this year because the Stress Teat is an open book exam where the Fed preps the Banks so that they can essentially cheat and pass the exam. That is exactly why Silicon Valley Bank failed.
Meanwhile, Dennis Kelleher, who leads the Washington-based group Better Markets, which advocates for tougher financial rules, said changes to the exams are urgently needed. “This is dangerous, misleading, incomplete and results in false comfort,” he said in a statement, adding that the 2023 exams didn’t fully capture the scope of risk in the banking system.
Close your Chase Bank account now 6/30/2023 https://youtube.com/@stevenvanmetre5087
Almost $9 resistance perhaps premarket
Federal Reserve says 23 biggest banks weathered severe recession scenario in stress test
https://www.cnbc.com/2023/06/28/fed-stress-test-2023-23-banks-weathered-severe-recession.html
https://www.cnn.com/2023/06/28/business/fed-stress-test-preview/index.html
Closed up a bit today....good luck in 13 hours
Credit crunch is getting serious in the US, too. Commercial bank data (H.8) shows bank credit still isn't coming back. Banks are still selling securities, not afraid of rate hikes but liquidity cushion because crisis isn't close to over.
https://buff.ly/3NMgpaw
The bank crisis isn't done. On the contrary, it's still going on right now. Even if another bank doesn't fail from here on, that doesn't matter since the damage has already been done.
The bank crisis isn't done. On the contrary, it's still going on right now. Even if another bank doesn't fail from here on, that doesn't matter since the damage has already been done.
— Jeffrey P. Snider (@JeffSnider_EDU) June 27, 2023
Two words: credit crunch. https://t.co/kuQXyHS40O
Shareprice up a bit in premarket trading
A tipping point is coming: In the US alone, about $1.4 trillion of commercial real estate loans are due this year and next, according to the Mortgage Bankers Association. When the deadline arrives, owners facing large principal payments may prefer to default instead of borrowing again to pay the bill, as per a Bloomberg report.
The number of transactions is plunging, and when deals do happen, the price declines are stark.
In the US, where return-to-office rates have been lower than in Asia and Europe, values for institutional-quality offices are down 27% since March 2022, when interest rates started going up, according to data analytics company Green Street. Apartment building prices have declined 21%, and mall prices are down 18%. Office prices are expected to fall more than 25% in Europe and almost 13% in the Asia-Pacific region before hitting a trough, PGIM Real Estate, a unit of Prudential Financial Inc., forecasts.
Commercial real estate’s woes are expected to add to the stress on a financial system that’s already reeling from this year’s crisis in regional banks after back-to-back failures. And as the downturn deepens, it stands to have a transformational impact on some cities as they contend with empty buildings and lower property tax revenue.
The question is whether the commercial property correction will be big enough to destabilise the wider economy. As broad as the forces arrayed against the real estate sector may be, it’s also a very local business, encompassing not only urban skyscrapers but small-town shopping centres, suburban apartment buildings, and sprawling warehouse parks.
The Ticking Time Bomb Amid Piles Of Debt
Debt distress has already stretched from Los Angeles to Sweden and South Korea.
Here’s how the troubles are unfolding in some major financial and business centres around the world:
San Francisco
Nowhere in the US is the crisis more pronounced than in San Francisco, where a downward trend is gathering momentum as one building after another slips into default. Property prices in the tech hub reached record heights in the past decade, so they had a long way to fall. The city boomed with hot startups—Airbnb, Twitter, and Uber Technologies—along with established giants such as Salesforce. Now many of them have cut jobs and office space.
The downtown is struggling to re-attract employers and employees who thrived working remotely. The area consists largely of office towers, leaving it feeling particularly empty. Those workers who do come in endure among the nation’s longest average commutes. San Francisco’s homelessness crisis is also concentrated downtown, and highly publicised retail theft has led to some stores closing.
As per the report, in the once-fashionable Union Square district, the owners of the city’s largest mall, Westfield San Francisco Centre, essentially handed the keys over to holders of a $558 million mortgage in June. The move came after Nordstrom Inc. announced it was closing its department store in the complex. With tourism slow to rebound from the pandemic, Park Hotels & Resorts Inc. has stopped payments on $725 million in debt tied to two of the city’s biggest hotels, the Hilton San Francisco Union Square and the Parc 55 San Francisco. Veritas Investments Inc., a major local landlord, defaulted on $675 million in debt on a portfolio of apartments valued at more than $1 billion in 2020. The loans are now on the market.
The city’s coffers are taking a hit, with Mayor London Breed projecting a $780 million two-year budget deficit. She’s proposed diversifying the downtown, including the conversion of more buildings to housing, and suggested the Westfield mall could be used in other ways, reflecting a "new vision" for the property. For now, there’s a lot of empty space to fill.
New York
While New York City’s streets are bustling with tourists and residents, only about half of office workers are back at their desks, according to building security company Kastle Systems.
The report mentioned that many buildings are struggling with the loss of tenants and the need for upgrades. As employers work out their updated office needs, they can choose spaces in newly built towers in such areas as Hudson Yards or near Grand Central Terminal rather than ageing properties.
These choices helped put even iconic buildings in the world’s financial capital into troubled situations. At the Seagram Building, a 1950s skyscraper in Midtown that’s renowned architecturally for its modernist design, owner RFR Holding had to negotiate a one-year extension on $1 billion of debt set to mature this year after failing to secure financing. RFR spent $25 million on upgrades, including a vast sports complex and a wellness centre, and the property was 95% leased as of earlier this year. Still, it lost Wells Fargo to a newer development prior to the pandemic, while private equity firm Clayton Dubilier & Rice is relocating to a renovated Madison Avenue tower.
New York's Mayor Eric Adams has called for a wider return to the office, urging Wall Street leaders to enforce more in-person work. Offices, expected to reach a record 22.7% vacancy rate this year, typically account for about 20% of the city’s property tax revenue. A joint study by researchers at New York University and Columbia University found that offices in the city will lose 44% of their pre-pandemic value by 2029 because of the impact of remote work.
London
The widespread adoption of hybrid work is hitting London unevenly. Office vacancy rates in London’s West End, home to the city’s buzziest retail and nightspots, are almost at record lows as companies look for space in the best buildings and locations to help lure workers back. Rents are rising, too, because companies are prepared to pay more per square foot while taking less space overall.
The Canary Wharf district, home to 1990s-era glass and steel towers, is in the deepest trouble. The neighbourhood, perceived by most as a place built solely for bankers, is having a harder time staying relevant for major office tenants. The law firm Clifford Chance is leaving in favour of a new—and much smaller—office in the more centrally located City of London district. HSBC Holdings Plc is looking for a new headquarters, with most of its shortlisted options in the City as well. The YY building, a recently completed redevelopment of Thomson Reuters Corp.’s former headquarters that occupies the prime site right outside the Canary Wharf tube station, remains entirely vacant.
Another issue looming over London’s real estate market is the prospect that hundreds of buildings will be rendered obsolete because they don’t meet UK environmental regulations. Properties are graded on energy performance, from A to G.
By 2030, it will be illegal to rent commercial buildings that are ranked below B. That leaves landlords forced to make costly upgrades or risk their offices sitting empty. Brexit has also contributed to London losing some of its financial allure, says PGIM’s Hayes. Office buildings are "very, very vulnerable for the near term," he says.
Also Read: Why Hong Kong Is Pressurizing Big Banks To Accept Crypto Clients
Hong Kong
In 2015, a 26-floor building with a sweeping view of Hong Kong’s famed Victoria Harbour made headlines in the city when China Evergrande Group reportedly purchased it for $1.6 billion—more than double the previous record for an office tower. The deal exemplified the property market boom in the Asian financial hub, which in the years that followed attracted ambitious Chinese capital to buy everything from office blocks to land plots, often at record-breaking prices. Investing in offices appeared to be a safe bet in a city with tight space and strong demand from mainland Chinese companies.
But then came anti-government protests and the strict lockdown measures of Covid-19 in 2020, which made investors rethink Hong Kong’s status as a financial hub. Adding to the turmoil: a Chinese property debt crisis, with Evergrande at the center.
With hundreds of billions of dollars in debt, the developer sought to raise cash in every way possible and, in late 2020, pledged the office building to a bank in return for a HK$7.6 billion ($971 million) loan. Last year, a receiver took over the property. The new owner put the building up for sale but failed to get a bid that reached its target. The tower is now only about 25% occupied, in part because prospective tenants are put off by its complicated ownership. It was fully occupied when Evergrande bought it.
https://www.indiatimes.com/worth/news/worlds-empty-office-buildings-turning-into-debt-time-bomb-606939.html
Is that all she wrote end of run for Banks?
Not surprising PMIs turned really ugly in June. Inventory cycle is really starting to hit manufacturers and service providers stumbled. Chinese were definitely on to something when citing "changing economic landscape."https://t.co/N8QAJyrCBc
— Jeffrey P. Snider (@JeffSnider_AIP) June 24, 2023
While everyone has gone back to sleep on the banking crisis, not much has changed since start of May when First Republic failed. The credit crunch continues to hit the economy and is being mentioned more and more by economic agents as it filters out. pic.twitter.com/xHMsDQqNUu
— Jeffrey P. Snider (@JeffSnider_AIP) June 24, 2023
back into the $6's more like it imo. we'll see maybe today??
when back to 9? LOL
PACW
Morningstar Services
Jun 20, 2023
Rating
Star rating 3 out of 3 stars
Last updated Jun 20, 2023
Price Target
24.01 U
Last updated Jun 20, 2023
I'm optimistic and certainly don't think the Fed or Big Banks want another financial crisis like 2008....Tuesday could be good
Fed knows there are going to be more bank failures. Officials seem to be counting on it. Why you don't hear about BTFP going up. Hubris. To these academics, this is a sign their "tools" are working when, like '08, more at the Fed means less circulating organically in real money.
Fed knows there are going to be more bank failures. Officials seem to be counting on it. Why you don't hear about BTFP going up. Hubris. To these academics, this is a sign their "tools" are working when, like '08, more at the Fed means less circulating organically in real money. pic.twitter.com/y6o00Kc50W
— Jeffrey P. Snider (@JeffSnider_EDU) June 17, 2023
Regional Banks meant to fail with the help of Big Banks and Fed raising rates meaning flight by depositors from Banks paying no or little interest and then Commercial Real Estate Loans just on the beginning phase of collapses..
Late payments on commercial mortgages are piling up as higher rates and weakening property prices bite into the sector..
https://news.yahoo.com/payments-commercial-mortgages-piling-higher-214328465.html
After release of the Q2 report we know more about the situation on PACW.. lets hope they are almost healty..than it need some time to realize in the market.
Fed will not raise the interest rate this time and PACW dropped 50 cents
Regular close Monday $8.59,,,,after hours close....$8.59
Hope I can complete a swingtrade tomorrow....or at least part ofit
$10 max downtrend starting…
“Zero showed up and gave me a bid” Howard Hughes strikes out on Houston project
Firm says 48 lenders rejected multifamily proposal in the Woodlands
?
Howard Hughes Corporation CEO David O’Reilly (Howard Hughes Corporation,
JUN 8, 2023 AT 6:57 PM
• By TRD Staff
Even Howard Hughes can’t get a loan in this environment.
Howard Hughes Corporation got no takers on a multifamily proposal in the Woodlands, the Houston suburb where the firm is headquartered, CEO David O’Reilly told Bloomberg.
“Zero showed up and gave me a bid,” O’Reilly told the outlet. “I talked to 48 of them.”
The real estate developer and manager is known for its range of master-planned communities to offices and retail spaces, including condominiums in Hawaii and buildings in Manhattan’s Seaport area. Hedge fund manager Bill Ackman’s investment firm, Pershing Square Capital Management, holds around a third of the company’s stock.
The financing market for real estate is tightening, causing concerns among developers and owners. Commercial real estate is being impacted by rising borrowing costs, leading to payment difficulties, defaults and negotiations with lenders. Texas Billionaire developer Ross Perot Jr. has also noted the increasing difficulty of obtaining construction loans for real estate projects.
Apartment landlords are now experiencing the fallout as well. Despite benefiting from rent growth during the pandemic, they are now grappling with high borrowing costs and increased expenses that are eroding profits. Apartment building prices have dropped 21% over the past year, according to Green Street.
Lenders are currently focused on resolving existing loans and are hesitant to extend new ones, creating challenges for developers like Howard Hughes, despite strong demand from renters. Apartments Howard Hughes has already constructed in the Woodlands boast a 96% occupancy rate and double-digit rent growth.
“Sounds good, except I’m upset because it means I didn’t build the next building fast enough,” O’Reilly told the outlet.
?
Distress a long-term trend in Houston
TEXAS
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Houston hotel logs largest CMBS loan loss
TEXAS
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Commercial sales fall 74% in Houston
So today regular trading closed at $9.12 and Post market last order was $9.08 and second last at 9.12
....market sector uncertainty??
Big Pharma Green as usual
Most Banks are red today , that could account for the shareprice here today
Nice bounce off the low of the day! I hope it continues throughout today!
PACW creeping back up to opening HOD (knock on wood)
It looks like you made a good decision yesterday. I hope we never see the low it hit today!
Me too I sold yesterday. I think it was a mistake though. I have fate on PacWest. They are doing all the right things to bring it back strong
sold a few this morning PM, gonna let rest ride for a bit!
Pump those low $10s today resistance level …meanwhile Banks per Fed chart losing deposits at the fastest pace in history. Yellen flat out lying no surprise there either.
This can’t end well for Banks..
Breaking Market News
@financialjuice
·
20h
US TREASURY SECRETARY YELLEN: THE LEVEL OF CAPITAL AND LIQUIDITY IN THE BANKING INDUSTRY IS STRONG.
No it isn't. https://t.co/Yz6TjPCYMI pic.twitter.com/ns9EdXBrd1
— Financelot (@FinanceLancelot) June 7, 2023
$10 resistance but Banks are high risk as there commercial real estate loans and portfolios crashing.. hard
So many examples popping up..
Wells Fargo to take a $60M loss on 13-story office tower in SF
550 California, purchased for $108M, has mystery buyer paying $43M to $46M
By TRD Staff
Wells Fargo Bank has found a mystery buyer for its 13-story office building in San Francisco’s Financial District, and appears poised to take a $60 million bath on the sale.
The San Francisco-based bank has chosen a buyer for its 355,000-square-foot building at 550 California Street, expected to sell for between $42.6 million and $46 million, the San Francisco Business Times reported.
The pending deal works out to between $120 and $130 per square foot. Wells Fargo bought the building in 2005 for $108 million, or $304 per square foot……
Jamie Dimon warns of a commercial real estate downturn - CNN
May 23, 2023Economists are concerned about the $20 trillion commercial real estate (CRE) industry and so is JPMorgan Chase CEO Jamie Dimon. The regional banking crisis is having a knock-on effect on ...
Goldman Finds "Most Accurate" Reading Of Current CRE Conditions ...
May 19, 2023Goldman Finds "Most Accurate" Reading Of Current CRE Conditions, Predicts 25% Drop In Office Building Prices There are increasing concerns about the severity of the downturn in the commercial real estate market. This week, Moody's Analytics reported the first quarterly drop in CRE prices in over a decade. The most pressing issue at the moment is
Regular trading closed at $9.15 per share, up 14% on the day.....at 7PM after hours it's at $9.12 and 3 to 5 trades a minute
Who knows bro., market manipulation is crazy. In my opinion I think it will go up more but honestly do not take my opinion
It looks like it will crack the high of day soon. What happens at the close is anyone's guess.
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