$FRC - Puzzle Pieces

Submitted by PussyBreath007 t3_1264nxo in wallstreetbets

Have you ever seen the most powerful banks in the world willingly hand over $30 billion dollars with the expectation that they not only weren’t going to be able to make a return on their investment, but also, would likely lose their investment entirely? Me neither.

JPM, Citi, BofA and Wells alone deposited $20 billion into First Republic roughly two weeks ago. Did you notice these banks were unwilling to help SVB? In addition to having the worst exposure to long-dated T-bonds, SVB had no friends. First Republic has lots of friends. Nepotism and favoritism are alive and well in the banking industry.

First Republic doesn’t have nearly the unhedged exposure to long-dated T-bonds that SVB did. They don’t have the crypto exposure like the clowns at Signature Bank did. First Republic is, very temporarily, solely suffering from a liquidity issue due to its relatively wealthy client base unfairly losing confidence. The withdrawals will have some sort of lasting effect until confidence is entirely restored (which has already started behind the scenes), but by no means should $FRC be trading at $14. This is a very profitable bank with, even now, a better balance sheet than many of the other, smaller regional banks whom frankly aren’t at risk of insolvency either.

Put the pieces of the puzzle together - First Republic just announced they are no longer considering buyouts. They aren’t going anywhere. Don’t you realize that any one of the banks who just contributed to the $30 billion investment would have been champing at the bit to buy $FRC at these extremely undervalued prices? This stock is about to go on an epic bull run at even the slightest hint of depositor confidence returning. Don’t let the big guys fuck you and trick you into buying puts on this beautifully undervalued gem.

Position = 20 May23 $20C Will be adding more calls to this position if $FRC drops to $10-$12 range within the next week or so. Will perhaps roll them out if the price ascension isn’t as swift as I predict it to be.

Love, PussyBreath

EDIT: The post kept getting taken down when I tried adding an image showing my position on WeBull. If someone can point me in the right direction I will gladly add proof of position.

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VisualMod t1_je7huyv wrote

>I agree with your assessment of First Republic. I believe the stock is undervalued and has potential for significant growth in the future.

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AwkwarkPeNGuiN t1_je8qc4f wrote

mf, that’s all you have to say.

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AccordingCaram t1_je91v6a wrote

Like I said elsewhere in the thread, and what is reflected in my portfolios, a specific bank is not the best way to play a recovery.

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sf_warriors t1_je7r16c wrote

Imo FRC will rise or fall after 04/13 ER, only an ER can reveal actual balance sheet of theirs. AFAIK It is a very well run and a reputed bank in SF, among all banks in the SF bayarea they are the pay masters and also hire the best talent. They have a very sticky customer base with industry leading customer satisfaction ratings, hence in-spite all this, we hear on social media a lot of their customers are sticking with them through this crisis.

People playing with puts/shorting be mindful that FRC is a very respected name among banking circles(i had worked for their competitors, 2 of the big 3 banks).

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diqster t1_je863r3 wrote

Not sticky at all. FRC makes you deposit a certain amount of assets in order to get favorable mortgage loan rates. Those deposits get bupkis for interest. Once your loan closes you can move the money elsewhere. They're not going to say you broke the covenant and foreclose on your underwater Bay Area home. Even during good times they would never do that. I know because I did it and asked friends if they did it, and they all said yes everyone does. Only the olds are keeping their money there and after last month I doubt even that's the case.

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sf_warriors t1_je8bfhq wrote

The kind of customers that bank with FRC are not in for those cheap tricks, they are wealthy and on an avg each account has $170,000 in deposits, the minimum balance to hold is $3,500 or else a $25 is charged.

Anyways 4/13 is not too far.

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diqster t1_je8g2fj wrote

Sure. Tell me what I already know. Former FRC client. You can get the mortgage then move the deposits somewhere to get a decent rate. I did it. Lots of others clearly did too. First Republic isn't offering anything that even a bottom tier private bank like Chase Private Client already is.

FRC had some nice ineterst only jumbo loans but other banks in the area already offer it. Ironically one of my banks now is SVB lol.

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sf_warriors t1_je8jhqo wrote

Firstly you need to understand that FRC is in the wrong news because 68% of its customer base hold more than $250,000 in their accounts, I am hearing from my sources that avg uninsured account is $11 million.

Only on 4/13 we will know how many of those 68% uninsured depositors are intact and how many left, they move the scale as the bank previously held $170 billion deposits and $205 billion assets in loans and bonds

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irongi8nt t1_je8h88y wrote

Chase doesn't do Jumbos, they are hard to find.

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diqster t1_je8hfkv wrote

Bay Area even Star One will give you a jumbo deal. Chase Private Client definitely does jumbos.

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slick2hold t1_jec0k11 wrote

FRC is also a spin off of BofA. If anything, if FRC was as conservative as bofa is then the longs have a great deal of excitement. As OP noted 30b is sitting with these guys from other banks. The 30b is free money sitting there wo any guarantees of getting it all back. The big banks will make sure it doesn't go under. Mind you, the risk is not the same as equity holders and shouldn't be equated in any manner. If FRC goes under the banks will get most of the 30b back...equity holders will get back zero.

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thus t1_je7l0jo wrote

A few other data points:

  • $FRC institutional ownership is still 97%+
  • The $FRC implied volatility and option premium has really dropped over the last week, indicating that nerves are calming. Trust me, I will miss this, as I was making bank selling cash-secured puts.
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SheepherderSea2775 t1_je8ijns wrote

Post-GME, I don’t trust subreddits, especially the posts saying anything of mainly institutionally owned. It just reads like a pump and dump and an institutional bad actor is just trying to get retail to hold their bags.

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thus t1_je8iyhn wrote

Smart

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SheepherderSea2775 t1_je8jlja wrote

That being said. Given banks are -90% right now. Finding that regional bank that can weather the storm and buying in at the bottom (after Powell stops fleecing the markets)… that’s a 10x multiplier for sure…

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thus t1_je8kanc wrote

Don't pick the bank, play the sector ETFs.

They are more boring, but there is plenty of profit to be had long-term unless the whole sector is doomed to zero.

If you really do have to scratch the itch, there are 3x bull sector ETFs like $DPST (be very careful).

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robbinhood69 t1_je7ntnu wrote

you realize institutional ownership data is like 4 months delayed right ?

no, of course you don't, u imbecile

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PussyBreath007 OP t1_je7oahw wrote

That’s not very kind. I’ll try to get more current info on tutes ownership %

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robbinhood69 t1_je7pijk wrote

This whole thread is walking people into a trap, which is not very kind since the DD lacks any semblance of even basic knowledge of reference materials

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thus t1_je85zd8 wrote

If FRC was going to implode, it most likely would have gone into receivership 10ish days ago.

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robbinhood69 t1_je8gcj4 wrote

Silvergate is basically humping along outside of receivorship but its prolly gonna bleed forever, this is a moronic play

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thus t1_je8i4gn wrote

Like I said elsewhere in the thread, and what is reflected in my portfolios, a specific bank is not the best way to play a recovery.

Buy bull put spreads, shares and CCs, or leaps in a sector ETF like KRE.

If you really must have more risk, then pick a levered-up sector ETF like $DPST.

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thus t1_je8i65k wrote

I am shocked SI is not collapsed, to be honest.

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irongi8nt t1_je8hwuo wrote

All y'all bears say the same thing every week "by Friday they will be in receivership" it's getting old...

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robbinhood69 t1_je8i701 wrote

!remindme one year

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irongi8nt t1_je8ko6r wrote

You have $1 puts out to next year, I hope your not also shorting :P

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robbinhood69 t1_je8okdg wrote

Im not touching this coz vols r blown out coz its priced in that this shit is going down

It’s like amc

It’ll hump along but theres no salvation here, only down

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thus t1_je869rs wrote

That said. $FRC is not the smartest way to play this.

If you really do want to play a recovery, buy one of the sector ETFs instead. That way, a bank could still fail, but the sector would survive.

Disclaimer: I am deep in June 2025 $KRE leaps at $35 strike.

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thus t1_je854jh wrote

Obviously. We don't know for sure until the 13Fs fly.

We can infer, however. There has been one large institution that has reportedly divested.Swedish pension fund Alecta. They sold for a $728mil loss. Nobody has followed them, from what I can see. Too bad they didn't hold out for a week.

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robbinhood69 t1_je8gaml wrote

We cannot infer diddly squat, look at every other regional bank, even silvergate still shows 97% ownership

Idk if europe has different disclosure laws and thats why sweden fessed up but no one else is gonna say shit until long after they r completely our

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diqster t1_je85nkb wrote

23.7% short fee rate on IBKR for FRC.

I also loved selling puts on SIVB until I didn't. I won't be able to sit down for years.

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Theta_Ome t1_je7w20t wrote

WSB are majority of the put buyers and the minority are the put sellers.

Your post won’t get traction. The fear narrative will be milked until puts expire worthless on Friday.

Then the loss porn hits from put buyers.

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KenGriffinsDaddy t1_je7kha8 wrote

Pretty sure Moody’s just said unrealized losses represent almost 40% of the money FRC set aside to absorb losses and they would also take losses on a large amount of residential mortgage loans, which is why they downgraded them. That hasn’t changed. It’s alarming that they needed the 30 billion schneebs from their buddies to survive, no? There is more to this than they are leading on for sure but what we see and know is more than enough to stay away. The fucking thing was trading at $147/share less than 2 months ago. Big depositors and smart money left/sold and I have my doubts it was simply because “they unfairly lost confidence”

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PussyBreath007 OP t1_je7mrgy wrote

I don’t put a lot of faith in Moody’s ratings for a number of reasons.

As far as your claim “big money left” why would BofA, Citi, JPM etc just deposit $20B if they suspected their deposits would disappear?

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dbgtboi t1_je8bxed wrote

>As far as your claim “big money left” why would BofA, Citi, JPM etc just deposit $20B if they suspected their deposits would disappear?

You're way overthinking this. Look at banking stocks right now, they all got slammed because of the bank issues. They helped FRC because if FRC went bust it would take them down even further. They didn't help FRC out of love, they helped FRC to save their own asses because they knew the government / the fed would have let FRC blow up.

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PussyBreath007 OP t1_je8cgdx wrote

I believe you’re underthinking it. The prevailing narrative as these regional banks were collapsing was to get your $ into the largest banks. If anything, the more regional banks that went under, the more depositors would flee to the big boys… of course they didn’t do it for love, they did it because they see FRC as a low-risk, short-term-high-reward investment because it’s being unfairly lumped into the same group as SVB and Signature (who both a had a much different, irredeemable type of exposure)

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dbgtboi t1_je8d9h5 wrote

With every banking crisis comes increased regulation which is bad for business and profits. Even if the big boys got more deposits, they would get kneecapped by the government and any new regulations will last a lifetime.

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SuperAmerica123 t1_je8zwoz wrote

Right. Because in 2009 after everything collapsed the Banks went bankrupt and definitely had very strict regulations that were ruthlessly enforced up until today…

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517UATION t1_je8o0co wrote

By lifetime I think you mean the next Republican president.

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shbtc t1_je7p2kr wrote

They’d all rather be depositors than shareholders

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PussyBreath007 OP t1_je7rsru wrote

Their deposits aren’t insured. Less risk than being a shareholder (in the meantime) but definitely not zero risk

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shbtc t1_je7tq8z wrote

I thought fed said they’d continue to insure over 250k at banks whose failures might hurt the economy (too big to fail). I’ll bet the big banks with all their political control are sure their money falls in that category. If nothing else, their massive deposits brought FRC into that category.

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PussyBreath007 OP t1_je7ubx0 wrote

That’s an awful lot of speculation and the Fed has received increasing backlash from bailing out SVB

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shbtc t1_je7uir4 wrote

And has yet to rescind the new policy

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PussyBreath007 OP t1_je7vmuu wrote

It’s been opaque at best. Powell and Yellen literally were saying opposite things last week

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shbtc t1_je7wz84 wrote

I had only seen Yellen say “only the big bois “. Thanks for pointing that out. I still think you underestimate the power of these banks. Fed meets at banks’ offices when it hits the fan. Not the other way around.

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That-Relation-5846 t1_je7o8jy wrote

>Pretty sure Moody’s just said unrealized losses represent almost 40% of the money FRC set aside to absorb losses and they would also take losses on a large amount of residential mortgage loans, which is why they downgraded them to That hasn’t changed. It’s alarming that they needed the 30 billion schneebs from their buddies to survive, no? There is more to this than they are leading on for sure but what we see and know is more than enough to stay away. The fucking thing was trading at $147/share less than 2 months ago. Big depositors and smart money left/sold and I have my doubts it was simply because “they unfairly lost confidence”

FRC is an SF bank; there's a lot of overlap between their customer base and SVB's customer base. When SVB went down, it was inevitable that the jitters would spread to the other local bank that services a ton of rich people in the same area.

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diqster t1_je85h8l wrote

FRC is on the east coast, too. New England and Florida.

SVB was solely the Bay Area.

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sf_warriors t1_je8l2w9 wrote

FRC has presence in coasts like LA, Boston, Florida and NY. 40% of their customer base is non-bay area

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That-Relation-5846 t1_je955cl wrote

When 60% of customers are in the same area with a lot of direct and indirect customer overlap, it doesn’t surprise me that FRC saw a more severe bank run after SVB than, say, WAL. I believe FRB offers a differentiated level of service (as SVB did) and will see deposits slowly flow back, so anything that buys them time increases the likelihood of them solving this without diluting shareholders, selling the whole thing at a discount, or taking heavy losses over an extended period. The P/L will be harmed for a while, but they offer too good a product to not recover over time. They were valued at a significant premium over book for good reason.

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Chadmium1 t1_je8110t wrote

initially felt the "not for sale" rumor was bullish til i read this article. https://finance.yahoo.com/news/first-republic-bank-not-currently-203308150.html

Definitely didn't feel better about my position after reading this, except the article looks like it was written by fkn bard ai or a regarded intern. it says 30 trillion was injected by the big banks...it was actually 30B lol

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irongi8nt t1_je8hno9 wrote

Lots of typos in that article and they cite essentially no sources, they even say FRC didn't comment. I felt that was a pretty weak article.

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Smegma_Surfer t1_je89k7f wrote

And this is why I am holding my FRC shares with no worries. Not that many but still.

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_foldLeft t1_je7m4j1 wrote

FRC will be “saved” at a loss to shareholders, guaranteed

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Halforthechump t1_je8v48t wrote

The reason the big chunguses put money in FRC was to stop the spread of fear, it's not because they think FRC is a really good place to put money, it's because they were shit scared of the domino effect harming their businesses and the broader economic merry-go-round.

Having said that - every fucker here should be having a punt in FRC, it's value dropped 10x and that alone is reason enough for the degenerates to gamble on it going up. I've got a small bullish bet on FRC, not because I have any reasonable expectation it'll pay off but because my lizards brain is saying ' it went down loads and so will go up loads '.

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PussyBreath007 OP t1_je9gl3t wrote

The big chunguses had and have zero incentive to stop the spread of REGIONAL BANK fear. The prevailing narrative has overwhelmingly been - move your money to big banks for safety. The JPMs and BofAs would gladly take all of FRC’s clients overnight. I can’t say for certain FRC is going to recover (although I think they’re already on their way) but the big banks definitely did not invest $30B into FRC for the reason you are stating. In fact, it’s just the opposite. They see FRC is a very low risk, easy return while they inevitably recover over the next 6-12 months. You’ll see FRC skyrocket at earnings on 4/13 after it’s revealed their balance sheet is fine… my two cents

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Halforthechump t1_je9io6n wrote

My man credit Suisse was on the brink of collapse and is considered a vital cog in international banking. Contagion threat was through the roof. These regional banks had hundreds of billions of dollars under management, FRC and svb were boutique tech bro banks, not some farmers Union Bank servicing a few towns. The entire banking system is so intertwined that the ripple turns into a tsunami in days, which is exactly what happened. JPM aren't thinking ' oh boy I'm gonna get $10b in deposits if FRC collapses', they're thinking ' oh fuck this is snowballing like 2008 and we're long in far, far too many vulnerable positions to get out of it in the positive '.

The banks didn't invest anything in FRC, they deposited $30b, for a year, to stop it fucking collapsing from a cascade of deposit withdrawals.

I've said I'm long on FRC but it's purely a contrary play. This is a bank that had a major liquidity crisis because it lost shit tons of deposits.

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PussyBreath007 OP t1_je9m6eo wrote

I fundamentally disagree with you. I stand by my assertion that big banks would have no problem with many regional banks going under. In fact, a banking system where even more money was centralized with a dozen big banks would be their ultimate preference. I don’t believe the biggest banks deposited $30B to prevent regional bank failure contagion. Not at all. They have a different relationship with FRC, clearly.

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robbinhood69 t1_je7obv3 wrote

all the big banks had deposits grow as FRC depositors fled

those same big banks, deposited the same money back at FRC, presumably for interest

if the same big banks would have refused, FRC would have collapsed and thru FDIC those big banks would have had to repay the depositors anyways

this is a freaking shell game OP and you are falling hook, line, and sinker for it. Also, the deposits are only agreed upon for 120 days. Tick tock, u still have time to exit this position before u get 0'd bro

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PussyBreath007 OP t1_je7pv3b wrote

I’m not sure why you think the $30B in deposits from the big banks is all FDIC insured. The Fed has made no such claim. Their stance has been opaque at best. You’re making the assumption the big boys deposited $30B at FRC with zero risk.

I’d imagine you own $0.50 puts then, no? Since $FRC’s demise is a foregone conclusion and all…

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robbinhood69 t1_je7qu5c wrote

It’s not at 0 risk u dummy, it’s just that they’d have had to bail the bank out ANYWAYS

Anyways whatever OP go die on this hill if u want hf going to 0

−6

PussyBreath007 OP t1_je7rcoj wrote

The big boys “had to bail FRC out anyway”… you’re delusional. Like any other competing bank, they would have gladly let them go to zero. In fact, the prevailing narrative was - MOVE YOUR $$$ TO THE BIG BANKS QUICK!!

They deposited $30B because they saw a low-risk option to make easy interest from a bank with a much better balance sheet than SVB. I don’t understand how you think this equates to FRC is going to zero, especially when you just acknowledged JPM, Citi, BofA, etc are taking on some level of risk. They won’t lose here, and neither will FRC

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Responsible-Rip4366 t1_je7yz9l wrote

This comment proves you know nothing about the banking system and the political shitstorm these failures have kicked up.

I award you no points, and may God have mercy on your soul.

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Responsible-Rip4366 t1_je7ypew wrote

Correct. Also, big banks did this as a PR stunt to distract FDIC from imposing the majority of the coming deposit assessment on them. Lots of political pressure to make GSIBs pay the assessment to keep smaller banks from having to pay any of it.

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VisualMod t1_je7huhb wrote

User Report
Total Submissions 1 First Seen In WSB 1 week ago
Total Comments 26 Previous Best DD
Account Age 1 week [^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.) [^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.)
>TL;DR: The big boys are in control of the $FRC ticker right now. Don’t put your money on them losing.
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Apelightningz t1_je7vgre wrote

30 billion deposited and they're still negative 18 billion.

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jtmarlinintern t1_je7w55p wrote

when bonds of a bank get a junk status, it may take a while to get healthy

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vncld t1_je851lq wrote

Jamie was supposed to craft a new plan to save the bank, where is it?

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Idennatua t1_je88rsk wrote

Swaps.

They have bad swaps.

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0x11C3P t1_je8xc4a wrote

Lehman said they wouldn't sell and look what happened to them.

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slick2hold t1_jec259c wrote

Lehman wouldn't sell because no one wanted to buy that toxic shit. FRC is probably in similar stste right now. They need depositors to keep their money in FRC. That is the issue and the amount of money thay has left would have collapsed multiple WaMu size banks. But big banks and FRC are the same when it comes to banking and they came to the rescue.

WaMu was in same exact state...rumors start, people panic, they move funds, wamu is no longer compliant, feds take over. WaMu only needed cash to satisfy all the withdrawals and it would have been fine...but big banks didn't like WaMu as it was a threat to their fee based profits. Needless to say, no one came to help them.

0

bwatts53 t1_je9grjv wrote

I hate to break it to you, those banks are under extreme pressure to loan money out.

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eddie7000 t1_jeb6l66 wrote

My broker has shut down trading on SVB but has left FRC up. That's all the DD I need right there.

Nothing blows up a broker quicker than regards playing leveraged CFDs.

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Moneymma t1_je8gf4u wrote

FRBs residential loan book is garbage. Good luck regard.

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diqster t1_je86clz wrote

There's zero DD in here. It's hopes and dreams. FRC has said they're not selling. FRC employee morale is in the dumps according to the East Bay Times. Bad situation and your boss isn't open to selling? Sounds like a zombie bank. Oh, a zombie bank with a $20b hole in the balance sheet. Nah, I'm betting this one gets wiped out, too.

−6