CorpusColossus

"Do not my friends become addicted to water. It will take hold of you and you will resent its absence." - Immortan Joe. Not financial advice.

@dirtcheapbanks No lies detected except banks that small don't file 10-Ks - it costs too much.

I do not recommend this life. I am describing it. You will spend your evenings reading call reports while your friends watch Netflix and you will explain to your wife why you bought shares in a bank that operates out of a building that hasn't been painted since Reagan was president and you will drive three hours to attend shareholder meetings where you and four other people sit in folding chairs listening to the president read numbers from a printout while his secretary serves grocery store cookies and coffee that tastes like it was brewed during the Carter administration. You will learn the names of towns that Google Maps struggles to find and you will know which exit off Interstate 64 leads to the branch that processes agricultural loans for tobacco farmers who still pay with checks written in pencil and you will become fluent in the language of efficiency ratios and net interest margins and Texas ratios while your college roommate learns cryptocurrency and your neighbor gets rich flipping houses and your brother-in-law day-trades meme stocks from his phone during lunch breaks. You will explain at parties that you invest in community banks and watch people's eyes glaze over like you just told them you collect vintage staplers and you will know exactly how many basis points the allowance for loan losses increased last quarter while remaining completely ignorant about whatever Netflix series everyone else binged last weekend and you will find yourself genuinely excited about a dividend increase from $0.18 to $0.19 per share while your friends get excited about Tesla earnings and Bitcoin breaking new highs. You will spend Christmas dinner trying to explain to your uncle why a bank trading at sixty-three cents on the dollar represents compelling value while he explains why he just bought more Amazon and you will drive home knowing you are probably wrong about everything but unable to stop reading 10-Ks filed by institutions with total assets under five hundred million dollars. The banks compound anyway. They compound with the patience of midwestern farmers waiting for corn prices to recover and the persistence of small-town pharmacists who know every customer's prescription history and the quiet stubbornness of institutions that have survived the Depression and the savings and loan crisis and the great recession and the pandemic without changing their lending standards or their coffee supplier or their policy of closing at three o'clock on Friday afternoons. They compound while Silicon Valley reinvents banking every eighteen months and while fintech startups raise billions to solve problems that community banks never had and while regulatory consultants write reports explaining why these banks cannot possibly survive the digital revolution that was supposed to kill them in 2015 and then 2018 and then 2021 and then last year. They compound through mergers that never quite materialize and acquisition rumors that turn out to be wishful thinking and management teams that refuse to sell because their fathers built these institutions with handshake deals and their grandfathers knew every borrower's family history and their great-grandfathers started these banks with money saved from farming and they are not about to hand over the keys to some holding company in Charlotte or Minneapolis just because the stock trades below book value. They compound through years when nothing happens except the quarterly dividend and the annual shareholder meeting and the slow accumulation of retained earnings and the gradual improvement in loan quality and the steady march of time that turns patient capital into generational wealth while you age into someone who understands that boring is profitable and profitable is boring and the intersection of those two truths is where fortunes hide in plain sight.

@peterrhague That’s Chesteron’s Railing

Wait, is that his actual fence?

@Jimfrombaseball Just looked at his stats. He was a lot better than one would think and retired because he had better opportunities, not because he had to. A much better player than Uecker.

"I knew that it was time to retire, when I was catching and ex-teammate Stan Musial stepped into the batter's box, turned to me and said: 'When are you going to quit?' It's not a record, but being traded four times to four teams when there are only eight teams in the league tells you something. I thought I was modelling uniforms for the National League. Being traded is like celebrating your 100th birthday. It might not be the happiest occasion in the world, but consider the alternative. I don’t mind saying that I think average for a major leaguer is pretty good. Each year I do not play, I get better. The first year on the banquet trail, I was a former ballplayer. The second year, I was great. The third year one of baseball’s stars, and just last year, I was introduced as one of baseball’s immortals. The older I get, the more I realize that the worst break I had was playing." Joe Garigiola. Chicago Cubs catcher Joseph Garagiola on June 18, 1953 at Wrigley.

@notgaetti Not to speak ill of the dead, but he was certainly not loved by all. He may have been a great person, but his announcing style was very grating for those of us who despise the Yankees.

RIP Legend The outpouring of John Sterling stories and tributes today has been just amazing He was loved by all, even the folks who pretended they didn’t like him, because how could anyone dislike a genuinely kind soul like John?

@TheWARmonger_ @JustBB_Media @PeterAppel23 @AramLeighton8 Excellent summary. He has very little weak contact.

Appreciate the shout from the @JustBB_Media guys on their weekend recap podcast! If you don't already listen, it's in the very top tier of baseball podcasts. Weekend recap is a must, they're all good. @PeterAppel23 and @AramLeighton8 asked for my breakdown, here are my theories on the Marsh BABIP: 1) Certainly some randomness involved, but 2000+ PA is a LOT. I was willing to consider it luck at 500 PA, that was a long time ago. 2) Always been heavily platoon-protected, minimal chances for bad contact by good lefties 3) Lefty and pretty quick, always an advantage 4) Doesn't care about strikeouts, still looking to do damage with two strikes ("just put it in play" isn't good for the old BABIP) 5) Lots of line drives, very few pop ups 6) Sprays the whole field and hits to all directions, even early in the count and on balls in the air. Always high "oppo air" rates That's all I've got! Any other ideas?

@uniformcritic Larry was still great for the Phils in 1968 but retired rather than follow Mauch to the Expos in 1969.

Random 60s at bat: Larry Jackson vs Pete Rose (August 19, 1965).

@StocksOddball $59 million jump in restructured commercial mortgages.

@CorpusCol What happened with Beal?

This is my quarterly roll call of the US banks with $1B+ in assets with material (100+ bp) deterioration in loan quality in the last quarter. There are many new names but the damage is still in pockets and not widespread - in other words, problems come from mistakes not economic weakness. The data comes from FDIC call reports but I've only listed the public banks; some notable private banks like Beal, Column, Cross River and Emigrant (somehow in FL rather than NYC now) all had issues. Glossary: ADC Construction ATB Across the board weakness C&I Commercial CON Consumer CRE Commercial Mortgage MF Multifamily OTH Other Banks with big jumps in loans 30-89 days delinquent are $XYZ (CONS), $BHRB (ATB), $BYFC (ATB), $INBC (C&I), $DE (yes, the tractor folks), $MGYR (ATB), and $SOUB again (ATB). As always, the ones with Across the Board weakness are very concerning. Yet again, the loophole for loans 90+ days delinquent but still accruing was not used and has migrated to Restructured loans, which is being heavily utilized by $NODB. These banks had big jumps in nonaccrual loans were $AMAL (MF), $IBOC (ADC), $PBHC and $PFBC (both MF, CRE). The banks with big jumps in losses were $XYZ (C&I, CONS), $BMRC* (MF), $BNCC* (C&I), $CZNC (CRE), $FDVA* (C&I) and $WAL's well publicized fraud issues were widespread. The * indicate that nonaccruals fell due to the writedowns, as they should. Why use 100 bps as the cutoff? To get the list out faster. Decreasing the increment to 50bps would more than double the number of names to investigate more fully. $TBK and $KISB show up twice, dozens show up once.

@TMTLongShort Correct. Huge amounts of noise to obscure the incredibly important signal. To be fair, if Iran wasn't creating noise, the US & allies would create more themselves.

I’ve been consistent. This is about China. Both UAE and Saudi are playing dumb but they requested this. Regime change is the goal. Everything Trump says is a lie and is meant to set the narrative that Iran is the aggressor. Timing is important because of Xi meeting and midterms. Higher oil prices is an acceptable outcome. Escalation is inevitable. Iran is confused and that’s why its noisy 🫡

@Ron284Ron At the same time that the rockets start flying again.... Surely it is no coincidence.

Running out for a few hours.

@nut_history Sterling had a normal cadence back then.

It’s 330am on July 5th, 1985, 18th inning of a game between the Mets/Braves. The Braves are down 11-10 and down to their last hitter. They send reliever Rick Camp, who had a batting average of .062. Beautiful call by legendary broadcaster, John Sterling. Rest easy, John

@2008Philz That’s Hugh (Losing Pitcher) Mulcahy!

Most plate appearances in a season without a hit in Phillies history:

@commbankerguy @shortbus_ace @SEC_digger In theory, the borrower has more skin in the game. The numbers do not really support that theory.

@shortbus_ace @SEC_digger I never get the owner occupied is safer story in CRE. CRE is CRE and owner occupied ones could be harder to repurpose anyway.

Community Bank & Trust – West Georgia Owner occupied NFNR nonaccruals were 56% of capital in Q4.

Their pitchers' BABIP is .350 so far this year. That's the worst of all-time. The next worst is the 1930 Phillies at .345. Although the balls are dropping in, the ERA is better than the next 12 worst BABIP staffs because the Phils don't walk many or give up many HRs (ex Nola). A lot of balls fall in front of Crawford and leak through the middle of the infield.

I did not know it was this bad holy hell

@FluentInQuality His speech is less precise than it used to be.

@CorpusCol How so? Curious about your thoughts.

Jamie Dimon, CEO of $JPM, has fired people for running good meetings. Not bad meetings. Good ones. His definition of a bad meeting: it ends with "great session, let's pick this up next week." No owner. No deadline. No accountability. The people who run those meetings, he calls them "good bureaucrats." They love the process. They angle for the next job. They pound their chest. They grade themselves on activity, not outcomes. "If you don't get rid of them, no one believes you." He's applied this at $JPM, the most profitable bank in history, for 20 years. Bureaucracy doesn't require size. He said it can hit a single branch. "It's always the manager, stupid." The full clip is worth 3 minutes of any leader's time.

@JohnStolnis The Phils’ defense is statistically one of the worst of all-time this year using the DER. His jumps are a big part of it.

I would not have thought Justin Crawford would have graded out as the worst defensive player in baseball thus far...

@notgaetti John was usually known as Dave. I sort of remember him. His career was dogged by bad luck and an insubordinate streak that kept him on the move.

The three third basemen sharing this marvelous 1972 rookie card would ultimately combine for a whopping 158.6 WAR in their careers: • Cey (53.7 WAR) • Hilton (-2.0 WAR) • Schmidt (106.9 WAR)

The three largest megabanks are prohibited by law from buying smaller banks. It's #5-50 that will do the gobbling up. They are not based in NY and not run by guys named Brian. The process of decision making and credit allocation moving away from small towns is real and not a good thing.

If the consolidation of American community banking continues at its current pace, and the 4,100 small banks left in this country are absorbed, one by one, by the four or five megabanks that already dominate the system, you will wake up in 2040 in a country where the entire concept of a bank as a place that knows you, that lends to you because of who you are rather than because of a credit score generated by an algorithm in New Jersey, that has a lobby and a teller and a cookie and a person whose name you can remember, has ceased to exist, and you will not have noticed it happening, because the disappearance will have been gradual, and gradual disappearances are the only kind humans cannot see. The lobby cookie will be the first thing to go. It is already going. The cookies are stale at most banks now, set out by a corporate mandate from a regional manager in Charlotte who has never met the customers and considers the cookie a line item in a budget that needs to be reduced. After the cookies, the tellers. The tellers will be replaced by a kiosk, then by an app, then by nothing at all, because the megabank will have decided that anyone who needs to deposit a check in person is a customer they do not want anyway. After the tellers, the branch. The branch will close, the building will become a vape shop, and the only physical evidence that there was ever a bank in your town will be the carved stone above the door of the building, which the new tenants will, at some point, paint over. After the branch, the phone number. The phone number will route to a call center in Bangalore, where a polite man named Rajesh, who has been given a script and a 12-week training program, will pick up after a 47-minute hold and address you by a first name that he has been trained to mispronounce in a way that maximizes warmth-per-second-of-call as measured by an internal metric. Rajesh will not be able to help you. Rajesh has no authority. Rajesh's authority has been deliberately removed because authority distributed across thousands of call center employees is a compliance risk that the megabank's general counsel has spent fifteen years systematically eliminating. You will hang up. You will call back. You will sit on hold again. This will be your relationship with your bank. The CEO of your bank will be a man named Brian who lives in Manhattan and earns $32 million a year and has never set foot in your town and never will. The board of your bank will consist of nine other men named Brian who all sit on each other's boards and who collectively decide, every quarter, that the priorities of the institution are, in this order, regulatory compliance, dividend stability, share buybacks, and last, somewhere far down the list, the actual customer experience, which has been outsourced to a subsidiary that has been outsourced to a vendor that has been outsourced to Rajesh. None of them will ever meet you. None of them will ever know you exist. You will be a number in a database, and the number will be optimized, every quarter, by an algorithm whose objective function is the bank's net interest margin and not, in any way, your wellbeing. This is the future being constructed, in real time, by every acquisition that takes a community bank off the public markets and folds it into a regional that will, in turn, be folded into a megabank in the next cycle. The future is not inevitable. There are 4,100 small banks left. They are being acquired at 1.7x book. Every one that is acquired is a town that loses the last institution that knew its name, and a country that loses one more node of the relational economy that used to be the entire foundation of American commerce. You can own these banks before they are acquired. You can collect the premium when they sell. You can also, if you choose, refuse to bank at the megabanks and keep your deposits at the small ones for as long as they exist, which, at the current rate, will be roughly another 25 years. After that, you will be banking with Brian. Rajesh will pick up the phone. The cookie will be a memory. And you will, on some quiet Tuesday afternoon in 2049, remember the teller at the branch in your hometown who knew your name, and you will understand, too late, what the consolidation actually cost.

@SEC_digger Almost nobody late this time. Any idea why?

Just under 4,300 bank call reports filed for Q1'26. Credit looking fine.