FRC

[NitroZ7]

This thing ran up like crazy the day of earnings, which were reported after hours. Down 40%+ today. I wonder if this bank is going to make it. They are going to try and sell assets to shore up their balance sheet. Lots of people lost money on buying calls before earnings. They were up big during the day then lost just about all of its value in after hours.

[boneil]

I was kind of surprised at the FRC sell off. The little bit I heard about it was from CNBC and they were blaming the drops in deposits. I thought that was a given. Maybe it was much worst than thought?

[NitroZ7]

I was kind of surprised at the FRC sell off. The little bit I heard about it was from CNBC and they were blaming the drops in deposits. I thought that was a given. Maybe it was much worst than thought?

Yeah I think their deposits dropped like 40%. That is a lot of lost money and they are probably paying a lot more to retain those deposits that they hold or for CD's.

[NitroZ7]

Look like the FDIC is taking into receivership.

[boneil]

OK, so I get what happened with SVB, the risks and the bank run, the story behind what happened. But what happened with FRC? What caused depositors to run? I'm guessing FRC isn't a regular bank story. IF it is, does this mean banks like PNC or MTB might be in trouble? Is every bank, other than the biggest at risk?

[NitroZ7]

OK, so I get what happened with SVB, the risks and the bank run, the story behind what happened. But what happened with FRC? What caused depositors to run? I'm guessing FRC isn't a regular bank story. IF it is, does this mean banks like PNC or MTB might be in trouble? Is every bank, other than the biggest at risk?

Just got a push notification that PNC and JP Morgan are vying to buy the bank. Not sure how accurate it is but that is what they are saying right now. I think these two contributed some money to FRC to keep it afloat so I wonder if they get to credit that against their offer.

[zelmo]

OK, so I get what happened with SVB, the risks and the bank run, the story behind what happened. But what happened with FRC? What caused depositors to run? I'm guessing FRC isn't a regular bank story. IF it is, does this mean banks like PNC or MTB might be in trouble? Is every bank, other than the biggest at risk?

EVERY bank is at risk. It is the nature of the industry. The model is based on trust and if that trust erodes deposits flee. In this day and age those deposits can be gone with a click on a cell phone. It can get very ugly very fast, whether it is justified or not.

Can JPM have a problem? Highly unlikely but not impossible. As for FRC, they built their business catering to wealthy clients who wanted high-touch service that they couldn’t get from bigger banks. Rising interest rates made those depositors leave in search of better returns. Once the run started it snowballed.

While I don't normally make snap investment decisions banks have become very tricky. If I see unusual outflows in any of my bank holdings I will pull the trigger and sell much quicker than in the past. I can always re-enter.

[apenland01]

So apparently when JPM bought out FRC, the remaining shareholders are wiped out. I think the last value was around $3 per share. That seems like quite a bit of shareholder value gone very quickly....

[NitroZ7]

So apparently when JPM bought out FRC, the remaining shareholders are wiped out. I think the last value was around $3 per share. That seems like quite a bit of shareholder value gone very quickly....

There are a bunch of people that bought and sold puts on FRC and they have no idea what is going to happen to them. Why anyone would go into the weekend with an open option position on those headlines is beyond me. One person had like $295,000.00 in gains on the puts but they may end up worthless if they can't sell them.

[boneil]

I thinnk if you are holding puts into one of these banks failing, then you're SOL. There needs to be shares to exercise an option. The only way to play the downside of these banks is to short the stock. If you buy a put, I think you better close the position before the stock is halted.

[zelmo]

There are a bunch of people that bought and sold puts on FRC and they have no idea what is going to happen to them. Why anyone would go into the weekend with an open option position on those headlines is beyond me. One person had like $295,000.00 in gains on the puts but they may end up worthless if they can't sell them.

I thinnk if you are holding puts into one of these banks failing, then you're SOL. There needs to be shares to exercise an option. The only way to play the downside of these banks is to short the stock. If you buy a put, I think you better close the position before the stock is halted.

If you own the puts you can excercise them at any time before expiration. That will create a short position in the account which can be covered eventually by purchasing the stock. Eventually it will open for trading and can be bought for pennies. Another strategy is to wait for it to be written off.

[boneil]

If you own the puts you can excercise them at any time before expiration. That will create a short position in the account which can be covered eventually by purchasing the stock. Eventually it will open for trading and can be bought for pennies. Another strategy is to wait for it to be written off.

Where would the shares come from to create the short position to exercise a put option? When a bank goes into receivership, the shares of the bank no longer exist. FRC doesn't exist there is nothing to open for trading.

[zelmo]

Where would the shares come from to create the short position to exercise a put option? When a bank goes into receivership, the shares of the bank no longer exist. FRC doesn't exist there is nothing to open for trading.

The shares don't just disappear. They are delisted and can trade on pink sheets. (See SIVBQ)

[apenland01]

If the ticker changes, I don't believe you can do anything with the FRC shares or options. As I understand it, the shares are simply wiped out and there are no shares, as the company basically went bankrupt. No different than if a company goes bankrupt and you are holding shares.

[boneil]

The shares don't just disappear. They are delisted and can trade on pink sheets. (See SIVBQ)

I found some reddit posts that some SIVB put holders where able to get their brokers to exercise the options once the pink sheets shares started trading. But it wasn't easy and required alot of margin.

[zelmo]

If the ticker changes, I don't believe you can do anything with the FRC shares or options. As I understand it, the shares are simply wiped out and there are no shares, as the company basically went bankrupt. No different than if a company goes bankrupt and you are holding shares.

Don’t confuse the terms common stock and trading symbol. The shares don’t change. The ticker can.

[NitroZ7]

I found some reddit posts that some SIVB put holders where able to get their brokers to exercise the options once the pink sheets shares started trading. But it wasn't easy and required alot of margin.

You apparently have to call and have your broker exercise it manually. It still sounds like this is a mess and some people will have their puts expire worthless especially if they are with a broker like Robinhood. Would have been much easier and smarter for them to sell to close before the weekend.

[zelmo]

Reputable brokers automatically exercise in the money options at expiration.

[zelmo]

Would have been much easier and smarter for them to sell to close before the weekend.

If you owned a FRC put with a $5 strike it is worth a lot more when the halt is lifted than it was worth on Friday.

[boneil]

If you owned a FRC put with a $5 strike it is worth a lot more when the halt is lifted than it was worth on Friday.

Not if it expired on Friday.

I have yet to find anyone who had puts on SIVB that had their positions exercise automatically. Most looks to have expired worthless with no recourse. And only a few, who were able to contact their brokers and manually exercise weeks later.