. >> let's bring in gerard cassidy for more do you think for the regionals, if you look at the kred, do you think we've seen the worst of it stock-wise for this group? >> i do think the biggest percent declines have already happened, and as you guys have just been talking about, are we near a bottom? that is the question and i think we are going to be bottoming here in the next couple of weeks, because we all want to see the data from the first quarter. the first quarter data will come out in april, and that's what we want to see, particularly on deposits >> i feel like the big question, gerard, when you think about the -- it's fine to know that we're closer to a bottom and that's theoretically good, but we don't know what it looks like in terms of the operating environment, in terms of regulation, et cetera, and so how -- like, what does your model look like if we don't know those sorts of factors >> i think we should all take into account similar to past periods when we've gone through a crisis, particularly '08-09, we know more regulation is coming there will probably be lower pro

. >>> let's add spice to the stew with gerard cassidy. welcome. what do you make of today with the sector, the silicon valley bank and other things, how concerning is this to you? >> tyler, there's always concern when you see stocks move so dramatically it's just a unique situation with a few banks when you think about silicon valley in particular, you have to remember in 2019, before the pandemic, the company had about $71 billion in assets as of the end of '22, $211 billion the security portfolio went from 29 billion to 128 billion. they were the sweet spot for what we saw in the equity markets during the pandemic. as you all recall, the ipo market in t2021 was off the charts thiscompany has so much money to put to use. they put it in bonds the yields went the other way -- this is the critical part, this bank is different. they don't have low-cost consumer funding like most of our banking do when you look at the bank of america or a regional bank, these companies have 40 to 50 to 60% of funding from small consumer deposits, less than $250,000 at

maria: gerard cassidy. it's time for the word on wall street, joining me, mark tepper, kevin drier and gerard cassidy is sticking with us this morning on the banks as well. mark, kicking things off with you. you heard what gerard just said in terms of buying banks right here. do you agree with had what? what's your take on the macro story later this year. >> i don't know that i would be buying banks right here personally. as we mentioned earlier in the show, i'm very concerned about commercial real estate loans and i think when you look at the bigger banks like the jp morgans, the bank of americas, i think those banks are all fine. i don't see any issues there. when you look at the smaller regional banks and where i believe commercial real estate loans are going to become a problem as delinquencies go up, as defaults go up, when you look at the big banks, the jp morgans of the world, those commercial real estate loans make up right around 5% of their assets. when you look at the smaller regional banks that

gerard cassidy will join us, michael male will join us. what they are going to tell you is, this is idiosyncratic, not 2008. jonathan: svp ceo apparently told clients, bc after vc came out telling companies to pull out their money. tom: i call it running a bank, but jimmy stewart is not in the movie. fabulous work on this, basically two bond portfolios segregated and they've got to figure out what to do with them now those said deposits are walking out the door. most of the experts i have talked to say they have been clumsy at it. jonathan: let's talk about why some of those deposits are walking out the door. mike mayo said siv p core issue is the lack of funding, diversification, deposits are from vc which has issues. to us, the larger the bank, the more diversified the funding. i know you agree with that point. lisa: that has been a big distinction on why this is not 2008, what this is going to be is increasing challenge in the smaller, regional banks that do not have diversification and are competing for deposits in a higher interest ra

lisa: gerard cassidy that he is not seeing the withdraws from the mid-sized banks.u had someone say, look at all of this, this is just truly an idiosyncratic issue. maybe the fed could raise rates by 25 basis points and hold and try to understand more and make a move. jonathan: to sit here and say every single weekend after a bank has effectively failed that we have to keep calling it idiosyncratic. how many banks do you need to say we have a broader problem? lisa: perhaps we need different language. how many could potentially be susceptible to this similar type of activity? maybe that's fair. jonathan: this is bloomberg. ♪ lisa: with the first word, i'm lisa mateo. central banks endorsing credit suisse's bio by ubs. u.s. treasury secretary janet yellen and fed chair the news and said capital and liquidity of u.s. banks is strong. the european central bank and bank of england also endorsed those moves. signature bank deposits have been taken over and some of their loans. they collapsed earlier this month. 40 branches will operate at flagstar bank starting today. the

bank equities strategy gerard cassidy and trader keith fitzgerald. keith, i will start with you. your overall thoughts between the jobs report and, of course, silicon valley bank and the contagion a that has spread through the financial sector. >> well, what's a bank implosion and a few trillion dollars between friends, right, cheryl? everything is wrong with the financial system all rolled into one. you've got highly leveraged stuff, silicon valley's arrogance being ground to a halt, ricochets through the system. it's like throwing a stone in the water, only the time you got to watch the ripplings. charles: cheryl: all right. that's an interesting way to put it. gerard, your take? >> what we've seen here is obviously something that's quite dramatic. as of wednesday afternoon, there was no signs of any problems with silicon valley bank, and here we are friday and the bank is insuggest -- insolvent. shocking how fast this happened. but it does show very clearly that the problem that they ran into the last time we saw it was back in the early 1980 when the fed moved as aggressive b

joining me now is rbc capital markets director, gerard cassidy. thank you for being here.u and i had a conversation about six months ago about the deposit basis of the major money center banks. you were so smart to bring that issue up to me and i asked jamie dimon about it and he said deposits rates are going to go higher at some point and now we see this. how would assess what has taken place this week? >> thank you, maria, for having he plea on the show. you're absolutely right, deposits, the right side of the balance sheet, that is critical. as you saw this week it showed up in spades. when you think about the banks that they closed, silicon valley bank and signature bank, their deposit mix was skewed to large commercial deposits. one of the ratios we look at very closely for jp more p begak of america or the regional banks is the percentage of he deposits that are less than $250,000 which is generally considered a consumer deposits and silicon valley, that percentage was extremely low at around 2 and-a-half percent. most of your big banks that ratio is anywhere from 35

gerard cassidy with rbc.t does the intellectual framework to do something to provide action within crisis? that is what cassidy and horowitz and others are doing. lisa: there is a distinction between a banking crisis and a profitability story and that has been hard to tease out. how profitable can you beat lending at a time where it was more difficult to attract cheap deposits. you talk about 5% world being highly profitable, for which brinks -- for which banks? tom: to me, and gerard is making jokes at me, he reminds me in boston when it was kind percent and 10% cds we are just at the beginning of this reframe from no interest rates to tangible interest rates. a lot of people are getting used to this, including swashbuckling silicon valley bankers. may they rest in peace. lisa: toasters? tom: going back to green stamps. ♪ what does it mean to be ever better? its your customers getting what they ordered when they expect it. discover how ryder ecommerce makes your customer's experience ever better. these days,

i will call it systemic crisis monday as gerard cassidy talked about. greg peters is with us. there will be a lot of explanation and understanding of where we are now that the markets are open. jonathan: the front end of the yield curve in america, these moves are absolutely phenomenal. on wednesday, the two-year guild is at 5.08% and this morning it dropped low for .2 0 -- two year yield is at 5.08% and is when it dropped below 4.22. lisa: does what we are seeing with banking system stress because the federal reserve to materially pullback, which they raise rates to combat inflation and what does that due to inflation where it is still an issue with the stresses of the banking system? goldman sachs says no hike this month and they have no clue what happens after march. the federal reserve announced a new bank funding program that offers one year loans under easier terms. they are not going to accept collateral and securities that are deeply underwater. if you are a bank that hasn't failed and you have been run poorly and had -- haven't managed rates, is a lifeline the feds ha

gerard cassidy of rbc capital markets. tom: this goes to the semantics of the moment.take immense issue with the use of the word deposits. we need to learn more now, away from the semantics. we need clear language from people, including the management of first republic bank. have we heard from them? jonathan: not much. sunday evening, they talked about how much liquidity they had. not much since then. credit suisse, down almost 9%, 1.85. tom: the way it is down, we do not need a technical lesson but all you need to know is all the trends are challenging. beginning about an hour ago. over suggests rebounds into the german two-year and ten-year. not linking them together but this is what they have at the same time. jonathan: there is risk developing, not an image or way compared to the last week but there. german two-year yield 2.54. right now, four point 09% yields and six basis points at the front end of the curve. are you singing again? are you about to take a week off? ♪♪ welcome to a new era of energy. what does it mean to be ever better? its your customers getting

next guest believes the sell-off in bank stocks has been overdone joining us to talk about that, gerard cassidyu.s. bank equity strategy good to see you today. overdone in general, overdone in certain instances and does that mean you don't believe there are going to be further distressed institutions surfacing >> thank you, mike i would say when you look past periods of time where there's been panic selling in bank stocks like we're seeing this week, if you take the longer view, 12 months, let's say, on average following the '08- '09 bottoming and 2020 bottoming, stocks are up 88%. when the bottoming is today or next week, it's around this time because we will stem the nervousness and the angst that everybody is feeling today with bank stocks because the deposit outflows will stabilize and the system will, i think, start to stabilize later next week and into the end of the first quarter. >> you point out this morning that in previous cycles when you did have fears around the banking system and got a bottom on a monthly basis in the stocks, that they rallied massively afterward, so 2009, back in