Cici's Teaching Notes📝: Is the U.S. banking crisis over as FRC delists and sells out to JPMorgan Chase?

Moving forward, First Citizens Bank acquired Silicon Valley Bank and the market gave a similarly positive split camp. First Citizens Bank shares soared about 50% after the news came out.

On the one hand, deals tend to be done at lower prices, which in theory will increase the acquirer's profits and book value, such as First Citizens Bank at a discount of about 23%. JPMorgan Chase also valued the loans it received from FRC at market prices with lower interest rates.

On the other hand, what makes this banking crisis most different from the '08 financial crisis is that the bank failures were not due to toxic assets like subprime loans. Most of the asset side of banks like Silicon Valley are very safe U.S. Treasuries, MBS (Mortgage-Backed Security).

This acquisition of FRC's 84 offices in 8 states will reopen as JPMorgan Chase branches, and all depositors will become JPMorgan Chase depositors. The FRC's wealthy customers also directly add value to JPMorgan Chase. JPMorgan Chase's share price rose 3% after the release of the acquisition information.

But FRC's shareholders are miserable, according to the information disclosed by FDIC, the shareholders are paid in the last order.

In addition, this FRC event may cause a big impact on the confidence of mid-small bank shareholders, and perhaps a new wave of bank mergers and acquisitions may be about to start.

The future of most small and medium-sized U.S. banks may be:

As regulatory requirements rise, the cost of regulation makes small-scale businesses unprofitable and insolvent. Need to be committed to the shareholders of large banks, or sold to large banks, or their own merger into a relatively large, more risk-resistant banks.

The company is delisted, generally in two cases, the Company goes private and decides to delist itself. In this case, the company may buy back the shares in the hands of shareholders at a price higher than the market price.
The other is when the listing conditions are not met and the company is forced to delist. Obviously Silicon Valley Bank, Signature Bank, and First Republic Bank belong to the latter category.

You can read these two articles on what investors should do after delisting.

Companies that are delisted will now generally be traded over-the-counter, which is unregulated and has no real-time quoting system, making it riskier.

- For partners who have not invested before and now feel that the OTC price is low and want to take the bottom. Pay special attention, OTC trading is very high risk!

- For previously held First Republic stock, the price of the stock in hand now is the OTC quote, compared to the price on the market before the suspension will be much lower.

- For previous First Republic short positions, you can buy back on the OTC to cover.

OTC trading requires intraday trading and the trading time period is 9:30-16:00 ET


Feel free to add more details. More related questions can be left in the comments section.