MY 20 FAVORITE BOOKS

20. Killing Pablo by Mark Bowden

The story of finding and killing Pablo Escobar, told by Mark Bowden, one of the best storytellers in the geopolitical space. 19. A Night to Remember by Walter Lord

The only book you need to read about the sinking of the Titanic.

The story of a photo…

Two years ago I was immersed in a project to read contemporary materials about American banking starting in the year 1790 and continuing every year through today.

That’s when I snapped this photo.

1/8 I had been studying the industry for over a decade but couldn’t reduce it in the same way that I’d been able to reduce other subject matters to a simple underlying principle that’s robust enough to explain everything that happens in the environment.

2/8

cool stuff to share…

these are pages of a catalog of imagery I’ve created for banks/bankers…

the images come in two sizes — large (13x19) and small (4x6) at $250 per big print and $100 per small print.

if you’re interested in buying one, DM me. Everything is fine until it isn’t…

There’s a whole series of these for failed banks, including SIVB, First Republic, Silvergate, Colonial, etc.

found a super interesting chart

it teaches...

- how bad we are at predicting the direction of interest rates

- the common mistake we make when doing so

- why this mistake makes no sense...

h/t @BobNewman_CFC @mhigginsjr

1/5 here's the chart...

it compares...

the expected range of future interest rates at different times

to actual interest rates

(actual rates = thicker blue line)

let me explain why this is so valuable...

2/5

I wanna share a little bit about how I do my job.

Not because I think I have all the answers. Instead because it’s unique and maybe even interesting.

My overarching philosophy is that to understand an institution, you must understand the individuals who run it.

1/ By this I mean you really need to understand them as people.

Who they are.

The environment in which they were raised.

The life experiences that influence their decision making.

I say all this because, in banking there is almost no margin for error.

2/

silicon valley bank screwed the pooch on managing interest rate risk

everyone knows that

but did any banks do it well?

oh yes, my friends...

one did it very well

m&t bank

this is from rene jones' 2021 annual letter...

1/3 fast forward one year...

here's what happens to the common equity tier one capital ratio among m&t bank and its peers when you factor in unrealized losses on securities due to rising rates...

(note silicon valley bank at the very bottom)

2/3

silicon valley bank experienced a bank run today

we don't know if it will fail or not

but here are some things we do know...

[thread] THE DARLINGS IN ONE ERA OF BANKING OFTEN BECOME PARIAHS IN THE NEXT

Jay Cooke & Co., Bank of United States, and Continental Illinois, etc. etc.

had a special time with a few friends over the past three days...

for every bank that fails today, there are likely hundreds, if not thousands, of banks that failed in the past for the same reasons

this thread breaks down the different ways banks have failed over the past 200 years 1. COMMERCIAL REAL ESTATE

the first u.s. bank failures happened in 1809

a guy decided to build a skyscraper in boston

so he borrowed money from a handful of nonboston banks and built it

but his timing was off...

bank twitter,

i came across a bank recently with solid performance and wanted to share because it teaches an important lesson about bank analysis... there are a few things i always check as a litmus test...

one of the first is their growth trajectory...

are they growing?

what does that growth look like?

most importantly...

are they growing too fast?

in this case, it passes on all accounts...

everything is fine until it isn't

thread everything is fine until it isn't

hello banking twitter...

have you ever wanted to know absolutely everything about banking...

to the three of you who whispered 'yes'...

...a curated list of key resources... gotta start with OCC annual reports...

if you love data, you'll go bananas...

some of these have hundreds of pages of data tables...

here are the reports for 1863-1980...

fraser.stlouisfed.org/title/annual-r…

Gotta plug Tom Brown's email from yesterday...

Particularly his thoughts on Lakeland Financial, a terrific bank since Mike Kubacki came from Northern Trust in 1998 to be president.

Its stock has since compounded 15% annually, among the best in banking.

Three thoughts...

$LNKD First, as serious students of banking know, leadership succession makes or breaks long-term performance.

The best banks have cordial, unbroken chains of custody between leadership generations.

That's what allows institutional knowledge to compound.

The highest-flying bank stock today is @silvergatebank.

I dug deep into it earlier this week.

Here’s what I found…

$SI The starting point to understanding Silvergate is Dennis Frank, its chairman from 1996-2021.

Frank led a group of investors in 1996 who recapitalized Silvergate Loan & Thrift Company, an ailing industrial loan company based in a San Diego suburb.

Here's a list of 50 books...

every one of them is a page-turner.

[thread] 1. A Night to Remember: The Classic Account of the Final Hours on the Titanic by Walter Lord

2. Say Nothing: A True Story of Murder and Memory in Northern Ireland by Patrick Radden Keefe

Wanna analyze a bank like a pro?

Here are ten things you'll need to know…

[thread] 1. Age

New banks are twice as likely to fail as old banks.

A handy benchmark is 100 years old — the median age of a bank in the U.S.

You can find a bank’s age on the FDIC's website here…

banks.data.fdic.gov/bankfind-suite…

The longer you study a subject, the closer you get to the core laws that govern it.

Here are 10 laws that govern banking, deduced from a decade of studying the industry...

[thread] 1. Success in banking is foremost about winning a war of attrition.

More than 17,300 banks have failed since the birth of the modern American banking industry in the Civil War.

That’s over three times the number of banks in business today.

It's easy to talk about doing the right thing. But here’s a remarkable story about a CEO who actually did.

1/ By 2011, Glacier Bancorp suspected it had a problem.

Glacier is based in Kalispell, Montana – the biggest town in one of the most picturesque valleys in America.

It’s known as the gateway to Glacier National Park.

2/

1/ Once in a while, you happen upon a really interesting story...

Here's one of my favorites.

It's about a brilliantly executed transformation of one of this country's biggest companies that virtually no one noticed... 2/ On paper, U.S. Bancorp was one of the top-performing banks in the country in 2006.

It was built through acquisitions over the previous 14 years by a guy named Jerry Grundhofer.

(There aren't a lot of photos of Jerry. So here he is getting out of a van.)

A short thread about bank strategy in the Covid era…

1/15 At the beginning of a crisis or economic downturn, the smart thing for a bank to do is to aggressively set aside money to cover future loan losses.

2/15

A THREAD ON EXTRAORDINARY BANKING...

Over the past year, I’ve talked w/ many of this era’s most accomplished bankers – Brian Moynihan, Richard Davis, Rene Jones, John Allison, Mick Blodnick, Joe Turner, Terry Turner, Scott Dueser, and others. I’m doing so in most cases for a book I’m writing on banking.

But also because I want to know what it takes to be an exceptional banker.

What unique traits and characteristics do they share that distinguishes them from others?