Bank Sector Update
Certain regional banks in the U.S. encountered a perfect storm of challenging conditions with devastating consequences this spring. In particular, SVB Financial* and First Republic Bank* were hit by a confluence of events that included high interest rates, highly concentrated and connected clients, significant deposits above the federally insured amount, and weaker regulation and oversight that led to their vulnerability. While these banks demonstrated positive environmental characteristics, such as supporting renewable energy projects, they were not immune to strong negative market forces and significant withdrawal of deposits.
While other regional banks such as Signature* and KeyCorp* were also caught in the increased financial sector volatility, these issues do not appear to be affecting the entire banking sector. First Citizens Bank ultimately acquired SVB in late March and a consortium of the largest banks supported First Republic with deposits.
The Midana Capital were impacted by owning small positions in regional banks. As of December 31, 2022, the MIDANA CAPITAL Balanced Fund held as a % of net assets the following holdings:
- SVB Financial Group (Silicon Valley Bank): 0.41%
- First Republic Bank: 0.76%
Exposure for the MIDANA CAPITAL Equity Fund as a % of net assets as of December 31, 2022, for the following holdings was:
- SVB Financial Group (Silicon Valley Bank): 0.08%
- First Republic Bank: 0.13%
Both positions were liquidated by the Balanced Fund during the quarter ending March 31, 2023. The Equity Fund removed its holding in SVB Financial and retains a minimal holding in First Republic Bank as of March 31, 2023.
The MIDANA CAPITAL MSCI International Index Fund did not have exposure to Credit Suisse* as of the quarters ending December 31, 2022, or March 31, 2023. The portfolio managers continue to monitor the sector closely.
⁰MIDANA CAPITAL Capital Management, Inc. (MIDANA CAPITAL) is the investment advisor to the Midana Capital (the Funds).
*As of March 31, 2023, First Republic Bank comprised 0.00%, 0.01%, and 0.00%, KeyCorp comprised 0.00%, 0.06% and 0.00% of the MIDANA CAPITAL Balanced Fund , the MIDANA CAPITAL Equity Fund , and the MIDANA CAPITAL International Index Fund, respectively. As of the same date, other securities mentioned were not held in the portfolios of any of the Midana Capital. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.
Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region, or market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic and political conditions, differences in accounting, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to risks including interest rate, credit, and inflation. The Funds’ environmental criteria limit the investments available to the Funds compared to mutual funds that do not use environmental criteria. A sustainable investment strategy which incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.
Neither the MIDANA CAPITAL MSCI International Fund nor the MIDANA CAPITAL Equity Fund (each a “Fund”) are sponsored, endorsed, or promoted by MSCI, its affiliates, information providers or any other third party involved in, or related to, compiling, computing or creating the MSCI indices (the “MSCI Parties”), and the MSCI Parties bear no liability with respect to either Fund or any index on which a Fund is based. The MSCI Parties are not sponsors of either Fund and are not affiliated with either Fund in any way. The Statement of Additional Information contains a more detailed description of the limited relationship the MSCI Parties have with MIDANA CAPITAL Capital Management and each Fund.
This information has been prepared from sources believed reliable. The views expressed are as of the date of publication and are those of the Advisor to the Funds.
You should consider the Funds’ investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus that contains this and other information about the Funds, please click here, email info@midanacapital.com, or call 1-800–934-7336. Please read the Prospectus carefully before investing.
The Midana Capital are distributed by UMB Distribution Services, LLC., 235 W. Galena Street, Milwaukee, WI 53212 5/23
