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A Quick Thought on “Twist”

Looks like a great buying opportunity for great banks.  Prices were low, they’re going lower. Killing the yield curve is going to seriously hurt banks as they’re trying to regain capital. However, this too shall pass. Strong, well capitalized banks not entirely dependent on the yield curve will make it through this and may even […]

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Bank Valuation Made Simple

After going through the bank analysis series (parts 1, 2, 3, 4) and determining if a bank is one of the few worth taking a look at, the valuation part works out to be pretty simple in practice.  Bank valuation can be made a great deal more complicated than it needs to be. Sure, you can […]

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How to Become a Bank Voyeur

I have another confession.  I’m a bit of a bank voyeur.  There was a point where I could list some odd tidbit of information on every bank on Montgomery St. in the financial district of San Francisco.  Passing by the Beal Bank branch on my way to work was always a treat, knowing that it […]

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How to Analyze a Bank Part 2: Riding on the Back of CAMELS

The first section of Morningstar’s Bank Credit Methodology is the bank solvency score, basically a current check of capital adequacy, asset quality, earnings power, and liquidity.  Yes, four of the letters from CAMELS, the undisclosed rating system that the US government uses to rate banks to determine if they can continue to operate.  We’ll hit management […]

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How to Analyze a Bank Part 1

I must confess I have a special place in my heart for small banks.  Maybe too many viewings of “It’s a Wonderful Life” and that banking when done correctly is a simple, understandable business with a lot of publicly available data. However, the moment banking gets into trillions of dollars of derivatives, investment banking, 20x […]