After running our bank solvency test on our target bank, we have a rough idea of just how good a bank it is. Now, we get to stress test it. It’s time to make the clouds thunder and the winds blow with the stress test from Morningstar’s Bank Credit Methodology acting as our Prospero. Fortunately, this […]
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 […]
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 […]
I will confess one of the main reasons I got an iPad is that I was growing weary of being glued to my laptop when having to read a 10Q or having to print out a bank’s 10K at 25 sheets with four pages to sheet so as not to print a tome and be […]
I’ve always loved the analogy that the rational portion of our brains is akin to a rider strapped to the top of an elephant that is our emotional brain. The feeling of “probably not the best thing to do right now, but damned if I can stop it,” seems pretty much in line with the control […]