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 […]

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 […]