Wednesday, June 01, 2005
Ballston Spa National Bank
When I invested in Washington Mutual a while back (I've since decided they aren't a good investment), I read the book Bank Director's Handbook which is a good overview of the important things to know about banking.
The FDIC database is an outstanding resource. You can look at the assets, liabilities, income, expenses, and lots of other stuff in great detail (more than typical company financial tables and footnotes). You can look at both dollar amounts and ratios against total assets. Best of all, you can compare a bank against any other bank or a peer group of banks with all sorts of specifications. And you can do all of these things for any quarter or year. So I can take Bank A and look at how all of its numbers have changed since, say, 1992. Or I can compare it to another bank at the same time period or a different time period.
What I'm starting to do now is look at startup community banks. With all the mergers and acquisitions, there are a lot of these small banks being created.
This bank is in upstate New York. Obviously they have a lot of real estate loans (right now I consider that a negative). Zero derivatives (most small banks have no derivatives). They made increasing amounts of money from 1992 until 1999, then they blew up in 2000 and income cut in half. They slowly recovered over the years back to a little over a million a year in earnings. They pay out almost that much. And the P/E ratio is roughly around 30. Too high by a factor of 2.
The FDIC database is an outstanding resource. You can look at the assets, liabilities, income, expenses, and lots of other stuff in great detail (more than typical company financial tables and footnotes). You can look at both dollar amounts and ratios against total assets. Best of all, you can compare a bank against any other bank or a peer group of banks with all sorts of specifications. And you can do all of these things for any quarter or year. So I can take Bank A and look at how all of its numbers have changed since, say, 1992. Or I can compare it to another bank at the same time period or a different time period.
What I'm starting to do now is look at startup community banks. With all the mergers and acquisitions, there are a lot of these small banks being created.
This bank is in upstate New York. Obviously they have a lot of real estate loans (right now I consider that a negative). Zero derivatives (most small banks have no derivatives). They made increasing amounts of money from 1992 until 1999, then they blew up in 2000 and income cut in half. They slowly recovered over the years back to a little over a million a year in earnings. They pay out almost that much. And the P/E ratio is roughly around 30. Too high by a factor of 2.
// posted by Bruce @ 7:45 PM 
