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Daily email includes an in-depth analysis of a bank's
-Profitability and Valuation
-Credit Risk, Interest Rate Risk, and Capital/Liquidity Risk
-Latest News and Press Releases
Expert Analysis by:
Ryan Sawyer, CFA, CPA
Ryan has been investing in stocks for himself and others for over a decade through his firm Sawyer Investment Management Company. A few years ago, he became obsessed with banks, and has since then exclusively studied and invested in banks on a daily basis. He is a CFA Charterholder and a Certified Public Accountant.
Investment Analysis Specific to Banks
Banks significantly differ from other companies/industries, and the investment analysis of them should differ too. Due to our extensive knowledge and experience in analyzing banks, we know what calculations and metrics are important to bank investors/researchers. As such, our reports include bank-specific metrics that help you determine how profitable the bank is relative to its peers, how much risk it is taking on, and how reasonable its valuation is.
Profitability
We consider the bank's leverage and its yields on assets and liabilities, which result in its net interest income. We also consider ancillary services that result in non-interest income, while normalizing one-time or unusual occurrences. Additional consideration is given to the non-interest expenses and how efficiently the compensation and other administrative costs are managed. All of these metrics are compared to our coverage population to determine how the bank's profitability ranks relative to its peers.
Interest Rate Risk
We consider the timing of when the bank's assets reprice relative to its liabilities, and make a determination of how the bank's net interest income could be affected by changes in interest rates. We also compare this term structure and interest rate gap to that of other banks.
Credit Risk
We consider how much of the bank's loans and securities are past-due, on nonaccrual, or are classified. We also compare these amounts to the credit loss allowance that has been recorded to determine whether there is risk that credit issues could affect the provision in the future. We compare these metrics to the credit risk of other banks.
Capital/Liquidity Risk
We convert all assets and liabilities to fair values and determine how the fair value of the bank's equity compares to that of other banks. We also consider the bank's regulatory capital ratios, as well as its on-balance sheet and off-balance sheet liquidity measures relative to other banks. We also consider how much of the bank's deposits are non-core or uninsured relative to the average bank in our coverage population.
Valuation
We consider the bank's normalized earnings relative to its market capitalization, and compare this to the earnings yields of other banks. We also convert all assets and liabilities to fair values and compare to its market capitalization as a way to assess the bank's market price relative to the fair value of its tangible net assets. The valuation metrics are compared to those of other banks, and considered for reasonableness in light of the bank's profitability and risk measures.
Latest News and Press Releases
We also note any important news or press releases of the bank whose effect might not have been included in the financial statements analyzed, or that represent contingencies or uncertainties important to the context of the bank's situation.
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Investment Analysis of 300+ Publicly Traded Banks
Our newsletter performs and reports investment analysis on a different bank each day, resulting in more than 300 banks reported on each year. This population includes every bank traded on the Nasdaq and NYSE, and includes a wide range of sizes, locations, and community orientations. The map on the left includes a pin for each bank in our coverage population.