Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Bank stocks
Old 10-20-2005, 10:48 AM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Bank stocks

I know we all love our CDs, but how about some bank stocks? An awful lot of them are pretty beaten-down, and most pay attractive dividends. The big banks tend to pay a higher yield, but you give up growth opportunities and can never exactly be sure what is in their portfolios. The midsize and small banks usually have better growth opportunities and are easier to understand, but usually offer lower yield. Might not be the bottom quite yet, but I may be starting to nibble soon.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Bank stocks
Old 10-20-2005, 10:52 AM   #2
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Bank stocks

I like banks that own credit card operations (like BofA), but I don't see how traditional banks are going to make money during a possibly long period of flat yield curves. What do you see as their upside?
__________________

__________________
wabmester is offline   Reply With Quote
Re: Bank stocks
Old 10-20-2005, 11:00 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Bank stocks

Depends on their interest rate posture, hedging strategy, etc. It is quite possible for a bank to be very well duration matched (taking minimal interest rate risk) and still make nice money. Look around: can you borrow money on a HELOC , buy reasonably safe assets that are floating rate and make money? Nope. But a bank can borrow at institutional rates or less (deposits) and make a HELOC loan and make attractive returns, especially when they lever their equity capital 10 to 15X.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Bank stocks
Old 10-20-2005, 11:02 AM   #4
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Re: Bank stocks

How small are we talking Brew? *Seems like the small ones have M&A prices built in and the mids are just kind of in limbo.

I noticed Marty Whitman plunked down some $$ in NAL. *Seems like he has some Yale connections there but I don't see the value there. *
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Re: Bank stocks
Old 10-20-2005, 11:07 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Bank stocks

Up to the individual investor, I guess. Prretty much all size categories have taken a beating in the market lately. I personally tend towards the smal and midsize guys. I have positions in one bank with a market cap of ~25MM, one with a cap of ~100MM, and one with a cap of ~2.8 billion. The biggest of the three probably has the most impressive operating performance over time and the best risk management.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Bank stocks
Old 10-20-2005, 11:12 AM   #6
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Re: Bank stocks

Brew -

What performance measures do you feel are the most important?
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Re: Bank stocks
Old 10-20-2005, 11:22 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Bank stocks

Quote:
Originally Posted by wildcat
Brew -

What performance measures do you feel are the most important?
1) Credit quality - NPA as % of assets, appropriate level depends on what kind of lending is done
2) Appropriate capitalization - Equity as % assets, depends on riskiness of assets
3) Reasonable provisioning for loan losses in the income statement (don't want this to be a cookie jar)
4) Good deposit growth and deposits to cover loans
5) disciplined asset growth: don't want to see huge balance sheet growth if the risk vs. reward isn't there
6) Conservative approach to risk management: don't do stupid things, like make Option ARM loans, play the carry trade, pile into junk bonds, do lots of subprime credit card lending right before a recession

For a smaller bank, I focus on deposit and loan growth and the development of a profitable franchise (since a sale is the end game most of the time). For a mid size or larger bank, I like to see efficient use of capital, a good dividend track record, and judicious repurchases of stock. In general, I avoid serial acquirers. I'd rather be on the selling side than the buying side.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Bank stocks
Old 10-20-2005, 12:30 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,695
Re: Bank stocks

One of my DRIPs is Keybank (KEY) out of Cleavland, one of the banks that actually did not fold or close durning the Depression. It pays a nice dividend and grows a bit and is a good takeover candidate for the big boys.
I am a buy & hold type obviously with DRIPs and I know there are better performing banks but this one has worked decently for me.
__________________

__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Swedroe comments on buying individual stocks. Nords FIRE and Money 27 10-12-2005 10:20 PM
Net Bank - Poor Customer Service Lancelot Other topics 7 09-22-2005 05:51 AM
Book report:  "1st National Bank of Dad" Nords Young Dreamers 9 03-21-2005 10:30 AM
Bank Preferred Stocks Jason FIRE and Money 1 08-19-2004 09:34 AM

 

 
All times are GMT -6. The time now is 12:11 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.