Originally Posted by wildcat
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.