Submit Questions: Interview with a Bank Analyst

[ExpectedValue]

My interview with Paul Sonkin in August was pretty popular. I'm doing a new interview with a value investing bank analyst who works for a large buy side fund. Unfortunately, the interview has to remain anonymous but he's legit and very bright.

 

I know that a number of value investors find financials tough to analyze, so this could be a good time to ask some questions about investing in that area.

[ExpectedValue]

I've also set up a page if you'd rather submit questions in the comments section there:

 

http://streetcapitalist.com/2009/10/07/submit-questions-interview-with-the-bank-analyst/

 

or feel free to shoot me an e-mail [email protected]

 

 

 

 

[manualofideas]

Tariq, can you ask what would happen to banks in a hyper-inflationary scenario in which the 30-year Treasury Bond yield goes to 15-20% or higher, as Julian Robertson has suggested?

[ExpectedValue]

Tariq, can you ask what would happen to banks in a hyper-inflationary scenario in which the 30-year Treasury Bond yield goes to 15-20% or higher, as Julian Robertson has suggested?

 

will do

[manualofideas]

Thanks!

[Rabbitisrich]

Thomas Brown of Bankstocks argued that the charge-offs to loan reserve ratio had no meaning due to variations in accounting treatment. Can the analyst describe a better criteria for measuring loan reserve adequacy?

 

Also, how long does a branch have to operate in an area before it's efficiency ratio normalizes?

 

Thanks Tariq.

[ExpectedValue]

Thomas Brown of Bankstocks argued that the charge-offs to loan reserve ratio had no meaning due to variations in accounting treatment. Can the analyst describe a better criteria for measuring loan reserve adequacy?

 

Also, how long does a branch have to operate in an area before it's efficiency ratio normalizes?

 

Thanks Tariq.

 

Great questions! I'm going to do my interview this weekend, so I should have all the answers posted this by Sunday night.

[CONeal]

How is the best way to analyze a bank?  What are the important things that we should look at and what numbers are pretty much meaningless when determining value.  An example would be extremely helpful.

[kvattiku]

Hi Tariq,

I have posted the following questions on your blog too. I am not sure if its a little too late.

 

1. Commerce Bancorp (formerly CBH) used to be a unique bank which had a different business model. If it were a standalone company now, would it have been affected the same way as most of the big banks. Also, would it have taken more market share from the likes of BoA and Citi.

 

2. Are there any banks similar to Commerce Bancorp which are radically different ?

 

Thanks for doing this.

[Crip1]

Can the analyst describe a better criteria for measuring loan reserve adequacy?

 

 

Tariq,

 

This is a similar question to the one above, but I would like to hear how this bank analyst assesses the quality of a given bank's assets (or the lack of quality of the asset base).

 

-Crip

[arbitragr]

Ask him what he thinks about Citigroup.

And ask how he feels the level of provision for loan losses going forward. How is this being driven? By the consumer or CRE etc.

[ExpectedValue]

Great questions! Adding them to the list