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Posted

This year I've decided to start learning more about the different banks out there. It's always been something I've mostly avoided. Does anyone have a good list of well run banks. Would love to start learning and also reading shareholder letters. Market cap size doesn't matter to me.

Posted

Frost Bank in Texas (CFR) - quite disciplined. Avoided dumb lending during housing boom and same during energy boom and declines.

 

Republic First Bank (FRBK) - fascinating bank running the growth model of Commerce Bank. Fantastic service

and low cost deposit model. Vernon Hill is COB.

 

Metro Bank (MTRO:LN) - same as FRBK, except UK based.

Posted

Of the big US banks I think JPM is recognized as the best run. CEO Jamie Dimon’s shareholders letters are recommended reading by Warren Buffett.

Posted

TD in Canada, Wells and US Bank in the US, Lloyds in the UK, Santander in Europe/Lat Am. One of the Nordic banks is also really good but I can't remember which one at the moment.

Posted

TD in Canada, Wells and US Bank in the US, Lloyds in the UK, Santander in Europe/Lat Am. One of the Nordic banks is also really good but I can't remember which one at the moment.

 

I suppose that you are referring to Svenska Handelsbanken AB here, rb. [sHB A.STO & SHB B.STO]

 

There is written a book about it by Niels Kroner. CoBF topic here.

Posted

This year I've decided to start learning more about the different banks out there. It's always been something I've mostly avoided. Does anyone have a good list of well run banks. Would love to start learning and also reading shareholder letters. Market cap size doesn't matter to me.

 

Why not just keep avoiding it? Can anyone make a good case for investing in banks?

Posted

Why would you select TD over RBC, is it because of their focus on retail banking?

 

TD in Canada, Wells and US Bank in the US, Lloyds in the UK, Santander in Europe/Lat Am. One of the Nordic banks is also really good but I can't remember which one at the moment.

Posted

A good and interesting Bank is Chesapeake Bank (Chesapeake Financial Shares).

 

It earned a return on equity north of 10 % last quarter. With a leverage ratio of 5,6 to 1.

 

The bank is interesting because they have a mix of 50/50 between interest income and non-intererst income.

 

They do wealth management and merchant card in a relative big way for their size (market cap 121mio $ ). Looks like a small bank with a great future. It s still trading for under 1,5* tangible book value and i m pretty sure they will do double digit returns on equity in the future. The CEO owns a big chunck of stock and i think Chesapeake has a very good line of  non interest income businesses to make it successful in the long term. The Bank is pretty old but build a pretty good local franchise over the last few years.

 

 

Posted

Why would you select TD over RBC, is it because of their focus on retail banking?

 

TD in Canada, Wells and US Bank in the US, Lloyds in the UK, Santander in Europe/Lat Am. One of the Nordic banks is also really good but I can't remember which one at the moment.

That's part of it yes.

 

But also TD is more focused and has better risk management. Until a couple of years ago they had a great CEO which didn't hurt either.

 

Generally you'll see all around the world that retail banks with good risk management tend to outperform.

Posted

Look at this another way: examine what banks were doing in 2005-2007.

 

Were they returning capital or growing their loans?

Posted

Why would you select TD over RBC, is it because of their focus on retail banking?

 

TD in Canada, Wells and US Bank in the US, Lloyds in the UK, Santander in Europe/Lat Am. One of the Nordic banks is also really good but I can't remember which one at the moment.

That's part of it yes.

 

But also TD is more focused and has better risk management. Until a couple of years ago they had a great CEO which didn't hurt either.

 

Generally you'll see all around the world that retail banks with good risk management tend to outperform.

 

.... Also because both TD and RBC are paid up partners of the R3 Consortium - with ownership access to the pipes of the blockchain based Corda ledger. They will not be doing anything 'stupid' under OSFIs oversight, and how they 'do'/'report' will give some insight as to how the technology will be implemented.

 

SD

 

 

Posted

I have various dealings with all 5 big Canadian banks, and over time I seem to be migrating more and more of it to RBC. Mostly happens when one of the others screws something up, something that has gone smoothly in the past at RBC...

Posted

Best Shareholder Letters to read over time:

 

- Glacier Bancorp - Michael Blodnick (now retired)

- MidwestOne Bank

- Jamie Dimon (Both Chicago and JP Morgan Letters)

- Nicolet National Bank / Nicolet Bankshares, inc

- Frost Bank

- First Republic Bank

- Eagle Bank

- M&T Bank - the late Robert Wilmers

 

Are the banks that I have archived every letter over the past decade or more. All have done well.

Posted

Bank of Hawaii (BOH) has always stood out to me.  They consistently churn out great numbers -- even through the 2007-2010 period -- and trade at a significant book value premium to the sector and Hawaiian comps, at 2-3x BV (3x today).

 

Hawaii is unique for the US in that the Big Four (and all other mainland banks) are absent there.  The banking market is almost entirely controlled by BOH, First Hawaiian (FHB), Central Pacific (CPF) and American Savings (a subsidiary of Hawaiian Electric - HE).  It would appear this insulates them from mainland/asian competition, but of course their geography naturally limits growth.  This is very obvious on their 10yr financials and I believe reflected in their below-market earnings multiples.

Posted

Towne bank (ticker TOWN) is a favorite of mine. I owned Monarch Bank (MNRK) for years, towne purchased them over a year ago and I have held on since much of Monarch's management stayed on. Conservatively ran (NPA around 0.2% if I remember right off the top of my head), great record of dividend increases, profitable through 08/09, and inherited a great mortgage business from Monarch. Company gets about 40-45% of revenue from non-interest sources currently, but should be lower if/when yield curve gets back to normal.

 

Ceo has a successful history with 2 other banks that were both purchased and gave shareholders great returns.

 

I know you make it to MKL shareholder meetings, this is just an extra hour and a half south and usually includes a good lunch and talks from management. I wouldn't say shareholder letters are anything amazing though.

$2 billion market cap.

 

Maybe obvious disclosure, but I own TOWN so every comment above is pretty biased!

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