Analyzing bank stocks

Hello,

I am an equity research analyst in a boutique sell-side research firm. I focus on generating and working on general short ideas. However, until now, I have not had a chance to analyze a publicly traded bank stock.

Any recommendation on what books to buy to analyze bank stocks? I bought a few airline financial books two years ago when I was focussing on the airline sector, it was quite helpful.

Thank you in advance,
Laks

 

Thank you. The link is helpful. Do you know any books to help me with Bank & Financial Institution Modeling? I need to get one model out by end of Sunday! Any help will be appreciated.

Lux
 

Thank you for your response. I am doing basic I/S and B/S modeling for a bank (projecting for the next four Qs) as well as DCF. This is my first time doing modeling for a Bank.

Lux
 
Best Response

Gotcha, that shouldn't be too bad, just go quarter by quarter holding most of the balance sheet item ratios constant (for example, if you grow loans at 5% and you want your projected reserves, just hold the initial ratio of reserves to loans constant). The DCF, or I guess DDM, is straightforward once you have your B/S and I/S done. Pick a minimum TCE / TA ratio or leverage ratio and pay out any excess capital each period, then whatever is leftover is your cash flow that you discount.

Is there any specific part of it that you are struggling with? How big is the bank? If you are modeling Bank of America or something, we might be outside of my wheelhouse, but if it is just a regional or big community bank, I'm happy to provide pointers.

 

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made new unrelated account - dont reply or message as i never use it. 

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