Mercer Capital | Bank Valuation Basics

1,622 views

Published on

In this session, originally presented on February 19, 2013, Jay D. Wilson, Jr., CFA, CBA, ASA of Mercer Capital, presents an overview of bank valuation. Topics include: An Overview of Community Banks, Financial Statement Basics, Key Financial Indicators, Valuation Approaches, the Levels of Value, and Special Issues in the Valuation of a Community Bank

Published in: Economy & Finance
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,622
On SlideShare
0
From Embeds
0
Number of Embeds
77
Actions
Shares
0
Downloads
172
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Mercer Capital | Bank Valuation Basics

  1. 1. 
  2. 2. 
  3. 3. 
  4. 4. 
  5. 5. 
  6. 6. 
  7. 7. Total Securities Interest IncomeTrading Account LoansFed Funds + CDs + Rev Repos Fed Funds Sold & CDsGross Loans & Leases SecuritiesLoan Loss Allowance Estimated Tax BenefitNet Loans & Leases Interest Income (FTE)Total Earning AssetsInterest ExpenseCash and Due From Banks DepositsBank Premises Fed Funds PurchasedOther Real Estate Owned Other Interest ExpenseIntangible Assets Interest ExpenseCash Surrender Value of Life Insurance Net Interest Income (FTE)Other AssetsTOTAL ASSETS Fee IncomeDeposit Account Service ChargesOther Operating IncomeTotal Other IncomeNon-Interest Operating ExpenseSalaries & BenefitsNet OccupancyOther Operating ExpensesNon-Interest Operating ExpensesSecurity TransactionsLoan Loss ProvisionPre-Tax IncomeTaxesNET INCOME
  8. 8. 
  9. 9. 
  10. 10. 
  11. 11. 
  12. 12. 
  13. 13. 
  14. 14. 
  15. 15. Source: Mercer Capital Presentation at AOBA Conference “CapitalManagement: Alternatives & Uncertainties”
  16. 16. 55%60%65%70%75%80%Assets > $10B Assets $3-10B Assets $1-3B Assets $500M - $1B2005 2009 2012Source: Mercer Capital Presentation at AOBA Conference “CapitalManagement: Alternatives & Uncertainties”
  17. 17. 0.00%5.00%10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%50.00%0.00%0.20%0.40%0.60%0.80%1.00%1.20%1.40%1.60%1.80%2.00%2004Y 2005Y 2006Y 2007Y 2008Y 2009Y 2010Y 2011Y YTD @9/11YTD @9/12LoanLossProvision+/-OREOLosses/Gains/PTPPPOIncomePre-Tax,Pre-Provision,Pre-OREOIncome/Avg.AssetsLoan Loss Provision + OREO / PTPPPO Income Pre-Tax, Pre-Provision, Pre-OREO Income / Avg. AssetsSource: Mercer Capital Presentation at AOBA Conference “CapitalManagement: Alternatives & Uncertainties”
  18. 18. Source: FDIC-12%-10%-8%-6%-4%-2%0%2%4%6%8%10%12%14%16%18%84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12Assets > $10B Assets $1-10BSource: Mercer Capital Presentation at AOBA Conference “CapitalManagement: Alternatives & Uncertainties”
  19. 19. Source: Mercer Capital Presentation at AOBA Conference “CapitalManagement: Alternatives & Uncertainties”
  20. 20. 
  21. 21. 
  22. 22. 
  23. 23. 
  24. 24. 
  25. 25. »»»»»»
  26. 26. 30
  27. 27. 31
  28. 28. 32
  29. 29. 33
  30. 30. 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Price / Earnings 13.4 16.8 18.3 16.6 17.7 14.3 13.5 14.3 13.5 11.6 12.0Price / Tang. Book Value 1.53 2.03 2.17 1.86 1.86 1.41 1.40 1.27 1.21 1.05 1.140.000.601.201.802.403.000.02.04.06.08.010.012.014.016.018.020.0Price/TangibleBookValueMultiplePrice/EarningsMultiplePrice/Earnings and Price/Book Value MultiplesBanks with Assets of $500 Million - $5 Billion & Return on Tang. Equity Between 5% and 15%2002-2012 Medians:P/E: 14.28xP/TBV: 1.41x
  31. 31. 37
  32. 32. 38217305399481566463458463504357280261232272283278309 323177 175216 215233$0$50$100$150$200$250$300050100150200250300350400450500550600DealValue($B)Bank&ThriftTransactionsBank & Thrift Transactions Deal Value
  33. 33. 3950%75%100%125%150%175%200%225%250%275%300%10x14x18x22x26x30x34x38x42x46x50xPrice/TBVPrice/EarningsPrice / Earnings Price / TBVNM
  34. 34. -30%-20%-10%0%10%20%30%0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0xROAEPrice/Tangible Book ValueBank and Thrift Transactions2012 to 2/6/2013
  35. 35. 41
  36. 36. 42
  37. 37. 
  38. 38. »»»»»»»»»»
  39. 39. 45
  40. 40. 46
  41. 41. WeeklyTrading AssetsNPAs /Loans+OREO ROTCE< 0.5% 733,895 4.01 5.830.5 to 1.0% 1,700,931 3.10 9.811.0 to 2.0% 2,823,692 3.07 9.82> 2.0% 14,913,012 2.08 11.65
  42. 42. 48
  43. 43. 

×