As featured on the website Travilliannext.com on November 4th, 2022
Why are certain banks consistently valued highest by investors?
We recently presented to the Board of Directors of a community bank and in preparation for the discussion, we were asked by the management team to address the question of why certain banks seem to consistently trade with the highest valuation premium. I’ve been analyzing banks for over 20 years, and when asked this question in the past, my off-the-cuff response tended to hit on the usual platitudes – the company was well-managed, was more profitable than the average bank through the cycle, conservative in its underwriting standards, yada, yada, yada. In preparation for this presentation, however, I realized that I had never researched the question in any great depth, and that the standard answers would be insufficient to appropriately address the question.
