Community Bank Stocks Driven by Spread Between ROE and COE

In a previous article, the major bull market in bank stocks of 300%, from the first quarter of 1995 to year-end 2006, was driven by the widening spread between return on equity (ROE*) and the cost of equity (COE*), as defined by IDC Financial Publishing, Inc. (IDCFP).  In the article,…

Keep Reading »

Large Bank Stocks Driven by the Spread Between ROE and COE

The major bull market in bank stocks (KBW Index, Ticker “BKX”) from the 1st quarter of 1995 to year end 2006 of 300% was driven by the widening spread between bank return on equity (ROE*) and the cost of equity (COE**), as defined by IDC Financial Publishing, Inc. (IDC).  During…

Keep Reading »

IDC's Remarkable Record

As stated on the Washington State Department of Financial Institutions website and as displayed on IDC Financial Publishing, Inc.’s website, “IDC has a remarkable track record of identifying deteriorating or improving performance months, and sometimes years, before it becomes apparent to other ranking companies.”  The following review of IDCFP rankings…

Keep Reading »

Bank Stocks Recovery to Normal Valuation

Banks suffered under the Fed policy of ultra-low rates and anemic economic growth in recent years.  Return on equity for banks averaged 9.4% over the past five years, compared to the five years ending 2006 of 14.6%.  The net interest margin of 3.13% over the recent five-year period compares to 3.72% for the five…

Keep Reading »

Yields on 2-Year Treasury Notes Could Suddenly Rise 100 Basis Points

Yields on T-Notes fail to recognize the economic recovery from the Trump administration, i.e. tax cuts, reduced regulation, healthcare reform, infrastructure and military spending.  Yields also ignore potential rate hikes by the Federal Reserve.  But, most important, the yields on T-Notes continue to be held back by the negative 85…

Keep Reading »