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 »

ROE Compared to COE Still the Best Indicator of Value

Investors and analysts measure the performance of bank holding companies by comparing return on equity (ROE) against the cost of equity capital (COE). If the ROE is higher than the COE, management is creating value. ROE less than COE, management destroys value. Value is measured by stock price to book value, i.e. equity market capitalization…

Keep Reading »

Inflation Acceleration in 2016 Continues in 2017

Inflation has moved up in 2016, with most measures above 2%, the Federal Reserve target.  Given that the Housing Market Index (HMI) and other leading indicators to the economy remain positive, inflation is expected to continue to accelerate in 2017.  Chart IThe chart above illustrates the year-over-year change for…

Keep Reading »