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…
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…
The S&P 500 stock market average index has had a remarkable history of tracking the recovery in the return on equity (ROE) above the cost of equity (COE) for its average of 500 component companies (see Chart I). Each time ROE has risen above COE, a bull market occurred as…
Growth in estimated brokered CDs (brokered deposits excluding reciprocals and sweep accounts) is highly cyclical, reaching as high as 40% to 90% growth, during periods of 10% or more growth in loans with up to 20% growth in time deposits. Loan growth is currently 8%, but under Trump economics in the next few years, could…
Banks suffered under the Fed policy of ultra-low rates and anemic economic growth in recent years. Return on equity for banks averaged 9.2% over the past five years, compared to the five years ending 2006 of 14.6%. The net interest margin of 3.12% over the recent five year period compares…
