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…
The mission of a bank is to operate a safe and sound financial institution, while creating shareholder value. The value of a bank, defined by the ratio of market value to common equity, most often is directly related to the return on equity (ROE) less the cost of equity capital…
Many banks are looking for alternatives to raising rates or using advances from the Federal Home Loan Bank to attract new deposits. Banks with strong loan growth may raise funds and generate liquidity through issuing federally insured certificates of deposit (CDs). A large number of banks utilize the brokered CD…
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