Tag: Bank Valuation

Preferred Equity In Bank Valuation

Bank Capital Valuation

For U.S. banks, unlike common equity that derives its returns primarily through appreciation; preferred equity gives an investor a return largely in the form of a fixed dividend. Thus, when it comes to valuing a bank with preferred debt, the question comes up do you treat the capital as common or more like a debt instrument? Because the dividend is largely like a coupon on a holding company loan or other debt instrument, it seems natural to value preferred equity as debt.

Why Your Bank Is Going To Be Worth A Lot of Money

Bank valuations and new bank applications

The new bank application department at the FDIC was a little slow in 2014. Before the recession, it was common for the FDIC to get 250 applications per year and approve 159 of those.  In 2014, only Primary Bank (in organization) filed an application (still pending). Part of the issue is that if you are crazy enough to want to start a bank you are probably too dysfunctional to handle the management of a bank.

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