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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (24989)	10/12/2006 4:26:44 PM
From: E_K_S	Read Replies (1) \| Respond to of 78742

Hi Paul - When you and Spekulatius talk about the efficiency ratio for a bank, what exactly do you look at to calculate this number? (Spekulatius you might provide the board some of the specifics you look at..). Is it the operating expenses divided by the net income? It would seem that because of economies of scale a very large money banks would be more efficient in their back room operations than a small regional bank. Therefore, if you have a profitable regional bank that is inefficient in their back room operations and holds a unique franchise, I would think that this would be an attractive property for a buyout candidate. The one thing that sours the balance sheets of these midsize regional banks is how they value "Goodwill". Several of these banks have bought up smaller banks and have accumulated a lot of worthless goodwill which they continue to carry on their balance sheet. This over states their true BV. It's just another thing to consider. EKS