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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: jjs64 who wrote (29834)	4/13/1999 9:14:00 PM
From: Nazbuster	Respond to of 122087

jjs64, FLBK, NTBK, etc.. What is it that is driving this? Is it just another INUT craze? It's not like online banking is a new capability! It seems insane. From the 10K: "Net interest income is the principal component of a financial institution's income stream and represents the difference or spread between interest and certain fee income generated from earning assets and the interest expense paid on deposits and other borrowed funds. " Let's figure this with very rough approximations: How much capital earning a 2% average spread would have to be out there to create enough value to justify a $36 FLBK price? With approx. 3.1M shares and an assumed P.E. of 30 (Citigroup is 30, Wells 34, BankBoston 18, BankAmerica 25), and today's $36 price, you get $1.20 earnings per share. If that $1.20 represents a 2% spread (no expenses or salaries for this calculation), then they have to have $60 working to earn the $1.20. $60 x 3.1M shares = $186,000,000 outstanding loans. Hey, this is not so large a number! The year end loan balance was already about 1/5 of that and they're just getting started. Does anyone know a reasonable ratio between net earnings and loan portfolio size for a healthy bank so I don't have to use this ridiculous example which ignores all other business factors? Here's a news article: nt.excite.com:80/news/bw/990413/fl-florida-banks P.S./Edit: Excuse the 3.1M share figure...taken from 10K. must be old.