Meanwhile in the banking sector – turmoil impacts valuations

BVWireIssue #71-1
August 6, 2008

Once upon a timenot too long agobanks were considered fairly safe investments given a high level of regulatory oversight, less variance in earnings from period to period, and favorable dividends.  What’s happened?  Andrew Gibbs, CFA, CPA/ABV (Mercer Capital, Memphis, TN) analyzes the impact of earnings quality on valuation analysis in his article Bank Valuation: A Focus on Earnings Quality (originally published in Mercer Capital’s Bank Watch 2008-03).  He points out that bank stocks, as reflected in the total return for the SNL Bank Index, were down 31.3% from 1/1/07-2/29/08 compared to a decrease of 6.07% for the S&P 500 during the same period. 

Now is the time for appraisers to re-think the framework for bank valuations.  In order to address the unique challenges in bank valuations and to help canonize the thought leadership in this practice area, Andrew and William Wilhelm, CPA/ABV (Crowe Chizek, Indianapolis, IN) are hosting "Current Topics in Bank Valuation - Reflections on Industry Trends and Emerging Financial Reporting Issues"—a teleconference on Tuesday August 12 (10 a.m. PT/1 p.m. ET).  To view the complete agenda and register, please click hereyou’ll also find on the registration page, Andrew’s complete article available as a free download!

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