Bank Valuation

Overview

Bank valuation is a subset of general asset valuation. However, there are aspects of bank valuation that make it particularly hard to do.

Two Valuation Model

The two valuation model segments the bank into two separate businesses.

• Fund Managment - the fund management business recognizes that the deposit taking and loan underwriting portion of a bank functions much like a leveraged hedge fund.
• Fee based business - in addition to managing assets, as above, most banks will collect fees. The discounted value of the fees minus expenses represents a separate value to the fund management segment.