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Island Investing

Riffs, rants, and the upside of investing from way off Wall Street


Why We Own CRBC: The Model

As per my last post, this series is written primarily for my investors.

For the analysts and PMs in the crowd, however, here is a link to my spreadsheet containing various analyses and valuation hacks at CRBC. I think this will go without saying, but in case it does not: that spreadsheet is neither comprehensive nor authoritative. For instance, you’ll note it doesn’t contain much of what a proper bank analysis should (i.e. tangible common equity calcs, book value per share estimates, Texas ratio, etc. ) because, well, those things don’t require a spreadsheet. Evernote is great to store those notes, though.

So the invisible assumption behind my spreadsheet is that the bank has already passed some key initial screens. If you begin analyzing other banks by starting to plug your own numbers into this, and ignore those initial screens, it will probably not end well. And if you’re looking for a great resource on how to quickly recognize viable banks as potential investments these days, I highly recommend Plan Maestro’s blog Variant Perceptions. Plan put CRBC on my watch list back in December. Also, the Above Average Odds blog recently featured an excellent write-up on a bank that should be a great reference for more experienced investors.

In any case, my goals in that spreadsheet were a bit more wide-ranging – everything from gauging when the bank would be profitable again to trying to reverse-engineer certain sell-side assumptions to ballparking core earnings power if, magically, all provisioning went away. That file is also an amalgamation of several different spreadsheets, and I broke the links off in this version so parts could be clunky.

In any case – all of this means:

I think that spreadsheet will be helpful to others, but use it at your own risk.


Next up: two critical things to understand about regional banks, plus one other tip for potential bank investors.

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