Financial Location: better than many

Perhaps the government is the best judge of whether a bank or other company is in good condition, or sad. This new school of thought that are still safe to enter a market in mind.

I urge you to oppose this idea, and their own assessment.
Yes, the old school of investments: own four walls and see the shares, and companies that really what you buy and invest in.

Here are a few simple steps, how to find a bank.
First, let me look at the operation. Banks really boils down to a fairly simple business model. Disposal of tanks (which are liabilities) to finance the loans that they invest in (asset). Then I simply manage, as the obligation to pay their deposits in exchange for payment of their loans.

So, firstly, if a bank, and look at the deposit and loan growth rates. For example, Regions Financial (NYSE: RF). Today, after the growth of deposits, which more than 4 percent. This means that if the bank can reverse this trend, the need to reduce borrowing and to reduce the size of assets.

Meanwhile, credit growth of more than 2.5 percent. This is good because it shows that the Bank continues to maintain its core business, rather than just pull their horns.

Next, we need to understand how the margins of their operations running. We can do this by dividing the net interest margin - to make the difference between the amount the bank pays on deposits, given the fact that they think about their assets. In the regions, the figure is more than 3 percent. Good - but could be better.

To see the relative performance of the bank, we can succeed. This is an indication of whether the costs of IT in profit from ordinary activities. The smaller the number, minus the cost of one U.S. bank earnings. A significant number of about 40 beats, with some doubtful that between 60 and 70 levels.

The region is currently working on 66 - which is understandable, given that many significant changes in current market situation.

After the vote on the utility by clicking on assets and return on capital. Regarding ORA, banks tend to be above 1.0 percent - to 1.25 very good. Especially now, when charge-offs, the region is on the ROA of -3.90 percent.

And have the resources, a list of the best banks, if a young man - but in the compromise, in the regions are currently limited to the loss of return on capital by 33 percent.

So, we have reviewed the activities and benefits of action. But to see how a bank, can they survive, we must clarify the balance.

First, we need to look at loans as a percentage of all loans and assets. Once again - in better times - with the NPLs should be at least 40 with a series of 25 in good condition. The region is currently at 1.3 percent for loans - not many - but far better than many of his peers in the group. And with respect to total assets falls back to 89 percent - not much - but better than many others.

But what we can see that the reserves in violation of the greatest potential profits and losses of NPLs in bad loans. Regions reserves credits run at 1.8 per cent of total assets in the current operation in 1.4-fold on loans - and a good mattress than others - but more.

But when it comes to capital and ability to losses - we are at the heart of the capital, and the actual impact of capital to finance their loans and other assets.

Fixed capital at the bottom of the double-digit pace well - the higher the better for security, the less the better for the current financial performance. The region is more than 10 percent. And, for operation around 8.5 percent - could be in better times - but it is more or less in line with the bank promising a reduction in difficult times.

The last review of the bank should apply to all businesses - for debt and risk that the debt the company will break.

Regions, what accounts for the majority, the duty - as lines of credit and bonds for many years. Nevertheless, it is already loaded in the next 2 to 3 years. This is where the real RUB in. If so, the Bank continues to slowdown in deposits, reducing the growth of credit. And if so, then its actual reserves against the loan, the proceeds of the suffering - to the attractiveness of lending to the Bank on the bond market or in other parts of the market.

And with the nominal debt in 2010 to 2012 means, the regions, with one game to issue new debt or new shares to rotate or remove their debts. This amounts to approximately 6.2 million people who are not shy, almost twice the market capitalization, but it is less than half of total assets - that is, they should be able to adapt to the new creditor / buyer should bond even if it means that the decline in the bank a little more in the coming quarters.

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