This month’s Singular Diligence report covers one of the largest banks in Texas.
The bank has lower operating expenses than other banks, a higher efficiency ratio, high gross yields on its loans and low net charge offs. It is able to gather each dollar of deposits more cheaply than other banks. And then it makes more money per dollar of loans it makes because it receives a high yield for these loans while simultaneously charging off a lower than normal amount of each loan each year for its losses.
As a result, it has grown deposits per share 12 percent annually over the last 17 years while maintaining 20-25 percent dividend payout rate
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