Top Performing Banks Get Short Shrift; Stock Market Rewards Stars of Other Industries More

Gregor, William T., Frieder, Larry A., American Banker

A quick glance at the American Banker bank index on page 23 might make anyone think 1995 was a stellar year for banks in the stock market. Almost every month, the index outpaced the Standard & Poor's 500.

But take a closer look. Even the better-managed banks still don't receive the premium multiples investors pay for the leading companies in other industries that face similar problems.

In fact, a major Gemini Consulting survey shows market premiums for top performing banks are barely half those of top firms in industries facing comparable challenges.

It's a stock market axiom that in any industry, no matter what its prospects, the top-performing companies typically trade at a premium to their lesser competitors. Yet this study indicates high performance by bank managements counts in investors' minds far less than the achievements of high-performing companies in other industries.

To gauge operating performance among banks, the study identified the critical success factors we believe separate bank managements. …

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Publication information: Article title: Top Performing Banks Get Short Shrift; Stock Market Rewards Stars of Other Industries More. Contributors: Gregor, William T. - Author, Frieder, Larry A. - Author. Magazine title: American Banker. Volume: 161. Issue: 13 Publication date: January 22, 1996. Page number: 22. © 2009 SourceMedia, Inc. COPYRIGHT 1996 Gale Group.

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