Banking Analysis with a Creative Twist

By Padgett, Tania | American Banker, December 17, 1996 | Go to article overview

Banking Analysis with a Creative Twist


Padgett, Tania, American Banker


To investors and colleagues, bank analyst Henry "Chip" Dickson of Smith Barney Inc. is one of the Street's most creative analysts.

In a recent report on the banking industry, Mr. Dickson included a drawing of a dinosaur in a circle with a line through it.

The industry is changing too rapidly for banks to hold onto traditional banking strategies, warned Mr. Dickson.

In other words: "No Dinosaurs."

"You don't find that in many bank reports," said analyst Jacqueline Reeves of Smith Barney, who started working for Mr. Dickson this year.

Indeed. And you don't find too many sharp-shooting analysts with near-perfect earnings estimates.

According to American Banker's annual survey of bank analysts, Mr. Dickson ranked made the most accurate earnings projections for regional banks.

His average margin of error, as a percentage of the average margin of error of his peers, was about 17%. His accuracy is especially compelling considering that Mr. Dickson gave 66 estimates - more than twice the number from any other analyst.

For individual banks, he got perfect scores of 0.00 with Barnett Banks Inc. and First Union Corp.

While Mr. Dickson modestly credits "team work" and "opportunity" for his success, his colleagues were more forthcoming.

Mr. Dickson's valuation models for banks are distinct and dependable, said Phillip Gainey, an associate analyst at Smith Barney.

"He is one of the few that publish detailed forecasts out to the year 2000," said Mr. Gainey. "We usually ask all the banks that we cover if they've seen other forecasts like this and they say, 'no.'"

Mr. Dickson values banks by analyzing discounted capital flow, which tracks a bank's cash flow and its capital allocation, such as repurchase programs, said Ms. Reeves.

"He created this alternative because the industry was changing through better performance and technology," she said. …

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