We have one more dispatch from our conversation with banking industry analyst John Helfst, based on the podcast interview we recorded with Helfst (analyst at 1919 Investment Counsel) a few weeks back. 

Our previous posts discussed the data about deposits and loans are worth your attention when reviewing bank disclosures; and which disclosures about mortgages and other lines of business are also worth your time. 

We wanted to close this series with a more open-ended question: What else would Helfst recommend financial analysts to consider when studying bank disclosures? 

He recommended numerous sources of data, including:

• Earnings call transcripts
• Investor slide decks
• Wall Street earnings estimates, and especially the spread of those estimates
• The Federal Reserve’s annual stress tests (commonly known as CCAR), the results of which are announced every June

To be clear, Calcbench databases won’t possess the above information unless a bank specifically includes it in an SEC filing. But we love our subscribers anyway, and are more than happy to recommend other sources of useful data that complement our own.

Helfst also said that he likes to perform a fair bit of what he calls “cross-industry supply and demand analysis.” That is, since banks are so important to the insurance and commercial real estate sectors, he examines those sectors too, to see whether what the banks are saying lines up with what those other folks are saying. 

One example might be to look at real estate investment trusts (REITs) to see what they’re saying about new construction in various parts of the United States. Then you could compare what local banks in those regions are reporting about commercial mortgage activity to see whether the narratives support or contradict each other. (Don’t forget, we had a post earlier this month about how to research commercial mortgage activity in bank disclosures, using PacWest Bancorp (PACW) as an example.) 

Another recommendation: keyword searches, either in earnings call transcripts (which Calcbench sometimes has, depending on the company) or in the SEC filings themselves (which Calcbench has in spades). You can look up specific keywords by visiting our Interactive Disclosures page and then entering your keywords in the “full text search” field toward the left side of the page. 

You can also search for earnings guidance, which Calcbench has when companies provide guidance (not all do); and especially look for updated earnings guidance, typically filed as a Form 8-K. Again, Calcbench only has such updated guidance when a company chooses to disclose such information. 

Then again, earlier this year lots of banks did provide updated guidance or other disclosures generally when people were anxious about commercial real estate exposure. Helfst gave the example that during Q1 2023, many banks broke out additional disclosures to report their exposure to commercial real estate, and in particular office loans.  Some banks reported loan levels by property type, and some gave loan maturity schedules for the coming three years to help analysts understand potential payment or rate shock to commercial real estate borrowers.

In short, financial analysts have lots of data they can use to build better analytical models and forecasts. Calcbench has lots of it. You can hear our complete interview with John Helfst on our page dedicated to this conversation, with lots more suggestions and good ideas!