Here's Buffett again, from the same Fortune interview, on the metric he uses to value a bank:
It's earnings on assets, as long as they're being achieved in a
conservative way. But you can't say earnings on assets, because you'll
get some guy who's taking all kinds of risks and will look terrific for
a while. And you can have off-balance sheet stuff that contributes to
earnings but doesn't show up in the assets denominator. So it has to be
an intelligent view of the quality of the earnings on assets as well as
the quantity of the earnings on assets. But if you're doing it in a
sound way, that's what I look at.
Disclosure: Long Berkshire Hathaway
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