cohenbarryj

Still Short Downey Financial Despite Jump on Earnings

An alternative method is to think about the liability side of the balance sheet when valuing the company. The vast majority of the company's funding base is CD's, FHLB borrowings and other debt. Pure "core" deposits are relative small as a % of the total. Put a low premium on CD's and FHLB 2% - 3%, 8% to 12% on deposits add tangible equity to the sum then subtract balance sheet adjustments for bad loans and the time value of money for the earnings carry cost associated with the non-cash earnings flows (that is tougher to do). This should get you intrinsic value.

Just a thought..