Survey of Banking Industry Intangible Assets

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Includes: BSC, CFC, FMCC, FNMA, WMIH
by: Richard Shaw

The number of analysts predicting major further price declines for banks and related companies is increasing by the day.

To work within that perspective, we have begun to look at statistics that may begin to show excess valuation or over-leveraging that may be squeezed out in coming market sessions.

We are awaiting the quarterly reports that will provide the capital adequacy ratios for banks. That ratio is fundamental to credit ratings and capacity to grow, as well as to risks arising from the deleveraging that is sweeping the globe.

Pending that, we thought it might be interesting to see the extent of intangibles banks, savings & loans and consumer lending companies are carrying on their books.

Intangible assets in the balance sheet do not have separate value from the capitalized earnings of a company, and they have no value in liquidation.

We examined entities with $1 billion or more in market cap as of March 14.

The first table below lists 40 companies with the highest percentage of intangibles to market cap. It also shows the market cap to tangible book ratio for those companies.

High Ratio of Intangible Assets to Market Cap

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The second table below lists 40 companies with the lowest percentage of intangibles to market cap, as well as their market cap to tangible book ratio.

Low Ratio of Intangible Assets to Market Cap

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It is grist for the mill for those who chose to invest in individual stocks instead of funds, and who do their own research.

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