Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-19
FINDS BANK STOCKS
IN GOOD POSITION
Expert Says rs Issues Have
Had Average Yield of 4.68
Pct. in Past 26 Years.
Special Dispatch to The star.

Special Dispatch to The Star.
NEW YORK, January 19.-While the
public in recent years has paid too
much for bank stocks, good issues pur-
chased at conservative prices have for
generations proved valuable holdings
and will undoubtedly continue to be so,
in the opinion of Gilbert Elliott, author
ity on the bank stock market AS an
aid in determining what Is a conserva-
tive, price, he has had the statistical de-
partment of his firm, Gilbert Elliott g.
Co., prepare history of IS leading New
York bank stocks covering the period
1905-1930, from which he quotes the
following pertinent facts:
I'VE find that during the last IS
years bank stocks have, on the average,
sold at 134 times book value, TN times
earnings and TO yield AIS per cent.
Prior to 1925, these stocks, as group,
at no time sold for more than twice
book value and did not depart greatly
from a ratio of about IA times book
value for any length of time. At their
low prices last December, they sold at
1877 times book value, 1874 times earn
ings and to yield 4.6S per cent"
Ratios Also Included.
This history includes table showing
these ratios for the rs stocks in each
year OF the 26-year period. In conclu-
sion, Mr.. Elliott says:
"A study Of the tables will indicate
that these latter averages December,
1890 were reasonable in the light of
past performance and the character of
the present depression. At such levels
New York bank stocks warrant favor
able consideration"
The history of these stocks reveals
many interesting facts, among the most
striking of which are:
/. That earnings have averaged over
10 per cent of capital and surplus
funds-a record which has probably
been unsurpassed In any other field for
SO long time.
2. That dividends have averaged 2-3
per cent of capital and surplus funds
Ia ratio that would ordinarily be consid-
cred unattainable for sound enterprise
over an extended period.
3. That dividend disbursements, which
have been covered by a so per cent
earnings margin have increased with
out interruption, being larger, in the
| aggregate, each succeeding year than
during the year previous.
Record of Dividends.
A. That total dividends paid since
1920 have amounted to more than the
aggregate book value of these banks. 10
4 years ago and have been virtually
| equivalent to the combined market
value of their shares at that time.
/ S. That these banks, as a group
! failed to earn their dividend require
mentS in only two years.
| 6. That after every year of panic OF
/ depression-viz. 1907, 1914 and 1921
stored to normal in the following year
no time during this period of % years
| sold below their aggregate book value
the lowest ratio being LOG in 1921.
Highest Yield in 1921.
| 8. That the highest yield basis also
occurred in 1921, when the index
touched per cent at the market lows
1t will be recalled that the New York
rediscount nate was also per cent
during the early part of that year, and
high-grade bonds we're available on
per cent yield basis.
9. That the highest ratios at which
| these stocks ever sold occurred, OF
course, in 1929, when their aggregate
market value was more than six times
book value, about so times earnings
and yield amounted to little more thar
per cent.
10. That the average ratios at which
these stocks sold during the period Of
20 years covered by this study were Ia
times book value, l71a times earnings
and AIS per cent yield.
|