I get inquiries from people asking how to model and value banks, insurance and financial institutions.
There’s a different way of valuing banks and financial institutions from valuing manufacturing companies.
You may also want to know why valuation multiples like EV/Revenue, EV/EBIT and EV/EBITDA are not used for valuing banks and financial institutions.
You may also want to know why EPS and Book Value and P / E and P / BV are more important in valuing banks.
In my previous article I write a review on Breaking Into Wall Street’s (BIWS) Real Estate and REIT financial modeling online course.
In this post, I’m going to write about BIWS’ Bank & Financial Institution Financial Modeling training program.
Before we start, let’s first check the requirements and job responsibilities of an investment banking analyst working in financial institutions group.
Click this link to see the requirements.
How will you prepare for bank modeling
Bank & financial institution modeling is a complex area. However, if you start with basics, you’ll gain confidence.
Breaking Into Wall Street (BIWS) has created an online training program on Bank & financial institution modeling.
Bank & financial institution FIG modeling training Course details
Bank & Financial Institution Modeling teaches you how to model and value banks and insurance companies and how they’re different from normal companies.
You’ll start with a crash-course on accounting, credit losses, and regulatory capital for banks, and then you’ll create a detailed operating model for JP Morgan based on its loan portfolio. Then we’ll move into a full valuation and the dividend discount and residual income models.
Next, you’ll create a bank merger model for JP Morgan’s hypothetical acquisition of SunTrust Banks, and you’ll learn about bank-specific items such as core deposit intangibles and deposit divestitures; we conclude with a bank buyout model where you’ll learn how to modify the traditional LBO framework for commercial banks.
On the insurance side, we’ll cover accounting and valuation, build a 3-statement operating model for a brand-new insurance company, and then go through several examples of valuation for both P&C and Life Insurance companies, including concepts such as embedded value and the dividend discount model.
Go to the Sign Up page.
Here’s the full run-down
- Prerequisites: Excel & Financial Modeling Fundamentals or equivalent (this is an advanced course).
- Lessons cover accounting and regulatory capital for banks, 3-statement projections, valuation (public comps, precedent transactions, dividend discount model and residual income model), merger models, buyout models, and insurance accounting and valuation (comps, multiples, NAV, dividend discount model, embedded value).
- 71 videos total (26 hours of footage).
- 5 quick reference guide PDFs on key topics – from accounting through valuation.
- Bank Overview lessons cover a bank’s financial statements, interest-earning assets and interest-bearing liabilities, how to calculate the provision for credit losses and allowance for loan losses, and how to determine risk-weighted assets and key metrics such as the Tier 1 Capital Ratio.
- Operating Model lessons teach you how to project JP Morgan’s loan portfolio and credit losses, and how you use those to drive its balance sheet, IEA and IBL, and income statement and cash flow statement; advanced topics such as the circular calculation for dividends and share repurchases are also covered.
- Valuation course covers public comps and precedent transactions for a bank, the key metrics and multiples to use, and both simplified and complex versions of the dividend discount model and residual income (excess returns) model.
- Merger Model course covers core deposit intangibles, deposit divestitures, and how to set up transaction assumptions differently; you’ll also learn how to take into account cost synergies, restructuring, changes to federal funds and regulatory capital, and how to analyze the IRR of a bank M&A deal.
- LBO Model course shows you why the traditional LBO model doesn’t work for banks, how to set up an alternative model properly, and how key variables such as the ROE improvement and P / BV multiple expansion impact the IRR.
- Insurance Overview lessons show you how insurance-specific accounting works, how to link and project the 3 statements, how P&C and Life Insurance differ, and how to value both types of companies, from comps and multiples to intrinsic valuation (dividend discount model, NAV, and embedded value).
- You receive instant access when you sign up because everything is delivered online– no shipping charges or physical products to worry about.
- Free lifetime updates and support.
- Free $97 bonus for FinanceWalk readers.
What are your alternatives?And what’s your investment in this program?
There are only two other companies offering courses for bank and/or insurance modeling:
Breaking into wall street vs wall street prep/ Breaking into wall street vs Wall Street Training:
- Wall Street Prep Advanced Bank Modeling: $399
- Wall Street Training Bank Financial Modeling + Insurance Financial Modeling: $1500
Brian of BIWS has personally been through both programs above. They certainly cover some good material, but they also have a few shortcomings:
- Wall Street Training includes nothing on valuation, merger models, or LBO models – that’s over 50% of interview questions right there. And while the insurance course is good, there’s nothing on Life Insurance companies, which are much different from P&C Insurance companies.
- Wall Street Prep includes nothing on Dividend Discount Models or public comps / precedent transactions, merger models, or LBO models and does not include the loan portfolio and loan loss reserves in the bank operating model projections. And there’s nothing on insurance companies.
With the Breaking Into Wall Street version:
- You get more material – overview, accounting, regulatory capital, operating model, and full valuation all based on a case study of JP Morgan and SunTrust Banks. Plus, you get insurance lessons that teach you all the fundamentals, how to create an operating model for a new insurance company, and how to value it.
- Everything has been designed for online, interactive learning, from the ground up – these are not re-hashed classroom training seminars.
- Everything is downloadable, in multiple formats, so you can take your training with you wherever you are.
- It comes with BIWS famous 100% No Hassle 60-Day Money Back Guarantee.
- All for an investment of just $347 (rather than $399 or $1,500 for the other, less complete programs). That’s a 60%+ discount for MORE content, lessons, and more in-depth material.
- BIWS actually thought about raising the price because this is extremely specialized content – good luck finding these lessons in standard finance books or via Google searches
- And $347 is still a big discount to the other programs above – this is specialized information that makes you far more valuable than if you simply knew basic accounting and valuation for other industries.
Plus, you get a no-hassle money-back guarantee
Just like every one of the BIWS products and courses, this comes with our unconditional 60-day money back guarantee.
That’s right – take a full 60 days to evaluate everything inside the Program, and if you’re not 100% satisfied, simply contact BIWS via the “Contact” link displayed on every page of the site and ask for your money back. You’ll receive a prompt and courteous refund.
There are no strings attached, no special terms or conditions, and no fine print.
Here’s what happens within minutes of you signing up
Once you sign up, you’ll immediately have access to the 71 instructional videos, all the Excel files and quick reference guides, and the complete curriculum. And you’ll have access to BIWS’ expert support team to ask whatever questions you have.
With that comes lifetime access, free upgrades, new content as we add it, and expert support.