How to Value a Bank?
 
Banks are a special breed when it comes to valuation. While they are no different in their pursuit of profit, banks use capital as inventory as opposed to a non-bank or non-financial company which uses capital to invest in goods or services for resale or in fixed-assets to generate goods or services.

This is a simple model to value a bank which covers most of the common approaches, but which also includes an adjusted DCF (DCFs are usually not used to value banks). You will find the formula inside. It's quite intuitive.
 
Given the recent chain of events that led to a bank run on SVB Financial Group and its eventual placement under receivership, we thought it timely to make this template available. 
 
We also added a Bonus Sheet which compares the effect of the Non-realised losses for other banks in the United States in 2022, mostly as a result of contractionary monetary policies. The pattern is quite similar.
 
In our workings, we estimate the value of SVB, under the assumption that SVB's operations had not been interrupted, and to ask a key question: Was the run justified?
 
Contents:
Proforma Income Statement running from 2018-2022 (historical) and 2023-2027 (forecast).
Proforma Balance Sheet running from 2018-2022 (historical) and 2023-2027 (forecast).
Non-Cash Adjustments running from 2018-2022 (historical) and 2023-2027 (forecast).
A set of Income Statement and Balance Sheet Drivers
Capital Management summary for the period under review:
Regulatory Capital Computation (Tier 1 & Tier 2)
Capital Adequacy Ratio Computation
Valuation:
Adjusted Discounted Cash Flow – assuming reinvestment in Regulatory Capital
Economic Profit
Multiples – PE and PB