Comerica Incorporated: The Valuation Dilemma

Darden Business Publishing Cases

ISSN: 2474-7890

Publication date: 20 January 2017

Abstract

In early September 2008, in the midst of the subprime crisis, a manager with the student-run Darden Capital Management fund, wants to evaluate whether Comerica Incorporated, a regional bank based in Dallas, Texas, is a good candidate for inclusion in his portfolio. He needs to perform a valuation of the bank to assert whether the bank seems to be undervalued by the market or whether a further decline in value might be possible. He must account for all the factors that affect bank valuation, both as related to the bank itself as well as to the current market conditions. The case can be taught to: a) examine the valuation of a bank during turbulent times; b) understand the key accounting statements (balance sheet and income statement) for a bank and how they may differ from those for an industrial company; and c) understand the key value drivers of bank value (metrics for profitability, credit quality, liquidity, and capital).

Keywords

Citation

Allayannis, G. and Ramraika, B. (2017), "Comerica Incorporated: The Valuation Dilemma", Darden Business Publishing Cases. https://doi.org/10.1108/case.darden.2016.000076

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Publisher

:

University of Virginia Darden School Foundation

Copyright © 2009 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved.

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