Statutory Data: A Trove of Valuable Bank Information

“First-level thinkers look for simple formulas and easy answers. Second-level thinkers know that success in investing is the antithesis of simple…Your thinking has to be better than that of others…you must find an edge they don’t have.  You must think of something they haven’t thought of, see things they miss or bring insight they don’t possess.” – Howard Marks

At Prospector Partners, we utilize regulatory filings and alternative data in addition to traditional SEC/GAAP filings and statements. This is especially the case when it comes to the bank sector as we make use of call reports filed to the FDIC and financial statements filed to the Federal Reserve. 


If you are willing to invest the time and energy (along with learning how to interpret them), regulatory filings can reveal a trove of valuable information. Many investors, especially generalists, do not make adequate use of non-traditional filings in the investment process. We utilize regulatory filings for greater insight into the balance sheet, the branch footprint, M&A potential, and the income statement.

Balance Sheet Detectives

Loan Type Detail:

Your typical 10-K, 10-Q, or investor presentation provides limited insight into the loan book. By relying on traditional filings alone, an investor may believe a loan book is of average or low risk.  Using regulatory statements, we occasionally discover exposure to higher-risk loan categories.  As a result, we avoid investing in banks which are above our desired risk profile. While high risk loan books produce attractive returns in good times, they are a leading cause of large and permanent loss when the credit environment turns.

Derivatives Exposure:

Solely utilizing SEC statements, an investor can overlook these key risk exposures.  Meanwhile, the bank in question may be holding large amounts of credit derivatives, opaque financial instruments, and off-balance sheet holdings/commitments…

To continue reading this Research Paper, simply access the PDF here. 

Looking for more research? 
Download our recent Whitepaper: Statutory Data: A Look Under the Hood of an Insurance Company. Available here.


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The views described herein do not constitute investment advice, are not a guarantee of future performance, and are not intended as an offer or solicitation with respect to the purchase or sale of any security. Investing involves risk, including loss of principal. Investors should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. Please review the offering memorandum or prospectus of a Fund for a complete discussion of the Fund’s risks which include, but are not limited to: possible loss of principal amount invested; stock market risk; value risk; interest rate risk; income risk; credit risk; foreign securities risk; currency risk and derivatives risk.

Nothing contained herein constitutes investment, legal, tax, or other advice nor should be relied upon in making an investment or other decision. Any projections, outlooks or estimates contained herein are forward looking statements based upon specific assumptions and should not be construed as indicative of any actual events that have occurred or may occur. 

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