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 NEW YORK, May 18 /PRNewswire/ -- The technology of banking has evolved dramatically while the financial reporting system remains rooted in accounting standards established in an earlier era. "The reporting system needs to catch up and progress to market value accounting," says Eugene J. Sherman, director of research of M.A. Schapiro & Co., Inc. in his latest issue of "The Bank Stock Quarterly."
 "We regard MVA as a tool to assist management and inform others, not as an end in itself," said Mr. Sherman, speaking on behalf of the firm which specializes in bank stock market-making and investment banking for banks. The objective of management is risk-controlled return on equity. Market value accounting will provide a bridge to bank managers in helping them to calculate their expected stream of income," he said.
 The study takes into account the likely higher costs of converting to MVA but expresses the view that the benefits will outweigh those costs. These benefits will arise out of higher valuations for bank stocks and a reduced cost of capital for banks. Investors and regulators will be better able to identify well-managed banks and reward them.
 This position is consistent with similar views expressed more than a quarter century ago by Morris Schapiro. "A well run bank need not fear disclosures. On the contrary, disclosures would inspire confidence among depositors and stockholders ... Shareholders are entitled to basic information needed for intelligent evaluations of their holdings," he wrote in March 1967. "What was true then is true now," Mr. Sherman said. "The principals of bank reporting and stockholder relationships haven't changed much over the decades."
 Copies of The Bank Stock Quarterly can be obtained by writing to:
 Mr. Eugene J. Sherman
 M.A. Schapiro & Co., Inc.
 One Chase Manhattan Plaza
 New York, N.Y. 10005
 M.A. Schapiro & Co., Inc., founded in 1939, is an investment banking firm specializing in banks and maintains active markets in the shares of many of the country's top banking institutions.
 -0- 5/18/93
 /CONTACT: Eugene J. Sherman, senior vice president, director of research of M.A. Schapiro & Co., Inc., 212-530-7580/

CO: M.A. Schapiro & Co., Inc. ST: New York IN: FIN SU:

TS-PS -- NY015 -- 9634 05/18/93 09:45 EDT
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Publication:PR Newswire
Date:May 18, 1993
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