BANC
Banc of California, Inc.
$18.85
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 89.8% above fair value
You pay
$18.85
Bear
$6.29
Fair
$9.93
Bull
$13.34
Bear
$6.29
-66.6%
ROTCE 5.3% → 0.30x TBV
Fair
$9.93
-47.3%
ROTCE 7.1% → 0.47x TBV
Bull
$13.34
-29.3%
ROTCE 8.2% → 0.64x TBV
Adjust Assumptions
7.1%
10.6%
Key Value Driver
ROTCE (7.1%) vs. cost of equity (10.6%)
Implied Market Multiple
0.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (27 analysts)
$17.50
Divergence from AlphaVal
43%
Summary
With ROTCE of 7.1% vs. 10.6% cost of equity, fair P/TBV is 0.47x on $20.96 tangible book, implying $9.93 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (7.1%) is below the minimum investors require (10.6%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $17.50 (from 27 analysts). Our estimate is 43% below the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly