BANC
Banc of California, Inc.
$18.81
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 45.2% above fair value
You pay
$18.81
Bear
$7.10
Fair
$12.96
Bull
$17.41
Bear
$7.10
-62.3%
ROTCE 5.3% → 0.30x TBV
Fair
$12.96
-31.1%
ROTCE 7.1% → 0.55x TBV
Bull
$17.41
-7.5%
ROTCE 8.2% → 0.74x TBV
Key Value Driver
ROTCE (7.1%) vs. cost of equity (9.7%)
Implied Market Multiple
0.9x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $17.50 from 27 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $12.96 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 (9.7%). 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 35% 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