BCAL
California BanCorp
$21.41
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 61.5% below fair value
You pay
$21.41
Bear
$45.71
Fair
$55.61
Bull
$55.61
Bear
$45.71
+113.5%
ROTCE 10.6% → 3.29x TBV
Fair
$55.61
+159.7%
ROTCE 14.1% → 4.00x TBV
Bull
$55.61
+159.7%
ROTCE 16.2% → 4.00x TBV
Adjust Assumptions
14.1%
6.0%
Key Value Driver
ROTCE (14.1%) vs. cost of equity (6.0%)
Implied Market Multiple
1.54x
Summary
With ROTCE of 14.1% vs. 6.0% cost of equity, fair P/TBV is 4.00x on $13.90 tangible book, implying $55.61 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.
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