BWB
Bridgewater Bancshares, Inc.
$20.13
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 19.0% below fair value
You pay
$20.13
Bear
$13.90
Fair
$24.85
Bull
$31.41
Bear
$13.90
-30.9%
ROTCE 6.9% → 0.78x TBV
Fair
$24.85
+23.4%
ROTCE 9.3% → 1.39x TBV
Bull
$31.41
+56.0%
ROTCE 10.6% → 1.76x TBV
Adjust Assumptions
9.3%
7.8%
Key Value Driver
ROTCE (9.3%) vs. cost of equity (7.8%)
Implied Market Multiple
1.13x
Summary
With ROTCE of 9.3% vs. 7.8% cost of equity, fair P/TBV is 1.39x on $17.87 tangible book, implying $24.85 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