CALB
California BanCorp
$25.09
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 237.9% above fair value
You pay
$25.09
Bear
$5.20
Fair
$7.43
Bull
$9.65
Bear
$5.20
-79.3%
ROTCE 4.0% → 0.30x TBV
Fair
$7.43
-70.4%
ROTCE 3.1% → 0.30x TBV
Bull
$9.65
-61.5%
ROTCE 3.6% → 0.30x TBV
Key Value Driver
ROTCE (3.1%) vs. cost of equity (9.5%)
Implied Market Multiple
1.66x
Summary
With ROTCE of 3.1% vs. 9.5% cost of equity, fair P/TBV is 0.30x on $15.15 tangible book, implying $7.43 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 (3.1%) is below the minimum investors require (9.5%). This means the bank is worth less than the net assets on its books.
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