CWBC
Community West Bancshares
$26.10
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 19.8% below fair value
You pay
$26.10
Bear
$22.78
Fair
$32.55
Bull
$42.31
Bear
$22.78
-12.7%
ROTCE 9.4% → 1.13x TBV
Fair
$32.55
+24.7%
ROTCE 12.5% → 1.79x TBV
Bull
$42.31
+62.1%
ROTCE 14.4% → 2.18x TBV
Adjust Assumptions
12.5%
8.8%
Key Value Driver
ROTCE (12.5%) vs. cost of equity (8.8%)
Implied Market Multiple
1.8x
Summary
With ROTCE of 12.5% vs. 8.8% cost of equity, fair P/TBV is 1.79x on $14.46 tangible book, implying $32.55 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