IBOC
International Bancshares Corporation
$68.40
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 40.2% below fair value
You pay
$68.40
Bear
$74.20
Fair
$114.35
Bull
$138.45
Bear
$74.20
+8.5%
ROTCE 10.4% → 1.55x TBV
Fair
$114.35
+67.2%
ROTCE 13.9% → 2.39x TBV
Bull
$138.45
+102.4%
ROTCE 16.0% → 2.90x TBV
Adjust Assumptions
13.9%
8.1%
Key Value Driver
ROTCE (13.9%) vs. cost of equity (8.1%)
Implied Market Multiple
1.43x
Summary
With ROTCE of 13.9% vs. 8.1% cost of equity, fair P/TBV is 2.39x on $47.75 tangible book, implying $114.35 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