MCBS
MetroCity Bankshares, Inc.
$35.27
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 17.7% below fair value
You pay
$35.27
Bear
$29.99
Fair
$42.84
Bull
$55.69
Bear
$29.99
-15.0%
ROTCE 10.8% → 1.67x TBV
Fair
$42.84
+21.5%
ROTCE 14.4% → 2.55x TBV
Bull
$55.69
+57.9%
ROTCE 16.6% → 3.08x TBV
Adjust Assumptions
14.4%
8.1%
Key Value Driver
ROTCE (14.4%) vs. cost of equity (8.1%)
Implied Market Multiple
2.13x
Summary
With ROTCE of 14.4% vs. 8.1% cost of equity, fair P/TBV is 2.55x on $16.60 tangible book, implying $42.84 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