OSBC
Old Second Bancorp, Inc.
$24.87
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 2.3% above fair value
You pay
$24.87
Bear
$17.01
Fair
$24.30
Bull
$31.59
Bear
$17.01
-31.6%
ROTCE 8.1% → 0.90x TBV
Fair
$24.30
-2.3%
ROTCE 10.8% → 1.50x TBV
Bull
$31.59
+27.0%
ROTCE 12.4% → 1.86x TBV
Adjust Assumptions
10.8%
8.5%
Key Value Driver
ROTCE (10.8%) vs. cost of equity (8.5%)
Implied Market Multiple
1.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (6 analysts)
$30.00
Divergence from AlphaVal
19%
Summary
With ROTCE of 10.8% vs. 8.5% cost of equity, fair P/TBV is 1.50x on $14.62 tangible book, implying $24.30 per share. DDM cross-check: $38.06.
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.
Dividend-based valuation: $38.06 (57% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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