RBCAA
Republic Bancorp, Inc.
$88.48
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 39.6% below fair value
You pay
$88.48
Bear
$92.40
Fair
$146.55
Bull
$179.04
Bear
$92.40
+4.4%
ROTCE 9.3% → 1.52x TBV
Fair
$146.55
+65.6%
ROTCE 12.4% → 2.41x TBV
Bull
$179.04
+102.4%
ROTCE 14.2% → 2.95x TBV
Key Value Driver
ROTCE (12.4%) vs. cost of equity (7.5%)
Implied Market Multiple
1.46x
Summary
With ROTCE of 12.4% vs. 7.5% cost of equity, fair P/TBV is 2.41x on $60.74 tangible book, implying $146.55 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