WSBF
Waterstone Financial, Inc.
$19.78
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 16.6% above fair value
You pay
$19.78
Bear
$11.87
Fair
$16.96
Bull
$22.05
Bear
$11.87
-40.0%
ROTCE 5.7% → 0.38x TBV
Fair
$16.96
-14.2%
ROTCE 7.6% → 0.81x TBV
Bull
$22.05
+11.5%
ROTCE 8.7% → 1.07x TBV
Adjust Assumptions
7.6%
8.4%
Key Value Driver
ROTCE (7.6%) vs. cost of equity (8.4%)
Implied Market Multiple
1.02x
Summary
With ROTCE of 7.6% vs. 8.4% cost of equity, fair P/TBV is 0.81x on $19.44 tangible book, implying $16.96 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.
Return on equity (7.6%) is below the minimum investors require (8.4%). This means the bank is worth less than the net assets on its books.
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