WTBA
West Bancorporation, Inc.
$28.02
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 9.2% below fair value
You pay
$28.02
Bear
$19.40
Fair
$30.86
Bull
$37.73
Bear
$19.40
-30.8%
ROTCE 9.2% → 1.24x TBV
Fair
$30.86
+10.1%
ROTCE 12.2% → 1.98x TBV
Bull
$37.73
+34.7%
ROTCE 14.1% → 2.42x TBV
Key Value Driver
ROTCE (12.2%) vs. cost of equity (8.2%)
Implied Market Multiple
1.79x
Summary
With ROTCE of 12.2% vs. 8.2% cost of equity, fair P/TBV is 1.98x on $15.62 tangible book, implying $30.86 per share. DDM cross-check: $13.05.
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: $13.05 (58% below 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