WTBA
West Bancorporation, Inc.
$23.65
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 20.6% below fair value
You pay
$23.65
Bear
$18.73
Fair
$29.80
Bull
$36.43
Bear
$18.73
-20.8%
ROTCE 9.2% → 1.20x TBV
Fair
$29.80
+26.0%
ROTCE 12.2% → 1.91x TBV
Bull
$36.43
+54.1%
ROTCE 14.1% → 2.33x TBV
Key Value Driver
ROTCE (12.2%) vs. cost of equity (8.3%)
Implied Market Multiple
1.51x
Summary
With ROTCE of 12.2% vs. 8.3% cost of equity, fair P/TBV is 1.91x on $15.62 tangible book, implying $29.80 per share. DDM cross-check: $12.68.
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: $12.68 (57% 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