Discounted Cash Flow Calculation for OTCPK:CWBK using Excess Returns Model Model
The calculations below outline how an intrinsic value for CommerceWest Bank is arrived at using the Excess Return Model. This approach is used for finance firms where free cash flow is difficult to estimate.
In the Excess Return Model the value of a firm can be written as the sum of capital invested currently in the firm and the present value of excess returns that the firm expects to make in the future.
The model is sensitive to the Return on Equity of the company versus the Cost of Equity, how these are calculated is detailed below the main calculation.
The current share price of
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
CommerceWest Bank's earnings available for a low price, and how does
this compare to other companies in the same industry?
CommerceWest Bank's earnings are expected to grow by 3.8% yearly, however this is not considered high growth (20% yearly).
Unable to determine if CommerceWest Bank is high growth as no revenue estimate data is available.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
CommerceWest Bank's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
3/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Fundamentally a bank's business is based upon borrowing and lending money, for
this reason they typically have high levels of debt and we analyse them
This treemap shows a more detailed breakdown of
CommerceWest Bank's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Ivo A. Tjan is currently serving as Chairman, President and Chief Executive Officer of CommerceWest Bank. Mr. Tjan is the Founder of the company and launched an Initial Public Offering in 2001. For the past three consecutive years, CommerceWest Bank has been recognized as a "Super Premier" Performing Bank by the Findley Report, recognized as 5 star rated Bank by BauerFinancial, and acknowledged as the 2°d Healthiest Bank in America by DepositAccounts.com. Mr. Tjan was honored as the 2013 Robert Ross Founders Award from the MDA; in 2006, Mr. Tjan was named one of OC Metro's Hottest 25 People of Orange County, California. Prior to joining CommerceWest Bank, Mr. Tjan held various management positions with Eldorado Bank, Home Savings of America and Great Western Bank. Mr. Tjan holds a Bachelor of Arts Degree in Business Administration from California State University, Fullerton. He is an active member and board member of several corporate, social and charitable organizations. He is a member of the Young Presidents' Organization (YPO), New Majority, California Bankers Association and the Bank CEO Network. He is also a former Board Member for California State Fullerton University Foundation, American Bankers Association, Advisory Board for CASA, Marconi Foundation and the Children's Museum.
Insufficient data for Ivo to compare compensation growth.
Insufficient data for Ivo to establish whether their remuneration is reasonable compared to companies of similar size in United States of America.
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the CommerceWest Bank board of directors is over 10 years, this suggests they are a seasoned and experienced board.
CommerceWest Bank provides various commercial banking products and services for small and mid-sized businesses in California. It accepts various deposit products, including business checking and analyzed checking, money market deposit, savings, sweep, and attorney client trust accounts; personal accounts for owners and key executives; and anywhere checking accounts. The company also offers asset based/M&A, term, and commercial real estate loans; lines of credit; commercial and stand-by letters of credit; and collection services. In addition, it provides treasury and cash management services, concierge services, and remote deposit solutions. The company was founded in 2001 and is headquartered in Irvine, California.
Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us.