EBSB WACC - Weighted Average Cost of Capital
The WACC of Meridian Bancorp Inc (MARYLAND) (EBSB) is 6.7%.
| Range | Selected | |
| Cost of equity | 8.3% - 11.1% | 9.7% |
| Tax rate | 24.9% - 28.8% | 26.85% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.0% - 7.3% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 1.22 | 1.33 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.3% | 11.1% |
| Tax rate | 24.9% | 28.8% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.0% | 7.3% |
| Selected WACC | 6.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| EBSB | Meridian Bancorp Inc (MARYLAND) | 0.95 | 1.07 | 0.62 |
| CASH | Meta Financial Group Inc | 0.23 | 0.92 | 0.79 |
| FSBW | FS Bancorp Inc | 0.17 | 0.72 | 0.64 |
| HMST | HomeStreet Inc | 3.37 | 0.3 | 0.09 |
| KRNY | Kearny Financial Corp | 0.26 | 0.9 | 0.76 |
| MBIN | Merchants Bancorp | 0.15 | 0.97 | 0.87 |
| NASB | NASB Financial Inc | 0.11 | -0.06 | -0.05 |
| NFBK | Northfield Bancorp Inc | 0.14 | 1.08 | 0.97 |
| SMBC | Southern Missouri Bancorp Inc | 0.04 | 0.97 | 0.95 |
| TF.TO | Timbercreek Financial Corp | 1.6 | 1.02 | 0.46 |
| TRST | TrustCo Bank Corp N Y | 0.15 | 0.76 | 0.69 |
| Low | High | |
| Unlevered beta | 0.64 | 0.76 |
| Relevered beta | 1.33 | 1.49 |
| Adjusted relevered beta | 1.22 | 1.33 |
EBSB's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for EBSB:
cost_of_equity (9.70%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.22) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.