RBB WACC - Weighted Average Cost of Capital
The WACC of RBB Bancorp (RBB) is 8.0%.
| Range | Selected | |
| Cost of equity | 8.6% - 11.0% | 9.8% |
| Tax rate | 29.5% - 29.6% | 29.55% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.1% - 8.8% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.02 | 1.09 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.6% | 11.0% |
| Tax rate | 29.5% | 29.6% |
| Debt/Equity ratio | 0.41 | 0.41 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.1% | 8.8% |
| Selected WACC | 8.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RBB | RBB Bancorp | 0.41 | 0.98 | 0.76 |
| BCBP | BCB Bancorp Inc | 0.28 | 0.67 | 0.56 |
| BFST | Business First Bancshares Inc | 0.17 | 1.13 | 1.01 |
| CARE | Carter Bank and Trust | 0.02 | 0.85 | 0.84 |
| CNBKA | Century Bancorp Inc | 0.52 | 0.94 | 0.68 |
| EBTC | Enterprise Bancorp Inc | 0.12 | 1.05 | 0.96 |
| EQBK | Equity Bancshares Inc | 0.18 | 1.07 | 0.95 |
| HTBI | Hometrust Bancshares Inc | 0.02 | 1.4 | 1.39 |
| INBK | First Internet Bancorp | 0.44 | 1.09 | 0.83 |
| SMMF | Summit Financial Group Inc | 0.33 | 0.65 | 0.53 |
| Low | High | |
| Unlevered beta | 0.8 | 0.88 |
| Relevered beta | 1.03 | 1.13 |
| Adjusted relevered beta | 1.02 | 1.09 |
RBB'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 RBB:
cost_of_equity (9.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.02) + 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.