Tangible Book Value (TBV)
Definition
Tangible book value is common shareholders' equity minus goodwill and other intangible assets. It approximates the 'hard' equity backing a bank or insurer — what shareholders would notionally have if intangibles created by past acquisitions were written off.
FIG practitioners prefer TBV to plain book value because goodwill absorbs no losses and regulators deduct it from capital anyway. Tangible book value per share (TBVPS) is the standard per-share metric, and its growth over time — alongside return on tangible common equity (ROTCE) — is a core measure of value creation for bank shareholders.
In bank M&A, deals are judged partly by TBV dilution at close and the 'TBV earnback period' — how many years until TBVPS returns to the standalone trajectory (market rules of thumb for acceptable earnback, often cited around three years or less, vary by cycle).
Why interviewers ask
You cannot interview for FIG without TBV: it anchors the P/TBV multiple, connects to ROTCE, and drives bank-deal math (TBV dilution and earnback are how the market scores bank acquisitions). Interviewers test whether you know why intangibles are excluded and how TBV links to regulatory capital.
Related terms
Interviews don't test definitions — they test recall under pressure.
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