Discounted Cash Flow (DCF) Analysis Levered

Pacific Mercantile Bancorp (PMBC)

$9.4

-0.11 (-1.16%)

All numbers are in Millions, Currency in USD

Stock DCF: 23.65 | 9.4 | undervalue

Free Cash Flow

Year A/P	2016 Actual	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Projected	2022 Projected	2023 Projected	2024 Projected	2025 Projected
Revenue	38.09	47.66	52.79	54.51	57.73	64.23	71.47	79.52	88.48	98.45
Revenue (%)
Operating Cash Flow	4.35	10.58	17.26	17.02	10.18	14.80	16.46	18.32	20.38	22.68
Operating Cash Flow (%)
Capital Expenditure	0.76	-0.27	0.83	1.11	-0.30	0.58	0.64	0.72	0.80	0.89
Capital Expenditure (%)
Free Cash Flow	5.10	10.32	18.09	18.13	9.88	15.38	17.11	19.03	21.18	23.57

Weighted Average Cost Of Capital

Share price	$ 9.4
Beta	0.933
Diluted Shares Outstanding	23.52
Cost of Debt
Tax Rate	32.91
After-tax Cost of Debt	21.00%
Risk-Free Rate
Market Risk Premium
Cost of Equity	7.530
Total Debt	27.53
Total Equity	221.05
Total Capital	248.58
Debt Weighting	11.07
Equity Weighting	88.93
Wacc

Build Up Free Cash Flow

Year A/P	2016 Actual	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Projected	2022 Projected	2023 Projected	2024 Projected	2025 Projected
Revenue	38.09	47.66	52.79	54.51	57.73	64.23	71.47	79.52	88.48	98.45
Operating Cash Flow	4.35	10.58	17.26	17.02	10.18	14.80	16.46	18.32	20.38	22.68
Capital Expenditure	0.76	-0.27	0.83	1.11	-0.30	0.58	0.64	0.72	0.80	0.89
Free Cash Flow	5.10	10.32	18.09	18.13	9.88	15.38	17.11	19.03	21.18	23.57
WACC
PV LFCF						14.10	14.39	14.69	14.99	15.30
SUM PV LFCF										73.48

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	9.02
Free cash flow (t + 1)	24.04
Terminal Value	342.40
Present Value of Terminal Value	222.34

Intrinsic Value

Enterprise Value	295.82
Net Debt	-260.34
Equity Value	556.16
Shares Outstanding	23.52
Equity Value Per Share	23.65