BUSE
First Busey Corporation
$30.66
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 17.2% above fair value
You pay
$30.66
Bear
$18.31
Fair
$26.16
Bull
$34.01
Bear
$18.31
-40.3%
ROTCE 5.1% → 0.30x TBV
Fair
$26.16
-14.7%
ROTCE 6.8% → 0.67x TBV
Bull
$34.01
+10.9%
ROTCE 7.8% → 0.92x TBV
Adjust Assumptions
6.8%
8.2%
Key Value Driver
ROTCE (6.8%) vs. cost of equity (8.2%)
Implied Market Multiple
1.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (11 analysts)
$31.50
Divergence from AlphaVal
17%
Summary
With ROTCE of 6.8% vs. 8.2% cost of equity, fair P/TBV is 0.67x on $23.51 tangible book, implying $26.16 per share. DDM cross-check: $17.91.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (6.8%) is below the minimum investors require (8.2%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $17.91 (32% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly