BUSE
First Busey Corporation
$27.08
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 1.3% above fair value
You pay
$27.08
Bear
$18.71
Fair
$26.73
Bull
$34.75
Bear
$18.71
-30.9%
ROTCE 5.1% → 0.30x TBV
Fair
$26.73
-1.3%
ROTCE 6.8% → 0.67x TBV
Bull
$34.75
+28.3%
ROTCE 7.8% → 0.92x TBV
Key Value Driver
ROTCE (6.8%) vs. cost of equity (8.2%)
Implied Market Multiple
1.15x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $29.00 from 11 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $26.73 per share.
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: $17.09 (35% 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