BUSE
First Busey Corporation
$29.77
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 13.8% above fair value
You pay
$29.77
Bear
$18.31
Fair
$26.16
Bull
$34.01
Bear
$18.31
-38.5%
ROTCE 5.1% → 0.30x TBV
Fair
$26.16
-12.1%
ROTCE 6.8% → 0.64x TBV
Bull
$34.01
+14.2%
ROTCE 7.8% → 0.87x TBV
Adjust Assumptions
6.8%
8.4%
Key Value Driver
ROTCE (6.8%) vs. cost of equity (8.4%)
Implied Market Multiple
1.24x
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. 8.4% cost of equity, fair P/TBV is 0.64x on $24.08 tangible book, implying $26.16 per share. DDM cross-check: $18.05.
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 (8.4%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $18.05 (31% 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