FCBC
First Community Bankshares, Inc.
$44.00
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 30.3% below fair value
You pay
$44.00
Bear
$41.14
Fair
$63.17
Bull
$73.25
Bear
$41.14
-6.5%
ROTCE 10.6% → 2.25x TBV
Fair
$63.17
+43.6%
ROTCE 14.1% → 3.45x TBV
Bull
$73.25
+66.5%
ROTCE 16.2% → 4.00x TBV
Key Value Driver
ROTCE (14.1%) vs. cost of equity (6.9%)
Implied Market Multiple
2.4x
Summary
With ROTCE of 14.1% vs. 6.9% cost of equity, fair P/TBV is 3.45x on $18.31 tangible book, implying $63.17 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.
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