FFIN
First Financial Bankshares, Inc.
$31.50
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 16.4% above fair value
You pay
$31.50
Bear
$18.00
Fair
$27.05
Bull
$32.49
Bear
$18.00
-42.8%
ROTCE 11.9% → 1.61x TBV
Fair
$27.05
-14.1%
ROTCE 15.8% → 2.42x TBV
Bull
$32.49
+3.1%
ROTCE 18.2% → 2.90x TBV
Adjust Assumptions
15.8%
8.9%
Key Value Driver
ROTCE (15.8%) vs. cost of equity (8.9%)
Implied Market Multiple
2.81x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (16 analysts)
$35.33
Divergence from AlphaVal
23%
Summary
With ROTCE of 15.8% vs. 8.9% cost of equity, fair P/TBV is 2.42x on $11.19 tangible book, implying $27.05 per share. DDM cross-check: $22.64.
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