FRBA
First Bank
$15.49
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 54.9% below fair value
You pay
$15.49
Bear
$20.96
Fair
$34.38
Bull
$42.43
Bear
$20.96
+35.3%
ROTCE 8.3% → 1.34x TBV
Fair
$34.38
+121.9%
ROTCE 11.1% → 2.20x TBV
Bull
$42.43
+173.9%
ROTCE 12.8% → 2.72x TBV
Key Value Driver
ROTCE (11.1%) vs. cost of equity (7.2%)
Implied Market Multiple
0.99x
Summary
With ROTCE of 11.1% vs. 7.2% cost of equity, fair P/TBV is 2.20x on $15.60 tangible book, implying $34.38 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