FSBC
Five Star Bancorp
$41.96
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 34.6% below fair value
You pay
$41.96
Bear
$41.57
Fair
$64.13
Bull
$77.67
Bear
$41.57
-0.9%
ROTCE 10.4% → 1.99x TBV
Fair
$64.13
+52.8%
ROTCE 13.8% → 3.07x TBV
Bull
$77.67
+85.1%
ROTCE 15.9% → 3.72x TBV
Key Value Driver
ROTCE (13.8%) vs. cost of equity (7.2%)
Implied Market Multiple
2.01x
Summary
With ROTCE of 13.8% vs. 7.2% cost of equity, fair P/TBV is 3.07x on $20.86 tangible book, implying $64.13 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