FSBC
Five Star Bancorp
$47.51
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 27.6% below fair value
You pay
$47.51
Bear
$42.52
Fair
$65.60
Bull
$79.45
Bear
$42.52
-10.5%
ROTCE 10.4% → 2.04x TBV
Fair
$65.60
+38.1%
ROTCE 13.8% → 3.15x TBV
Bull
$79.45
+67.2%
ROTCE 15.9% → 3.81x TBV
Key Value Driver
ROTCE (13.8%) vs. cost of equity (7.1%)
Implied Market Multiple
2.28x
Summary
With ROTCE of 13.8% vs. 7.1% cost of equity, fair P/TBV is 3.15x on $20.86 tangible book, implying $65.60 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