FSBW
FS Bancorp, Inc.
$44.62
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 35.4% below fair value
You pay
$44.62
Bear
$42.40
Fair
$69.05
Bull
$85.03
Bear
$42.40
-5.0%
ROTCE 8.5% → 1.14x TBV
Fair
$69.05
+54.7%
ROTCE 11.4% → 1.85x TBV
Bull
$85.03
+90.6%
ROTCE 13.1% → 2.28x TBV
Adjust Assumptions
11.4%
8.0%
Key Value Driver
ROTCE (11.4%) vs. cost of equity (8.0%)
Implied Market Multiple
1.19x
Summary
With ROTCE of 11.4% vs. 8.0% cost of equity, fair P/TBV is 1.85x on $37.34 tangible book, implying $69.05 per share. DDM cross-check: $69.91.
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