FSBW
FS Bancorp, Inc.
$41.00
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 44.3% below fair value
You pay
$41.00
Bear
$45.21
Fair
$73.62
Bull
$90.67
Bear
$45.21
+10.3%
ROTCE 8.5% → 1.14x TBV
Fair
$73.62
+79.6%
ROTCE 11.4% → 1.86x TBV
Bull
$90.67
+121.1%
ROTCE 13.1% → 2.29x TBV
Key Value Driver
ROTCE (11.4%) vs. cost of equity (8.0%)
Implied Market Multiple
1.04x
Summary
With ROTCE of 11.4% vs. 8.0% cost of equity, fair P/TBV is 1.86x on $39.60 tangible book, implying $73.62 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