FSBW
FS Bancorp, Inc.
$43.85
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 42.1% below fair value
You pay
$43.85
Bear
$46.50
Fair
$75.73
Bull
$93.26
Bear
$46.50
+6.1%
ROTCE 8.5% → 1.17x TBV
Fair
$75.73
+72.7%
ROTCE 11.4% → 1.91x TBV
Bull
$93.26
+112.7%
ROTCE 13.1% → 2.36x TBV
Key Value Driver
ROTCE (11.4%) vs. cost of equity (7.8%)
Implied Market Multiple
1.11x
Summary
With ROTCE of 11.4% vs. 7.8% cost of equity, fair P/TBV is 1.91x on $39.60 tangible book, implying $75.73 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