PFBC
Preferred Bank
$103.85
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 55.4% below fair value
You pay
$103.85
Bear
$156.68
Fair
$232.93
Bull
$235.70
Bear
$156.68
+50.9%
ROTCE 12.7% → 2.66x TBV
Fair
$232.93
+124.3%
ROTCE 16.9% → 3.95x TBV
Bull
$235.70
+127.0%
ROTCE 19.5% → 4.00x TBV
Key Value Driver
ROTCE (16.9%) vs. cost of equity (7.3%)
Implied Market Multiple
1.56x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $110.50 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $232.93 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.
Wall Street's average price target is $110.50 (from 10 analysts). Our estimate is 138% above the consensus -- consider that gap carefully.
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