PFBC
Preferred Bank
$106.72
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 59.7% below fair value
You pay
$106.72
Bear
$178.30
Fair
$265.08
Bull
$266.42
Bear
$178.30
+67.1%
ROTCE 12.7% → 2.68x TBV
Fair
$265.08
+148.4%
ROTCE 16.9% → 3.98x TBV
Bull
$266.42
+149.6%
ROTCE 19.5% → 4.00x TBV
Adjust Assumptions
16.9%
7.2%
Key Value Driver
ROTCE (16.9%) vs. cost of equity (7.2%)
Implied Market Multiple
1.6x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (10 analysts)
$115.00
Divergence from AlphaVal
131%
Summary
With ROTCE of 16.9% vs. 7.2% cost of equity, fair P/TBV is 3.98x on $66.61 tangible book, implying $265.08 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 $115.00 (from 10 analysts). Our estimate is 131% 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