PFBC
Preferred Bank
$106.87
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 53.8% below fair value
You pay
$106.87
Bear
$155.54
Fair
$231.23
Bull
$233.98
Bear
$155.54
+45.5%
ROTCE 12.7% → 2.66x TBV
Fair
$231.23
+116.4%
ROTCE 16.9% → 3.95x TBV
Bull
$233.98
+118.9%
ROTCE 19.5% → 4.00x TBV
Key Value Driver
ROTCE (16.9%) vs. cost of equity (7.3%)
Implied Market Multiple
1.6x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $102.00 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $231.23 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 $102.00 (from 10 analysts). Our estimate is 158% 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