PFBC
Preferred Bank
$102.46
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 61.3% below fair value
You pay
$102.46
Bear
$178.17
Fair
$264.88
Bull
$266.67
Bear
$178.17
+73.9%
ROTCE 12.7% → 2.67x TBV
Fair
$264.88
+158.5%
ROTCE 16.9% → 3.97x TBV
Bull
$266.67
+160.3%
ROTCE 19.5% → 4.00x TBV
Adjust Assumptions
16.9%
7.3%
Key Value Driver
ROTCE (16.9%) vs. cost of equity (7.3%)
Implied Market Multiple
1.54x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (10 analysts)
$110.00
Divergence from AlphaVal
141%
Summary
With ROTCE of 16.9% vs. 7.3% cost of equity, fair P/TBV is 3.97x on $66.67 tangible book, implying $264.88 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 $110.00 (from 10 analysts). Our estimate is 141% 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