RRBI
Red River Bancshares, Inc.
$101.85
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 37.7% below fair value
You pay
$101.85
Bear
$101.57
Fair
$163.51
Bull
$200.68
Bear
$101.57
-0.3%
ROTCE 8.8% → 1.84x TBV
Fair
$163.51
+60.5%
ROTCE 11.8% → 2.96x TBV
Bull
$200.68
+97.0%
ROTCE 13.5% → 3.63x TBV
Adjust Assumptions
11.8%
6.6%
Key Value Driver
ROTCE (11.8%) vs. cost of equity (6.6%)
Implied Market Multiple
1.84x
Summary
With ROTCE of 11.8% vs. 6.6% cost of equity, fair P/TBV is 2.96x on $55.22 tangible book, implying $163.51 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