SPFI
South Plains Financial, Inc.
$43.66
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 41.1% below fair value
You pay
$43.66
Bear
$47.39
Fair
$74.17
Bull
$90.23
Bear
$47.39
+8.6%
ROTCE 9.8% → 2.02x TBV
Fair
$74.17
+69.9%
ROTCE 13.0% → 3.16x TBV
Bull
$90.23
+106.7%
ROTCE 15.0% → 3.84x TBV
Adjust Assumptions
13.0%
6.9%
Key Value Driver
ROTCE (13.0%) vs. cost of equity (6.9%)
Implied Market Multiple
1.86x
Summary
With ROTCE of 13.0% vs. 6.9% cost of equity, fair P/TBV is 3.16x on $23.47 tangible book, implying $74.17 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