SPFI
South Plains Financial, Inc.
$42.72
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 39.0% below fair value
You pay
$42.72
Bear
$44.72
Fair
$69.98
Bull
$85.14
Bear
$44.72
+4.7%
ROTCE 9.8% → 1.91x TBV
Fair
$69.98
+63.8%
ROTCE 13.0% → 2.98x TBV
Bull
$85.14
+99.3%
ROTCE 15.0% → 3.63x TBV
Adjust Assumptions
13.0%
7.0%
Key Value Driver
ROTCE (13.0%) vs. cost of equity (7.0%)
Implied Market Multiple
1.82x
Summary
With ROTCE of 13.0% vs. 7.0% cost of equity, fair P/TBV is 2.98x on $23.47 tangible book, implying $69.98 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