SPFI
South Plains Financial, Inc.
$40.52
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 50.7% below fair value
You pay
$40.52
Bear
$51.83
Fair
$82.24
Bull
$100.49
Bear
$51.83
+27.9%
ROTCE 9.3% → 1.78x TBV
Fair
$82.24
+103.0%
ROTCE 12.4% → 2.82x TBV
Bull
$100.49
+148.0%
ROTCE 14.2% → 3.45x TBV
Key Value Driver
ROTCE (12.4%) vs. cost of equity (7.0%)
Implied Market Multiple
1.39x
Summary
With ROTCE of 12.4% vs. 7.0% cost of equity, fair P/TBV is 2.82x on $29.11 tangible book, implying $82.24 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