CARE
Carter Bankshares, Inc.
$27.44
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 29.8% above fair value
You pay
$27.44
Bear
$9.83
Fair
$21.13
Bull
$27.92
Bear
$9.83
-64.2%
ROTCE 5.6% → 0.52x TBV
Fair
$21.13
-23.0%
ROTCE 7.5% → 1.12x TBV
Bull
$27.92
+1.7%
ROTCE 8.6% → 1.49x TBV
Key Value Driver
ROTCE (7.5%) vs. cost of equity (7.1%)
Implied Market Multiple
1.46x
Summary
With ROTCE of 7.5% vs. 7.1% cost of equity, fair P/TBV is 1.12x on $18.79 tangible book, implying $21.13 per share. DDM cross-check: $8.63.
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.
Dividend-based valuation: $8.63 (59% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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