FNLC
The First Bancorp, Inc.
$33.78
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 53.8% below fair value
You pay
$33.78
Bear
$47.23
Fair
$73.10
Bull
$88.63
Bear
$47.23
+39.8%
ROTCE 10.2% → 2.11x TBV
Fair
$73.10
+116.4%
ROTCE 13.6% → 3.27x TBV
Bull
$88.63
+162.4%
ROTCE 15.7% → 3.96x TBV
Adjust Assumptions
13.6%
6.9%
Key Value Driver
ROTCE (13.6%) vs. cost of equity (6.9%)
Implied Market Multiple
1.51x
Summary
With ROTCE of 13.6% vs. 6.9% cost of equity, fair P/TBV is 3.27x on $22.38 tangible book, implying $73.10 per share. DDM cross-check: $35.33.
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: $35.33 (52% 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