FNLC
The First Bancorp, Inc.
$34.04
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 53.6% below fair value
You pay
$34.04
Bear
$47.35
Fair
$73.28
Bull
$88.85
Bear
$47.35
+39.1%
ROTCE 10.2% → 2.11x TBV
Fair
$73.28
+115.3%
ROTCE 13.6% → 3.27x TBV
Bull
$88.85
+161.0%
ROTCE 15.7% → 3.97x TBV
Key Value Driver
ROTCE (13.6%) vs. cost of equity (6.9%)
Implied Market Multiple
1.52x
Summary
With ROTCE of 13.6% vs. 6.9% cost of equity, fair P/TBV is 3.27x on $22.39 tangible book, implying $73.28 per share. DDM cross-check: $36.68.
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: $36.68 (50% 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