FNLC
The First Bancorp, Inc.
$28.58
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 59.3% below fair value
You pay
$28.58
Bear
$45.39
Fair
$70.26
Bull
$85.18
Bear
$45.39
+58.8%
ROTCE 10.2% → 2.03x TBV
Fair
$70.26
+145.8%
ROTCE 13.6% → 3.14x TBV
Bull
$85.18
+198.0%
ROTCE 15.7% → 3.80x TBV
Key Value Driver
ROTCE (13.6%) vs. cost of equity (7.1%)
Implied Market Multiple
1.28x
Summary
With ROTCE of 13.6% vs. 7.1% cost of equity, fair P/TBV is 3.14x on $22.39 tangible book, implying $70.26 per share. DDM cross-check: $36.98.
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: $36.98 (47% 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