HIFS
Hingham Institution for Savings
$290.74
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 13.0% below fair value
You pay
$290.74
Bear
$205.28
Fair
$334.15
Bull
$411.47
Bear
$205.28
-29.4%
ROTCE 8.5% → 0.93x TBV
Fair
$334.15
+14.9%
ROTCE 11.4% → 1.52x TBV
Bull
$411.47
+41.5%
ROTCE 13.1% → 1.87x TBV
Key Value Driver
ROTCE (11.4%) vs. cost of equity (8.9%)
Implied Market Multiple
1.32x
Summary
With ROTCE of 11.4% vs. 8.9% cost of equity, fair P/TBV is 1.52x on $220.02 tangible book, implying $334.15 per share. DDM cross-check: $48.26.
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: $48.26 (86% 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