HIFS
Hingham Institution for Savings
$291.32
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 9.4% below fair value
You pay
$291.32
Bear
$197.45
Fair
$321.40
Bull
$395.77
Bear
$197.45
-32.2%
ROTCE 8.5% → 0.90x TBV
Fair
$321.40
+10.3%
ROTCE 11.4% → 1.46x TBV
Bull
$395.77
+35.9%
ROTCE 13.1% → 1.80x TBV
Adjust Assumptions
11.4%
9.0%
Key Value Driver
ROTCE (11.4%) vs. cost of equity (9.0%)
Implied Market Multiple
1.32x
Summary
With ROTCE of 11.4% vs. 9.0% cost of equity, fair P/TBV is 1.46x on $220.02 tangible book, implying $321.40 per share. DDM cross-check: $43.27.
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: $43.27 (87% 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