HLAN
Heartland BancCorp
$160.00
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 38.5% below fair value
You pay
$160.00
Bear
$167.36
Fair
$260.27
Bull
$288.21
Bear
$167.36
+4.6%
ROTCE 10.0% → 2.32x TBV
Fair
$260.27
+62.7%
ROTCE 13.3% → 3.61x TBV
Bull
$288.21
+80.1%
ROTCE 15.4% → 4.00x TBV
Adjust Assumptions
13.3%
6.6%
Key Value Driver
ROTCE (13.3%) vs. cost of equity (6.6%)
Implied Market Multiple
2.22x
Summary
With ROTCE of 13.3% vs. 6.6% cost of equity, fair P/TBV is 3.61x on $72.05 tangible book, implying $260.27 per share. DDM cross-check: $463.58.
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: $463.58 (78% above 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