HTBK
Heritage Commerce Corp
$13.45
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 27.4% above fair value
You pay
$13.45
Bear
$5.77
Fair
$10.56
Bull
$13.43
Bear
$5.77
-57.1%
ROTCE 6.7% → 0.66x TBV
Fair
$10.56
-21.5%
ROTCE 8.9% → 1.21x TBV
Bull
$13.43
-0.2%
ROTCE 10.3% → 1.54x TBV
Adjust Assumptions
8.9%
8.1%
Key Value Driver
ROTCE (8.9%) vs. cost of equity (8.1%)
Implied Market Multiple
1.54x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (12 analysts)
$11.88
Divergence from AlphaVal
11%
Summary
With ROTCE of 8.9% vs. 8.1% cost of equity, fair P/TBV is 1.21x on $8.71 tangible book, implying $10.56 per share.
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.
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