NBN
Northeast Bank
$124.79
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 53.4% below fair value
You pay
$124.79
Bear
$181.42
Fair
$267.74
Bull
$282.08
Bear
$181.42
+45.4%
ROTCE 13.4% → 2.57x TBV
Fair
$267.74
+114.6%
ROTCE 17.8% → 3.80x TBV
Bull
$282.08
+126.0%
ROTCE 20.5% → 4.00x TBV
Adjust Assumptions
17.8%
7.6%
Key Value Driver
ROTCE (17.8%) vs. cost of equity (7.6%)
Implied Market Multiple
1.77x
Summary
With ROTCE of 17.8% vs. 7.6% cost of equity, fair P/TBV is 3.80x on $70.52 tangible book, implying $267.74 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