NBN
Northeast Bank
$123.50
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 44.4% below fair value
You pay
$123.50
Bear
$149.39
Fair
$222.14
Bull
$247.48
Bear
$149.39
+21.0%
ROTCE 12.7% → 2.41x TBV
Fair
$222.14
+79.9%
ROTCE 16.9% → 3.59x TBV
Bull
$247.48
+100.4%
ROTCE 19.4% → 4.00x TBV
Key Value Driver
ROTCE (16.9%) vs. cost of equity (7.6%)
Implied Market Multiple
2.0x
Summary
With ROTCE of 16.9% vs. 7.6% cost of equity, fair P/TBV is 3.59x on $61.87 tangible book, implying $222.14 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