NECB
Northeast Community Bancorp, Inc.
$26.51
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 73.9% below fair value
You pay
$26.51
Bear
$64.42
Fair
$101.60
Bull
$101.69
Bear
$64.42
+143.0%
ROTCE 9.5% → 2.53x TBV
Fair
$101.60
+283.2%
ROTCE 12.6% → 4.00x TBV
Bull
$101.69
+283.6%
ROTCE 14.5% → 4.00x TBV
Key Value Driver
ROTCE (12.6%) vs. cost of equity (6.2%)
Implied Market Multiple
1.04x
Summary
With ROTCE of 12.6% vs. 6.2% cost of equity, fair P/TBV is 4.00x on $25.42 tangible book, implying $101.60 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