NRIM
Northrim BanCorp, Inc.
$24.29
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 44.0% below fair value
You pay
$24.29
Bear
$32.54
Fair
$43.39
Bull
$44.12
Bear
$32.54
+34.0%
ROTCE 19.7% → 2.95x TBV
Fair
$43.39
+78.7%
ROTCE 25.0% → 3.93x TBV
Bull
$44.12
+81.6%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
26.3%
9.3%
Key Value Driver
ROTCE (26.3%) vs. cost of equity (9.3%)
Implied Market Multiple
2.2x
Summary
With ROTCE of 26.3% vs. 9.3% cost of equity, fair P/TBV is 3.93x on $11.03 tangible book, implying $43.39 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