NTB
The Bank of N.T. Butterfield & Son Limited
$56.01
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 41.6% below fair value
Bear
$95.93
+71.3%
ROTCE 16.5% → 4.00x TBV
Fair
$95.93
+71.3%
ROTCE 22.0% → 4.00x TBV
Bull
$95.93
+71.3%
ROTCE 25.3% → 4.00x TBV
Key Value Driver
ROTCE (22.0%) vs. cost of equity (7.0%)
Implied Market Multiple
2.12x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $57.00 from 7 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $95.93 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.
Dividend-based valuation: $46.11 (56% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $57.00 (from 7 analysts). Our estimate is 85% above the consensus -- consider that gap carefully.
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