NTB
The Bank of N.T. Butterfield & Son Limited
$60.24
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 43.5% below fair value
Bear
$106.56
+76.9%
ROTCE 16.5% → 4.00x TBV
Fair
$106.56
+76.9%
ROTCE 22.0% → 4.00x TBV
Bull
$106.56
+76.9%
ROTCE 25.3% → 4.00x TBV
Adjust Assumptions
22.0%
7.0%
Key Value Driver
ROTCE (22.0%) vs. cost of equity (7.0%)
Implied Market Multiple
2.26x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (7 analysts)
$61.00
Divergence from AlphaVal
75%
Summary
With ROTCE of 22.0% vs. 7.0% cost of equity, fair P/TBV is 4.00x on $26.64 tangible book, implying $106.56 per share. DDM cross-check: $46.40.
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: $46.40 (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 $61.00 (from 7 analysts). Our estimate is 75% 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