NTB
The Bank of N.T. Butterfield & Son Limited
$60.12
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 44.0% below fair value
You pay
$60.12
Bear
$103.29
Fair
$107.33
Bull
$107.33
Bear
$103.29
+71.8%
ROTCE 16.5% → 3.85x TBV
Fair
$107.33
+78.5%
ROTCE 22.0% → 4.00x TBV
Bull
$107.33
+78.5%
ROTCE 25.3% → 4.00x TBV
Adjust Assumptions
22.0%
7.2%
Key Value Driver
ROTCE (22.0%) vs. cost of equity (7.2%)
Implied Market Multiple
2.24x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (7 analysts)
$65.00
Divergence from AlphaVal
65%
Summary
With ROTCE of 22.0% vs. 7.2% cost of equity, fair P/TBV is 4.00x on $26.83 tangible book, implying $107.33 per share. DDM cross-check: $44.10.
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: $44.10 (59% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $65.00 (from 7 analysts). Our estimate is 65% 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