TOWN
TowneBank
$34.92
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 5.3% above fair value
You pay
$34.92
Bear
$23.20
Fair
$33.15
Bull
$43.09
Bear
$23.20
-33.5%
ROTCE 7.3% → 0.78x TBV
Fair
$33.15
-5.1%
ROTCE 9.8% → 1.35x TBV
Bull
$43.09
+23.4%
ROTCE 11.3% → 1.69x TBV
Adjust Assumptions
9.8%
8.3%
Key Value Driver
ROTCE (9.8%) vs. cost of equity (8.3%)
Implied Market Multiple
1.86x
Summary
With ROTCE of 9.8% vs. 8.3% cost of equity, fair P/TBV is 1.35x on $18.78 tangible book, implying $33.15 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