TSBK
Timberland Bancorp, Inc.
$40.16
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 67.4% below fair value
You pay
$40.16
Bear
$76.74
Fair
$123.31
Bull
$125.91
Bear
$76.74
+91.1%
ROTCE 8.9% → 2.44x TBV
Fair
$123.31
+207.0%
ROTCE 11.8% → 3.92x TBV
Bull
$125.91
+213.5%
ROTCE 13.6% → 4.00x TBV
Key Value Driver
ROTCE (11.8%) vs. cost of equity (6.0%)
Implied Market Multiple
1.28x
Summary
With ROTCE of 11.8% vs. 6.0% cost of equity, fair P/TBV is 3.92x on $31.48 tangible book, implying $123.31 per share. DDM cross-check: $40.26.
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: $40.26 (67% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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