FDBC
Fidelity D & D Bancorp, Inc.
$56.78
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 19.8% below fair value
You pay
$56.78
Bear
$45.12
Fair
$70.76
Bull
$86.15
Bear
$45.12
-20.5%
ROTCE 9.7% → 1.20x TBV
Fair
$70.76
+24.6%
ROTCE 12.9% → 1.88x TBV
Bull
$86.15
+51.7%
ROTCE 14.8% → 2.29x TBV
Adjust Assumptions
12.9%
8.7%
Key Value Driver
ROTCE (12.9%) vs. cost of equity (8.7%)
Implied Market Multiple
1.51x
Summary
With ROTCE of 12.9% vs. 8.7% cost of equity, fair P/TBV is 1.88x on $37.64 tangible book, implying $70.76 per share. DDM cross-check: $55.01.
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