MPB
Mid Penn Bancorp, Inc.
$35.25
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 14.3% below fair value
You pay
$35.25
Bear
$21.69
Fair
$41.14
Bull
$52.81
Bear
$21.69
-38.5%
ROTCE 6.4% → 0.83x TBV
Fair
$41.14
+16.7%
ROTCE 8.5% → 1.57x TBV
Bull
$52.81
+49.8%
ROTCE 9.8% → 2.02x TBV
Key Value Driver
ROTCE (8.5%) vs. cost of equity (6.9%)
Implied Market Multiple
1.35x
Summary
With ROTCE of 8.5% vs. 6.9% cost of equity, fair P/TBV is 1.57x on $26.15 tangible book, implying $41.14 per share. DDM cross-check: $22.01.
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.
Dividend-based valuation: $22.01 (46% 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