MPB
Mid Penn Bancorp, Inc.
$34.41
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 15.4% below fair value
You pay
$34.41
Bear
$28.45
Fair
$40.65
Bull
$52.84
Bear
$28.45
-17.3%
ROTCE 6.4% → 0.80x TBV
Fair
$40.65
+18.2%
ROTCE 8.5% → 1.52x TBV
Bull
$52.84
+53.6%
ROTCE 9.8% → 1.95x TBV
Adjust Assumptions
8.5%
7.0%
Key Value Driver
ROTCE (8.5%) vs. cost of equity (7.0%)
Implied Market Multiple
1.32x
Summary
With ROTCE of 8.5% vs. 7.0% cost of equity, fair P/TBV is 1.52x on $26.16 tangible book, implying $40.65 per share. DDM cross-check: $28.46.
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: $28.46 (30% 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