MPB
Mid Penn Bancorp, Inc.
$37.07
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 11.8% below fair value
You pay
$37.07
Bear
$22.16
Fair
$42.03
Bull
$53.96
Bear
$22.16
-40.2%
ROTCE 6.4% → 0.85x TBV
Fair
$42.03
+13.4%
ROTCE 8.5% → 1.61x TBV
Bull
$53.96
+45.6%
ROTCE 9.8% → 2.06x TBV
Adjust Assumptions
8.5%
6.8%
Key Value Driver
ROTCE (8.5%) vs. cost of equity (6.8%)
Implied Market Multiple
1.42x
Summary
With ROTCE of 8.5% vs. 6.8% cost of equity, fair P/TBV is 1.61x on $26.15 tangible book, implying $42.03 per share. DDM cross-check: $27.63.
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: $27.63 (34% 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