MPB
Mid Penn Bancorp, Inc.
$32.35
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 20.4% below fair value
You pay
$32.35
Bear
$28.45
Fair
$40.65
Bull
$52.84
Bear
$28.45
-12.0%
ROTCE 6.4% → 0.80x TBV
Fair
$40.65
+25.7%
ROTCE 8.5% → 1.52x TBV
Bull
$52.84
+63.4%
ROTCE 9.8% → 1.95x TBV
Key Value Driver
ROTCE (8.5%) vs. cost of equity (7.0%)
Implied Market Multiple
1.24x
Summary
With ROTCE of 8.5% vs. 7.0% cost of equity, fair P/TBV is 1.52x on $26.15 tangible book, implying $40.65 per share. DDM cross-check: $21.48.
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: $21.48 (47% 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