MSBI
Midland States Bancorp, Inc.
$32.22
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 15.2% above fair value
You pay
$32.22
Bear
$19.57
Fair
$27.96
Bull
$36.35
Bear
$19.57
-39.3%
ROTCE 4.0% → 0.30x TBV
Fair
$27.96
-13.2%
ROTCE -23.2% → 0.30x TBV
Bull
$36.35
+12.8%
ROTCE -26.6% → 0.30x TBV
Adjust Assumptions
-23.2%
7.8%
Key Value Driver
ROTCE (-23.2%) vs. cost of equity (7.8%)
Implied Market Multiple
1.25x
Summary
With ROTCE of -23.2% vs. 7.8% cost of equity, fair P/TBV is 0.30x on $25.87 tangible book, implying $27.96 per share. DDM cross-check: $23.97.
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.
Return on equity (-23.2%) is below the minimum investors require (7.8%). This means the bank is worth less than the net assets on its books.
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