Midland States Bancorp, Inc. :MSBI-US: Earnings Analysis: Q3, 2017 By the Numbers : December 19, 2017

Midland States Bancorp, Inc. reports financial results for the quarter ended September 30, 2017.

We analyze the earnings along side the following peers of Midland States Bancorp, Inc. – National Australia Bank Limited, National Bank of Greece S.A. Sponsored ADR and National Bank of Canada (NAUBF-US, NBGGY-US and NA-CA) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 49.65 million, Net Earnings of USD 2.02 million.
  • Net interest income margins widened from 57.52% to 74.05% compared to the same period last year.
  • Net loan assets changed 36.74% compared to same period last year and -0.87% from previous period, total deposits changed 28.70% compared to same period last year and -6.56% from previous period.
  • Year-on-year change in operating cash flow of -85.29% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline from worsening in operating margins as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 49.65 42.62 42.29 56.62 47.4
Revenue Growth (%YOY) 4.74 1.45 15.36 34.41 18.2
Earnings (mil) 2.02 3.52 8.44 11.52 8.01
Earnings Growth (%YOY) -74.83 -47.89 64.84 49.72 132.6
Net Margin (%) 4.06 8.26 19.95 20.35 16.9
EPS 0.1 0.2 0.52 0.72 0.51
Return on Equity (%) 0.44 0.89 2.57 3.58 2.51
Return on Assets (%) 0.18 0.36 1.02 1.42 1.02

Access our Ratings and Scores for Midland States Bancorp, Inc.

Market Share Versus Profits

Revenues History
Earnings History

MSBI-US’s change in revenue this period compared to the same period last year of 4.74% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that MSBI-US is holding onto its market share. Also, for comparison purposes, revenues changed by 16.49% and earnings by -42.68% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline has not come as a result of decline in net interest income margins or because of any loan loss provisions. Both net interest income margins and net interest income after provisions margins have actually improved. In fact, net interest income margins went from 57.52% to 74.05% and net interest income after provisions margins improved from 54.58% to 71.05% over this period. In addition, loan loss provisions as a percentage of net interest income were 4.05% this period , and 5.11% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (Qtr YOY)
Total Deposits Growth Rate History (Qtr YOY)

MSBI-US’s improvement in net interest income margins came in spite of relative drops in the levels of net loan assets and total deposits. On an absolute basis, net loan assets changed 36.74% compared to the same period last year and -0.87% from the previous period. Total deposits changed 28.70% compared to the same period last year and -6.56% from the previous period.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

MSBI-US’s change in operating cash flow of -85.29% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Contraction of operating margins from 25.63% to 4.66% and (2) One-time items that contributed to a decrease in pretax margins from 25.63% to 4.66%

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for Midland States Bancorp, Inc.

Company Profile

Midland States Bancorp, Inc. is a banking holding company. It operates through the following business segments: Banking, Commercial Federal Housing Administration Origination and Servicing, and Other. The Banking segment provides financial products and services such as loans, mortgage loan sales and servicing, letters of credit, deposit products, merchant services, and corporate treasury management services. The Commercial Federal Housing Administration Origination and Servicing segment refers to origination and servicing of government sponsored mortgages for multifamily and healthcare facilities. The Other segment includes operating results of the parent company and wealth management business unit. The company was founded in 1988 and is headquartered in Effingham, IL.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of MSBI-US.

Disclaimer

The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party’s use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any of our reports, you’re agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website www.analytixinsight.com.