Midland States Bancorp, Inc. :MSBI-US: Earnings Analysis: Q4, 2016 By the Numbers : February 1, 2017

Midland States Bancorp, Inc. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of Midland States Bancorp, Inc. – National Bank Holdings Corporation Class A, Northeast Bancorp and NBT Bancorp Inc. (NBHC-US, NBN-US and NBTB-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 57.15 million, Net Earnings of USD 11.58 million.
  • Net interest income margins narrowed from 62.79% to 45.43% compared to the same period last year.
  • Net loan assets changed 16.44% compared to same period last year and 0.34% from previous period, total deposits changed 1.55% compared to same period last year and -0.65% from previous period.
  • Earnings growth from operating margin improvements as well as from 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):

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 57.15 47.4 42.01 36.66 42.13
Revenue Growth (%YOY) 35.66 18.2 -1.87 -11.64 91.64
Earnings (mil) 11.58 8.01 6.75 5.12 7.7
Earnings Growth (%YOY) 50.53 132.6 1.5 -11.59 3117.65
Net Margin (%) 20.27 16.9 16.07 13.96 18.27
EPS 0.72 0.51 0.5 0.33 0.65
Return on Equity (%) 14.4 10.05 9.74 8.69 13.25
Return on Assets (%) 1.43 1.02 0.91 0.71 1.08

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 35.66% 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 20.55% and earnings by 44.55% 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

MSBI-US‘s earnings rose year-on-year. But this growth has not come as a result of improvement in net interest income margins or any loan loss improvement activities in its operations. Net interest income margins were 45.43% compared to 57.52% in the immediate last period. Net interest income after provisions margins were 41.15% this period compared to 54.58% in the previous period. In addition, loan loss provisions as a percentage of net interest income were 9.42% this period and 3.98% 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)

The firm’s decline in net interest income margins was influenced by both the relative drops in the levels of net loan assets and the level of total deposits as a percentage of equity. On an absolute basis, net loan assets changed 16.44% compared to the same period last year and 0.34% from the previous period. Total deposits changed 1.55% compared to the same period last year and -0.65% from the previous period.

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating margins from 25.09% to 36.06% and (2) one-time items. The company’s pretax margins are now 34.84%, compared to 24.94% for the same period last year.

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 (FHA) 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 FHA 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 the parent company and wealth management business unit. The company was founded on October 25, 1990 and is headquartered in Effingham, IL.

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