Midland States Bancorp, Inc. – Value Analysis (NASDAQ:MSBI) : November 2, 2017

Capitalcube gives Midland States Bancorp, Inc. a score of 50.

Our analysis is based on comparing Midland States Bancorp, Inc. with the following peers – National Commerce Corp. (Alabama), Nedbank Group Limited Sponsored ADR, Northeast Community Bancorp, Inc. and Nicolet Bankshares, Inc. (NCOM-US, NDBKY-US, NECB-US and NCBS-US).

Fundamental Overview

Midland States Bancorp, Inc. has a fundamental score of 50 and has a relative valuation of OVERVALUED.

Fundamental Score

Company Overview

  • It’s current Price/Book of 1.37 is about median in its peer group.
  • The market expects MSBI-US to grow faster than its peers and for the company to improve its current ROE.
  • MSBI-US has relatively low net profit margins while its capital efficiency is relatively high.
  • Compared with its chosen peers, the company’s annual revenues and earnings change at a slower rate, implying a lack of strategic focus and/or lack of execution success.
  • MSBI-US‘s return on equity currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • Compared with the peers chosen, MSBI-US has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s equity capital investment seems appropriate for a business with peer median returns.
  • MSBI-US might have enough interest coverage to take-on additional debt prudently.

Drivers of Margin

  • MSBI-US‘s pre-tax margin suggests relatively high operating costs.
  • The company’s net interest income (net interest income/total revenues) of 62.91% is around peer median suggesting that MSBI-US‘s lending operations does not benefit from any differentiating pricing advantage. In addition, MSBI-US‘s pre-tax margin is less than the peer median (20.31% compared to 32.09%) suggesting relatively high operating costs.
  • The company’s comparatively healthy proportion of fee based income (i.e. non interest income/total revenues) of 37.09% versus peer median of 31.87% — suggests that MSBI-US‘s operating margins are likely to be less volatile. On the other hand, MSBI-US‘s proportion of overhead costs (i.e. non interest expense/total revenues) is higher than peer median (76.57x compared to 61.67x) — suggesting room for improvement.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

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.