MidWestOne Financial Group, Inc. :MOFG-US: Earnings Analysis: Q2, 2017 By the Numbers : September 28, 2017

MidWestOne Financial Group, Inc. reports financial results for the quarter ended June 30, 2017.


  • Summary numbers: Revenues of USD 31.57 million, Net Earnings of USD 7.23 million.
  • Net interest income margins widened from 82.03% to 82.97% compared to the same period last year.
  • Net loan assets changed 1.31% compared to same period last year and 1.50% from previous period, total deposits changed 1.22% compared to same period last year and -1.47% from previous period.
  • Change in operating cash flow of -49.42% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • 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):

2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 31.57 30.62 30.24 30.33 30.41
Revenue Growth (%YOY) 3.82 -4.63 -9.48 -4.6 10.87
Earnings (mil) 7.23 6.71 3.87 6.22 4.76
Earnings Growth (%YOY) 52.13 21.09 -53.02 -18.29 6.4
Net Margin (%) 22.92 21.92 12.8 20.51 15.64
EPS 0.59 0.58 0.34 0.54 0.42
Return on Equity (%) 2.16 2.12 1.26 2.02 1.57
Return on Assets (%) 0.94 0.87 0.51 0.83 0.64

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, MOFG-US’s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if MOFG-US’s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 3.09% and earnings by 7.76% compared to the previous period.

Earnings Growth Analysis

The company’s earnings growth was influenced by the following factors: (1) Year-on-year improvements in net interest income margins from 82.03% to 82.97% and (2) improvement in loan loss provisions. As a result, net interest income after provisions margins improved from 78.17% to 79.04% compared to the same period last year. Loan loss provisions as a percentage of net interest income were 4.73% this period and 4.70% a year ago.

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)

MOFG-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 1.31% compared to the same period last year and 1.50% from the previous period. Total deposits changed 1.22% compared to the same period last year and -1.47% 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.

MOFG-US’s year-on-year change in operating cash flow of -49.42% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating margins from 27.03% to 32.83% and (2) one-time items. The company’s pretax margins are now 32.85%, compared to 21.54% for the same period last year.

EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for MidWestOne Financial Group, Inc.

Company Profile

MidWestOne Financial Group, Inc. is a bank holding company. The company operates through the following subsidiaries: MidWestOne Bank and MidWestOne Insurance Services, Inc. MidWestOne Bank provides retail banking services, which include deposit products, including checking and other demand deposit accounts, NOW accounts, savings accounts, money market accounts, certificates of deposit, individual retirement accounts and other time deposits. MidWestOne Insurance Services, Inc. provides personal and business insurance services in Iowa. It offers commercial and industrial, agricultural, real estate mortgage and consumer loans. The company’s other products and services include debit cards, automated teller machines, on-line banking, mobile banking, and safe deposit boxes. It also has a trust and investment department through which it offers a variety of trust and investment services, including administering estates, personal trusts, conservatorships, pension and profit-sharing funds and providing property management, farm management, custodial, financial planning, investment management and retail brokerage services. MidWestOne Financial Group was founded on March 14, 2008 and is headquartered in Iowa City, IA.

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