MidWestOne Financial Group, Inc. – Value Analysis (NASDAQ:MOFG) : September 15, 2017

Capitalcube gives MidWestOne Financial Group, Inc. a score of 57.

Our analysis is based on comparing MidWestOne Financial Group, Inc. with the following peers – West Bancorporation, Inc., Ames National Corporation, QCR Holdings, Inc., Hawthorn Bancshares, Inc., Great Southern Bancorp, Inc., UMB Financial Corporation, Enterprise Financial Services Corp, Associated Banc-Corp, Commerce Bancshares, Inc. and Guaranty Federal Bancshares, Inc. (WTBA-US, ATLO-US, QCRH-US, HWBK-US, GSBC-US, UMBF-US, EFSC-US, ASB-US, CBSH-US and GFED-US).

Fundamental Overview

MidWestOne Financial Group, Inc. has a fundamental score of 57 and has a relative valuation of UNDERVALUED.

Fundamental Score

Company Overview

  • It trades at a lower Price/Book multiple (1.21) than its peer median (1.59).
  • The market expects MOFG-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • MOFG-US‘s relative capital efficiency and net profit margins are both around the median level.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • MOFG-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.
  • While MOFG-US‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company is likely overinvesting in a business with only median returns.

Drivers of Margin

  • Margins do not suggest any relative benefit from a pricing or an operating cost advantage.
  • The company’s net interest income (net interest income/total revenues) of 81.77% is around peer median suggesting that MOFG-US‘s lending operations does not benefit from any differentiating pricing advantage. In addition, MOFG-US‘s pre-tax margin of 26.77% is also around the peer median suggesting no operating cost advantage relative to peers.
  • The company’s proportion of fee based income (i.e. non interest income/total revenues) of 18.23% is around peer median. In addition, MOFG-US‘s proportion of overhead costs (i.e. non interest expense/total revenues) of 66.51x is also around peer median — suggesting no cost advantage on fee-based overhead operations.
Drivers of Margins

Quadrant label definitions. Hover to know more

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

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.