MSB Financial Corp. :MSBF-US: Earnings Analysis: 2016 By the Numbers : February 2, 2017

MSB Financial Corp. reports financial results for the year ended December 31, 2016.

We analyze the earnings along side the following peers of MSB Financial Corp. – OceanFirst Financial Corp., Magyar Bancorp, Inc., Kearny Financial Corp., Oritani Financial Corp. and Provident Financial Services, Inc. (OCFC-US, MGYR-US, KRNY-US, ORIT-US and PFS-US) that have also reported for this period.


  • Net interest income margins narrowed from 93.37% to 91.99% compared to the same period last year.
  • Net loan assets changed 40.29% compared to same period last year and 40.29% from previous period, total deposits changed 37.97% compared to same period last year and 37.97% 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 2015 2014 2013 2012
Relevant Numbers (Annual)
Revenues 13 10.76 10.24 9.96 11.14
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 1.16 0.44 0.44 -1.39 0.5
Earnings Growth (YOY) 162.08 1.61 131.48 -378.67 -29.6
Net Margin 8.93 4.12 4.26 -13.91 4.46
EPS 0.2 0.08 0.07 -0.25 0.09
Return on Equity 1.55 0.75 1.08 -3.45 1.22
Return on Assets 0.28 0.12 0.13 -0.4 0.14

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Earnings Growth Analysis

MSBF-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 91.99% compared to 93.37% in the immediate last period. Net interest income after provisions margins were 85.84% this period compared to 92.32% in the previous period. In addition, loan loss provisions as a percentage of net interest income were 6.69% this period and 1.12% 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 (HY YOY)
Total Deposits Growth Rate History (HY YOY)

The firm’s decline in net interest income margins came despite the relative increase in the levels of net loan assets. In addition, total deposits as a percentage of equity went from 3.44% to 4.95%. On an absolute basis, net loan assets changed 40.29% compared to the same period last year and 40.29% from the previous period. Total deposits changed 37.97% compared to the same period last year and 37.97% from the previous period.


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating margins from 5.82% to 13.95% and (2) one-time items. The company’s pretax margins are now 13.95%, compared to 5.82% 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

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Company Profile

MSB Financial Corp. is a bank holding company, which engages in the ownership and operation of the Bank that offers a range of traditional deposits and lending services. Its loan portfolio comprised of the following segments: Residential Mortgage, Commercial Real Estate, Construction, Consumer, and Commercial and Industrial. The Residential Mortgage loan segment is disaggregated into two classes: one-to four-family loans, which are primarily first liens, and home equity loans, which consist of first and second liens. The Commercial Real Estate loan segment consists of both owner and non-owner occupied loans and is further disaggregated into owner-occupied loans and investor properties, which have medium risk due to historical activity on these type loans. The Construction loan segment is further disaggregated into two classes: one-to four-family owner occupied, which includes land loans, whereby the owner is known and there is less risk, and other, whereby the property is generally under development and tends to have more risk than the one-to four-family owner occupied loans. The Commercial and Industrial loan segment covers of loans made for the purpose of financing the activities of commercial customers. The Consumer loan segment includes primarily of installment loans and overdraft lines of credit connected with customer deposit accounts. The company was founded in 2004 and is headquartered in Millington, NJ.

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