Live Oak Bancshares (LOB) versus MidWestOne Financial Group (MOFG) Financial Survey

Live Oak Bancshares (NASDAQ: LOB) and MidWestOne Financial Group (NASDAQ:MOFG) are both small-cap financials companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, profitability, earnings, dividends, analyst recommendations and valuation.

Insider & Institutional Ownership

40.9% of Live Oak Bancshares shares are owned by institutional investors. Comparatively, 46.5% of MidWestOne Financial Group shares are owned by institutional investors. 30.1% of Live Oak Bancshares shares are owned by company insiders. Comparatively, 25.3% of MidWestOne Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. MidWestOne Financial Group pays an annual dividend of $0.68 per share and has a dividend yield of 2.0%. Live Oak Bancshares pays out 12.9% of its earnings in the form of a dividend. MidWestOne Financial Group pays out 33.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Ratings

This is a breakdown of current ratings for Live Oak Bancshares and MidWestOne Financial Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Live Oak Bancshares 0 1 2 0 2.67
MidWestOne Financial Group 0 1 1 0 2.50

Live Oak Bancshares currently has a consensus price target of $25.67, suggesting a potential upside of 6.06%. MidWestOne Financial Group has a consensus price target of $38.50, suggesting a potential upside of 11.79%. Given MidWestOne Financial Group’s higher possible upside, analysts clearly believe MidWestOne Financial Group is more favorable than Live Oak Bancshares.

Profitability

This table compares Live Oak Bancshares and MidWestOne Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Live Oak Bancshares 17.68% 13.60% 1.72%
MidWestOne Financial Group 17.35% 7.38% 0.79%

Earnings & Valuation

This table compares Live Oak Bancshares and MidWestOne Financial Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Live Oak Bancshares $150.81 million 6.40 $13.77 million $0.93 26.02
MidWestOne Financial Group $135.76 million 3.10 $20.39 million $2.03 16.97

MidWestOne Financial Group has lower revenue, but higher earnings than Live Oak Bancshares. MidWestOne Financial Group is trading at a lower price-to-earnings ratio than Live Oak Bancshares, indicating that it is currently the more affordable of the two stocks.

Summary

Live Oak Bancshares beats MidWestOne Financial Group on 10 of the 15 factors compared between the two stocks.

About Live Oak Bancshares

Live Oak Bancshares, Inc. is a bank holding company. The Company conducts business operations primarily through its commercial bank subsidiary, Live Oak Banking Company (the Bank). The Bank specializes in providing lending services to small businesses nationwide in targeted industries. The loans originated by the Bank are guaranteed by the small business administration (SBA). The Company’s loan portfolio includes commercial and industrial loans; construction and development loans; commercial real estate, and commercial land. The Company’s investment securities include the United States Government agencies, residential mortgage-backed securities and mutual fund. The Company’s deposits include non-interest-bearing deposits and interest-bearing deposits, such as interest-bearing checking, money market and time deposits.

About MidWestOne Financial Group

MidWestOne Financial Group, Inc. is a bank holding and financial holding company. The Company operates through its bank subsidiaries, MidWestOne Bank, Central Bank and MidWestOne Insurance Services, Inc. that operates through three agencies located in central and east-central Iowa. As of December 31, 2016, the Bank operated a total of 43 banking offices in Iowa, Minnesota, Wisconsin, and Florida. It provides full service retail banking in the communities in which its branch offices are located and also offers trust and investment management services. The Bank offers deposit products, including checking and other demand deposit accounts, negotiable order of withdrawal (NOW) accounts, savings accounts, money market accounts, certificates of deposit, individual retirement accounts and other time deposits. The Bank offers commercial and industrial, agricultural, real estate mortgage and consumer loans.

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