Critical Survey: Private Bancorp of America (OTCMKTS:PBAM) & Midland States Bancorp (NASDAQ:MSBI)

Midland States Bancorp (NASDAQ:MSBI) and Private Bancorp of America (OTCMKTS:PBAM) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, valuation and institutional ownership.

Institutional & Insider Ownership

60.9% of Midland States Bancorp shares are owned by institutional investors. Comparatively, 13.5% of Private Bancorp of America shares are owned by institutional investors. 8.6% of Midland States Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Midland States Bancorp has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500. Comparatively, Private Bancorp of America has a beta of 0.07, meaning that its stock price is 93% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for Midland States Bancorp and Private Bancorp of America, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Midland States Bancorp	0	5	0	0	2.00
Private Bancorp of America	0	1	3	0	2.75

Midland States Bancorp currently has a consensus price target of $31.12, suggesting a potential downside of 3.22%. Private Bancorp of America has a consensus price target of $93.67, suggesting a potential upside of 10.13%. Given Private Bancorp of America’s stronger consensus rating and higher possible upside, analysts clearly believe Private Bancorp of America is more favorable than Midland States Bancorp.

Profitability

This table compares Midland States Bancorp and Private Bancorp of America’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Midland States Bancorp	9.40%	13.32%	0.92%
Private Bancorp of America	25.45%	16.85%	1.72%

Earnings and Valuation

This table compares Midland States Bancorp and Private Bancorp of America”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Midland States Bancorp	$476.05 million	1.40	-$124.28 million	$1.56	20.62
Private Bancorp of America	$133.06 million	3.66	$40.67 million	$7.70	11.05

Private Bancorp of America has lower revenue, but higher earnings than Midland States Bancorp. Private Bancorp of America is trading at a lower price-to-earnings ratio than Midland States Bancorp, indicating that it is currently the more affordable of the two stocks.

Summary

Private Bancorp of America beats Midland States Bancorp on 9 of the 14 factors compared between the two stocks.

About Midland States Bancorp

Midland States Bancorp, Inc. operates as a financial holding company for Midland States Bank that provides various banking products and services to individuals, businesses, municipalities, and other entities. It operates through Banking, Wealth Management, and Other segments. The company provides a range of financial products and services to consumers and businesses, including commercial loans to finance agricultural equipment and production; and commercial real estate loans for owner occupied offices, warehouses and production facilities, office buildings, hotels, mixed-use residential and commercial facilities, retail centers, multifamily properties, and assisted living facilities. In addition, it offers construction and land development loans, such as real estate investment properties and residential developments, and lesser extent loans; and residential real estate loans, which includes first and second mortgage loans, and home equity lines of credit consisting of loans secured by first or second mortgages on primarily owner occupied primary residences. The company also provides consumer installment loans for the purchase of cars, boats and other recreational vehicles, as well as for the purchase of major appliances and other home improvement projects; and commercial equipment leasing programs for manufacturing, construction, transportation, and healthcare industries. Further, it offers merchant services; deposit products, including checking, time, savings, money market, and certificates of deposit, as well as sweep accounts; letters of credit; and trust and wealth management services, such as financial and estate planning, trustee and custodial, investment management, tax, insurance, and business planning, corporate retirement plan consulting and administration, and retail brokerage services. The company was founded in 1881 and is headquartered in Effingham, Illinois.

About Private Bancorp of America

Private Bancorp of America, Inc. operates as the bank holding company for CalPrivate Bank that provides banking products and services to individuals and businesses in California. The company offers checking and savings, money market, certificate of deposit, sweep, zero balance, and individual retirement accounts; unsecured lines of credit, personal credit lines, and term loans; additional services, such as direct deposits, online banking, ATM and debit cards, credit cards, savings/line of credit overdraft protection, and safe deposit boxes; and certificate of deposit account registry services. It also provides treasury management, merchant card, bill pay, positive pay, e-statement, remote deposit capture, ACH origination, wire transfer, electronic payments and collections, electronic check acceptance, account reconciliation, cash vault, and gift and business credit cards, as well as funds management services. In addition, the company offers term credit facilities and loans, equipment and business expansion loans, working capital lines of credit, commercial real estate financing, construction financing, letters of credit, business start-up loans, loans for business acquisition and partner buyouts, owner-occupied commercial real estate loans, equipment, furniture and fixture, and other loans; and CDARS And ICS products. Further, it provides wealth management and legal services. The company has offices in La Jolla, San Diego, Coronado, Newport Beach, Beverly Hills, El Segundo, Temecula, Mission Valley, and Redlands. Private Bancorp of America, Inc. was founded in 2006 and is headquartered in La Jolla, California.