Midland States Bancorp, Inc. Announces 2020 Third Quarter Results
Summary
Net income of $86 thousand, or $0.00 diluted earnings per share
Adjusted earnings of $12.0 million, or $0.52 diluted earnings per share, primarily reflects the exclusion of $13.9 million of charges related to branch and facilities optimization plan
Total loans increased $102.0 million, or 2.1%, from June 30, 2020
Total deposits increased $85.6 million, or 1.7%, from June 30, 2020
Allowance for credit losses increased to 1.07% of total loans
COVID-19 related loan deferral requests declined 68.9% from June 30, 2020
EFFINGHAM, Ill., Oct. 22, 2020 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $86 thousand, or $0.00 diluted earnings per share, for the third quarter of 2020, which includes $13.9 million of charges primarily related to the Company’s previously announced branch and facilities optimization plan. This compares to net income of $12.6 million, or $0.53 diluted earnings per share, for the second quarter of 2020, and net income of $12.7 million, or $0.51 diluted earnings per share, for the third quarter of 2019.
Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “Excluding the charges related to our branch and facilities optimization plan, we delivered a strong quarter highlighted by solid balance sheet growth, significant contributions from many of our sources of noninterest income, and disciplined expense management. Our diverse lending businesses enabled us to capitalize on pockets of strength in the economy where there is good demand, including equipment financing, small dollar consumer loans, and warehouse lines to commercial FHA lenders. As a result, our total loan balances increased at an annualized rate of more than 8% in the third quarter and helped drive an increase in net interest income.”
“We are seeing general improvement in the financial health of our borrowers as the economy continues to strengthen. Our deferred loans declined from 18.6% of total loans at the end of the second quarter to 5.7% of total loans at September 30, 2020. While the return to scheduled payments by many borrowers is encouraging, we remain cautious about the pace of the economic recovery and continued to add to our loan loss reserves, resulting in our allowance for credit losses increasing to 1.07% of total loans at September 30, 2020, from 0.97% at June 30, 2020.”
“As previously disclosed, during the third quarter we also made adjustments to our operations with the sale of our commercial FHA loan origination platform and the announcement of a series of planned branch and corporate office reductions. We believe the collective impact of these actions will help drive further improvement in our efficiency ratio and provide more operating leverage as we continue to grow our balance sheet in the future, resulting in more consistent financial performance, a higher level of returns, and greater franchise value,” said Mr. Ludwig.
Factors Affecting Comparability
Effective January 1, 2020, the Company adopted the new current expected credit loss (“CECL”) accounting standard, which replaced the incurred loss methodology with an estimated life of loan credit loss methodology.
Adjusted Earnings
Financial results for the third quarter of 2020 were impacted by $13.9 million in charges primarily related to the branch and facilities optimization plan (integration and acquisition expenses), $1.7 million in gains on sales of investment securities, and a $0.2 million loss on residential mortgage servicing rights (“MSRs”) held-for-sale. Excluding these amounts and certain income, adjusted earnings were $12.0 million, or $0.52 diluted earnings per share, for the third quarter of 2020.
Financial results for the second quarter of 2020 were impacted by a $0.4 million loss on residential MSRs held-for-sale and $0.1 million in integration and acquisition expenses. Excluding these amounts and certain income, adjusted earnings were $12.9 million, or $0.55 diluted earnings per share, for the second quarter of 2020.
A reconciliation of adjusted earnings to net income according to accounting principles generally accepted in the United States (“GAAP”) is provided in the financial tables at the end of this press release.
Net Interest Margin
Net interest margin for the third quarter of 2020 was 3.33%, compared to 3.32% for the second quarter of 2020. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 14 and 12 basis points to net interest margin in the third quarter of 2020 and second quarter of 2020, respectively. Excluding the impact of accretion income, net interest margin decreased 1 basis point from the second quarter of 2020, as a decline in the average yield on earning assets was largely offset by a reduction in the average cost of deposits.
Relative to the third quarter of 2019, net interest margin decreased from 3.70%. Accretion income on purchased loan portfolios contributed 20 basis points to net interest margin in the third quarter of 2019. Excluding the impact of accretion income, net interest margin decreased 31 basis points compared to the third quarter of 2019, primarily due to the impact of new subordinated debt issued in September 2019 and a decline in the average yield on earning assets, partially offset by a reduction in the average cost of deposits.
Net Interest Income
Net interest income for the third quarter of 2020 was $50.0 million, an increase of 2.0% from $49.0 million for the second quarter of 2020. Excluding accretion income, net interest income increased $0.6 million from the prior quarter. Accretion income associated with purchased loan portfolios totaled $2.1 million for the third quarter of 2020, compared with $1.8 million for the second quarter of 2020.
Relative to the third quarter of 2019, net interest income increased $0.5 million, or 1.1%. Accretion income for the third quarter of 2019 was $3.1 million. Excluding the impact of accretion income, net interest income increased primarily due to organic loan growth and a significant decline in cost of funds.
Noninterest Income
Noninterest income for the third quarter of 2020 was $18.9 million, a decrease of 2.5% from $19.4 million for the second quarter of 2020. Impairment on commercial MSRs impacted noninterest income by $1.4 million and $0.1 million in the third quarter of 2020 and second quarter of 2020, respectively. Excluding the impairment, noninterest income increased due to higher levels of residential mortgage banking revenue, service charges on deposit accounts, and other income.
Relative to the third quarter of 2019, noninterest income decreased 3.5% from $19.6 million. The decrease was primarily attributable to lower commercial FHA revenue and service charges on deposit accounts, partially offset by higher residential mortgage banking revenue.
Wealth management revenue for the third quarter of 2020 was $5.6 million, a decrease of 2.4% from the second quarter of 2020. Compared to the third quarter of 2019, wealth management revenue decreased 7.3%.
Commercial FHA revenue for the third quarter of 2020 was $0.9 million, compared to $3.4 million in the second quarter of 2020. The Company originated $50.9 million in rate lock commitments during the third quarter of 2020, prior to the sale of the origination platform on August 28, 2020, compared to $134.8 million in the prior quarter. Compared to the third quarter of 2019, commercial FHA revenue decreased $3.0 million.
Noninterest Expense
Noninterest expense for the third quarter of 2020 was $54.7 million, which included $13.9 million in charges primarily related to the branch and facilities optimization plan (integration and acquisition expenses), and a $0.2 million loss on residential MSRs held-for-sale, compared with $40.8 million in the second quarter of 2020, which included a $0.4 million loss on residential MSRs held-for-sale and $0.1 million in integration and acquisition expenses. Excluding the integration and acquisition expenses and losses on residential MSRs held-for-sale, noninterest expense was relatively unchanged from the prior quarter.
Relative to the third quarter of 2019, noninterest expense increased 13.8% from $48.0 million, which included $5.3 million in integration and acquisition expenses and a $0.1 million gain on residential MSRs held-for-sale. Excluding integration and acquisition expenses and gains/losses on MSRs held-for-sale, noninterest expense decreased 5.1% due principally to the Company’s expense reduction and efficiency improvement initiatives implemented over the past year.
Loan Portfolio
Total loans outstanding were $4.94 billion at September 30, 2020, compared with $4.84 billion at June 30, 2020 and $4.33 billion at September 30, 2019. The increase in total loans from June 30, 2020 was primarily attributable to an increase in equipment finance loans and leases, commercial FHA warehouse lines of credit, and consumer loans.
Equipment finance balances increased $65.0 million from June 30, 2020 to $815.5 million, which are booked within the commercial loans and leases portfolio, reflecting management’s efforts to grow the equipment finance business.
The increase in total loans from September 30, 2019 was primarily attributable to the growth in equipment finance balances, consumer loans, and loans originated under the Paycheck Protection Program (“PPP”).
Deposits
Total deposits were $5.03 billion at September 30, 2020, compared with $4.94 billion at June 30, 2020, and $4.45 billion at September 30, 2019. The increase in total deposits from the end of the prior quarter was primarily attributable to an increase in commercial FHA servicing deposits.
Asset Quality
Nonperforming loans totaled $67.4 million, or 1.36% of total loans, at September 30, 2020, compared with $60.5 million, or 1.25% of total loans, at June 30, 2020. The increase in nonperforming loans was primarily attributable to the addition of three commercial real estate loans. At September 30, 2019, nonperforming loans totaled $45.2 million, or 1.04% of total loans.
Net charge-offs for the third quarter of 2020 were $5.3 million, or 0.44% of average loans on an annualized basis, which primarily represents charge-offs taken against the three commercial real estate loans moved to nonperforming status referenced above.
The Company recorded a provision for credit losses on loans of $11.0 million for the third quarter of 2020, which reflects the higher level of net charge-offs experienced in the quarter.
The Company’s allowance for credit losses on loans was 1.07% of total loans and 78.3% of nonperforming loans at September 30, 2020, compared with 0.97% of total loans and 77.8% of nonperforming loans at June 30, 2020. Approximately 96.3% of the allowance for credit losses on loans at September 30, 2020 was allocated to general reserves.
Capital
At September 30, 2020, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:
| Consolidated Ratios as of September 30, 2020 | Minimum Regulatory Requirements (2) | |
Total capital to risk-weighted assets | 11.82% | 13.34% | 10.50% |
Tier 1 capital to risk-weighted assets | 10.96% | 9.40% | 8.50% |
Tier 1 leverage ratio | 9.01% | 7.72% | 4.00% |
Common equity Tier 1 capital | 10.96% | 8.18% | 7.00% |
Tangible common equity to tangible assets (1) | NA | 6.61% | NA |
(1) A non-GAAP financial measure. Refer to page 15 for a reconciliation to the comparable GAAP financial measure.
(2) Includes the capital conservation buffer of 2.5%.
Stock Repurchase Program
During the third quarter of 2020, the Company repurchased 352,932 shares of its common stock at a weighted average price of $14.20 under its stock repurchase program, which authorized the repurchase of up to $50 million of its common stock. As of September 30, 2020, the Company had $13.3 million remaining under the current stock repurchase authorization.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, October 23, 2020, to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 1996893. A recorded replay can be accessed through October 30, 2020, by dialing (855) 859-2056; conference ID: 1996893.
A slide presentation relating to the third quarter 2020 results will be accessible prior to the scheduled conference call. This earnings release should be read together with the slide presentation, which contains important information related to the impact of COVID-19. The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website at investors.midlandsb.com under the “News and Events” tab.
About Midland States Bancorp, Inc.
Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of September 30, 2020, the Company had total assets of approximately $6.70 billion, and its Wealth Management Group had assets under administration of approximately $3.26 billion. Midland provides a full range of commercial and consumer banking products and services, business equipment financing, merchant credit card services, trust and investment management, insurance and financial planning services. For additional information, visit https://www.midlandsb.com/ or https://www.linkedin.com/company/midland-states-bank.
Non-GAAP Financial Measures
Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP. These non-GAAP financial measures include “Adjusted Earnings,” “Adjusted Diluted Earnings Per Common Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.
Forward-Looking Statements
Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company’s plans, objectives, future performance, goals and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including the effects of the COVID-19 pandemic including its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
CONTACTS:
Jeffrey G. Ludwig, President and CEO, at jludwig@midlandsb.com or (217) 342-7321
Eric T. Lemke, Chief Financial Officer, at elemke@midlandsb.com or (217) 342-7321
Douglas J. Tucker, SVP and Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) | ||||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||
(dollars in thousands, except per share data) | 2020 | 2020 | 2020 | 2019 | 2019 | |||||||||||||||||
Earnings Summary | ||||||||||||||||||||||
Net interest income | $ | 49,980 | $ | 48,989 | $ | 46,651 | $ | 48,687 | $ | 49,450 | ||||||||||||
Provision for credit losses on loans | 10,970 | 11,610 | 10,569 | 5,305 | 4,361 | |||||||||||||||||
Noninterest income | 18,919 | 19,396 | 8,598 | 19,014 | 19,606 | |||||||||||||||||
Noninterest expense | 54,659 | 40,782 | 42,675 | 46,325 | 48,025 | |||||||||||||||||
Income before income taxes | 3,270 | 15,993 | 2,005 | 16,071 | 16,670 | |||||||||||||||||
Income taxes | 3,184 | 3,424 | 456 | 3,279 | 4,015 | |||||||||||||||||
Net income | 86 | 12,569 | 1,549 | 12,792 | 12,655 | |||||||||||||||||
Preferred stock dividends, net | - | - | - | - | (22 | ) | ||||||||||||||||
Net income available to common shareholders | $ | 86 | $ | 12,569 | $ | 1,549 | $ | 12,792 | $ | 12,677 | ||||||||||||
Diluted earnings per common share | $ | - | $ | 0.53 | $ | 0.06 | $ | 0.51 | $ | 0.51 | ||||||||||||
Weighted average shares outstanding - diluted | 22,937,837 | 23,339,964 | 24,538,002 | 24,761,960 | 24,684,529 | |||||||||||||||||
Return on average assets | 0.01 | % | 0.77 | % | 0.10 | % | 0.83 | % | 0.84 | % | ||||||||||||
Return on average shareholders' equity | 0.05 | % | 8.00 | % | 0.96 | % | 7.71 | % | 7.71 | % | ||||||||||||
Return on average tangible common equity (1) | 0.08 | % | 11.84 | % | 1.39 | % | 11.24 | % | 11.19 | % | ||||||||||||
Net interest margin | 3.33 | % | 3.32 | % | 3.48 | % | 3.56 | % | 3.70 | % | ||||||||||||
Efficiency ratio (1) | 58.83 | % | 58.53 | % | 63.78 | % | 59.46 | % | 60.63 | % | ||||||||||||
Adjusted Earnings Performance Summary | ||||||||||||||||||||||
Adjusted earnings (1) | $ | 12,023 | $ | 12,884 | $ | 2,806 | $ | 16,110 | $ | 16,422 | ||||||||||||
Adjusted diluted earnings per common share (1) | $ | 0.52 | $ | 0.55 | $ | 0.11 | $ | 0.64 | $ | 0.66 | ||||||||||||
Adjusted return on average assets (1) | 0.72 | % | 0.78 | % | 0.19 | % | 1.04 | % | 1.09 | % | ||||||||||||
Adjusted return on average shareholders' equity (1) | 7.56 | % | 8.20 | % | 1.73 | % | 9.71 | % | 10.01 | % | ||||||||||||
Adjusted return on average tangible common equity (1) | 11.04 | % | 12.14 | % | 2.53 | % | 14.15 | % | 14.52 | % | ||||||||||||
(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures. | ||||||||||||||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||||
(in thousands, except per share data) | 2020 | 2020 | 2020 | 2019 | 2019 | |||||||||||||||||||||
Net interest income: | ||||||||||||||||||||||||||
Interest income | $ | 60,314 | $ | 60,548 | $ | 61,314 | $ | 64,444 | $ | 65,006 | ||||||||||||||||
Interest expense | 10,334 | 11,559 | 14,663 | 15,757 | 15,556 | |||||||||||||||||||||
Net interest income | 49,980 | 48,989 | 46,651 | 48,687 | 49,450 | |||||||||||||||||||||
Provision for credit losses on loans | 10,970 | 11,610 | 10,569 | 5,305 | 4,361 | |||||||||||||||||||||
Net interest income after provision for credit losses on loans | 39,010 | 37,379 | 36,082 | 43,382 | 45,089 | |||||||||||||||||||||
Noninterest income: | ||||||||||||||||||||||||||
Wealth management revenue | 5,559 | 5,698 | 5,677 | 5,377 | 5,998 | |||||||||||||||||||||
Commercial FHA revenue | 926 | 3,414 | 1,267 | 3,702 | 3,954 | |||||||||||||||||||||
Residential mortgage banking revenue | 3,049 | 2,723 | 1,755 | 763 | 720 | |||||||||||||||||||||
Service charges on deposit accounts | 2,092 | 1,706 | 2,656 | 2,860 | 3,008 | |||||||||||||||||||||
Interchange revenue | 3,283 | 3,013 | 2,833 | 3,053 | 3,249 | |||||||||||||||||||||
Gain on sales of investment securities, net | 1,721 | - | - | 635 | 25 | |||||||||||||||||||||
Impairment on commercial mortgage servicing rights | (1,418 | ) | (107 | ) | (8,468 | ) | (1,613 | ) | (1,060 | ) | ||||||||||||||||
Other income | 3,707 | 2,949 | 2,878 | 4,237 | 3,712 | |||||||||||||||||||||
Total noninterest income | 18,919 | 19,396 | 8,598 | 19,014 | 19,606 | |||||||||||||||||||||
Noninterest expense: | ||||||||||||||||||||||||||
Salaries and employee benefits | 21,118 | 20,740 | 21,063 | 23,650 | 25,083 | |||||||||||||||||||||
Occupancy and equipment | 4,866 | 4,286 | 4,869 | 4,654 | 4,793 | |||||||||||||||||||||
Data processing | 5,396 | 5,300 | 5,334 | 6,074 | 5,271 | |||||||||||||||||||||
Professional | 1,861 | 1,606 | 1,855 | 1,952 | 2,348 | |||||||||||||||||||||
Amortization of intangible assets | 1,557 | 1,629 | 1,762 | 1,804 | 1,803 | |||||||||||||||||||||
Loss (gain) on mortgage servicing rights held for sale | 188 | 391 | 496 | 95 | (70 | ) | ||||||||||||||||||||
Impairment related to branch optimization | 12,651 | 60 | 146 | - | 3,229 | |||||||||||||||||||||
Other expense | 7,022 | 6,770 | 7,150 | 8,096 | 5,568 | |||||||||||||||||||||
Total noninterest expense | 54,659 | 40,782 | 42,675 | 46,325 | 48,025 | |||||||||||||||||||||
Income before income taxes | 3,270 | 15,993 | 2,005 | 16,071 | 16,670 | |||||||||||||||||||||
Income taxes | 3,184 | 3,424 | 456 | 3,279 | 4,015 | |||||||||||||||||||||
Net income | 86 | 12,569 | 1,549 | 12,792 | 12,655 | |||||||||||||||||||||
Preferred stock dividends, net | - | - | - | - | (22 | ) | ||||||||||||||||||||
Net income available to common shareholders | $ | 86 | $ | 12,569 | $ | 1,549 | $ | 12,792 | $ | 12,677 | ||||||||||||||||
Basic earnings per common share | $ | 0.00 | $ | 0.53 | $ | 0.06 | $ | 0.52 | $ | 0.51 | ||||||||||||||||
Diluted earnings per common share | $ | 0.00 | $ | 0.53 | $ | 0.06 | $ | 0.51 | $ | 0.51 | ||||||||||||||||
MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||||||||
As of | |||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||||||
(in thousands) | 2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 461,196 | $ | 519,868 | $ | 449,396 | $ | 394,505 | $ | 409,346 | |||||||||||||||
Investment securities | 618,974 | 639,693 | 661,894 | 655,054 | 668,630 | ||||||||||||||||||||
Loans | 4,941,466 | 4,839,423 | 4,376,204 | 4,401,410 | 4,328,835 | ||||||||||||||||||||
Allowance for credit losses on loans | (52,771 | ) | (47,093 | ) | (38,545 | ) | (28,028 | ) | (24,917 | ) | |||||||||||||||
Total loans, net | 4,888,695 | 4,792,330 | 4,337,659 | 4,373,382 | 4,303,918 | ||||||||||||||||||||
Loans held for sale | 62,500 | 32,403 | 113,852 | 16,431 | 88,322 | ||||||||||||||||||||
Premises and equipment, net | 74,967 | 89,046 | 90,118 | 91,055 | 93,896 | ||||||||||||||||||||
Other real estate owned | 15,961 | 12,728 | 7,892 | 6,745 | 4,890 | ||||||||||||||||||||
Loan servicing rights, at lower of cost or fair value | 42,465 | 44,239 | 44,566 | 53,824 | 54,124 | ||||||||||||||||||||
Mortgage servicing rights held for sale | 1,308 | 1,244 | 1,460 | 1,972 | 1,860 | ||||||||||||||||||||
Goodwill | 161,904 | 172,796 | 172,796 | 171,758 | 171,074 | ||||||||||||||||||||
Other intangible assets, net | 29,938 | 31,495 | 33,124 | 34,886 | 36,690 | ||||||||||||||||||||
Cash surrender value of life insurance policies | 145,112 | 144,215 | 143,323 | 142,423 | 141,510 | ||||||||||||||||||||
Other assets | 197,025 | 164,441 | 152,150 | 144,982 | 139,644 | ||||||||||||||||||||
Total assets | $ | 6,700,045 | $ | 6,644,498 | $ | 6,208,230 | $ | 6,087,017 | $ | 6,113,904 | |||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||||||||
Noninterest-bearing deposits | $ | 1,355,188 | $ | 1,273,267 | $ | 1,052,726 | $ | 1,019,472 | $ | 1,015,081 | |||||||||||||||
Interest-bearing deposits | 3,673,548 | 3,669,840 | 3,597,914 | 3,524,782 | 3,430,090 | ||||||||||||||||||||
Total deposits | 5,028,736 | 4,943,107 | 4,650,640 | 4,544,254 | 4,445,171 | ||||||||||||||||||||
Short-term borrowings | 58,625 | 77,136 | 43,578 | 82,029 | 122,294 | ||||||||||||||||||||
FHLB advances and other borrowings | 693,640 | 693,865 | 593,089 | 493,311 | 559,932 | ||||||||||||||||||||
Subordinated debt | 169,702 | 169,610 | 169,505 | 176,653 | 192,689 | ||||||||||||||||||||
Trust preferred debentures | 48,682 | 48,551 | 48,420 | 48,288 | 48,165 | ||||||||||||||||||||
Other liabilities | 78,780 | 78,640 | 71,838 | 80,571 | 90,131 | ||||||||||||||||||||
Total liabilities | 6,078,165 | 6,010,909 | 5,577,070 | 5,425,106 | 5,458,382 | ||||||||||||||||||||
Total shareholders’ equity | 621,880 | 633,589 | 631,160 | 661,911 | 655,522 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 6,700,045 | $ | 6,644,498 | $ | 6,208,230 | $ | 6,087,017 | $ | 6,113,904 | |||||||||||||||
MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||||
As of | |||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||
(in thousands) | 2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||||
Loan Portfolio | |||||||||||||||||||||
Commercial loans and leases | $ | 1,938,691 | $ | 1,856,435 | $ | 1,439,145 | $ | 1,387,766 | $ | 1,292,511 | |||||||||||
Commercial real estate | 1,496,758 | 1,495,183 | 1,507,280 | 1,526,504 | 1,622,363 | ||||||||||||||||
Construction and land development | 177,894 | 207,593 | 208,361 | 208,733 | 215,978 | ||||||||||||||||
Residential real estate | 470,829 | 509,453 | 548,014 | 568,291 | 587,984 | ||||||||||||||||
Consumer | 857,294 | 770,759 | 673,404 | 710,116 | 609,999 | ||||||||||||||||
Total loans | $ | 4,941,466 | $ | 4,839,423 | $ | 4,376,204 | $ | 4,401,410 | $ | 4,328,835 | |||||||||||
Deposit Portfolio | |||||||||||||||||||||
Noninterest-bearing demand | $ | 1,355,188 | $ | 1,273,267 | $ | 1,052,726 | $ | 1,019,472 | $ | 1,015,081 | |||||||||||
Interest-bearing: | |||||||||||||||||||||
Checking | 1,581,216 | 1,484,728 | 1,425,022 | 1,342,788 | 1,222,599 | ||||||||||||||||
Money market | 826,454 | 877,675 | 849,642 | 787,662 | 753,869 | ||||||||||||||||
Savings | 580,748 | 594,685 | 534,457 | 522,456 | 526,938 | ||||||||||||||||
Time | 661,872 | 689,841 | 765,870 | 822,160 | 833,038 | ||||||||||||||||
Brokered time | 23,258 | 22,911 | 22,923 | 49,716 | 93,646 | ||||||||||||||||
Total deposits | $ | 5,028,736 | $ | 4,943,107 | $ | 4,650,640 | $ | 4,544,254 | $ | 4,445,171 | |||||||||||
MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||
(dollars in thousands) | 2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||||
Average Balance Sheets | |||||||||||||||||||||
Cash and cash equivalents | $ | 491,728 | $ | 489,941 | $ | 337,851 | $ | 406,526 | $ | 259,427 | |||||||||||
Investment securities | 628,705 | 650,356 | 662,450 | 631,294 | 666,157 | ||||||||||||||||
Loans | 4,803,940 | 4,696,288 | 4,384,206 | 4,359,144 | 4,352,635 | ||||||||||||||||
Loans held for sale | 44,880 | 99,169 | 19,844 | 36,974 | 31,664 | ||||||||||||||||
Nonmarketable equity securities | 50,765 | 50,661 | 45,124 | 43,745 | 44,010 | ||||||||||||||||
Total interest-earning assets | 6,020,018 | 5,986,415 | 5,449,475 | 5,477,683 | 5,353,893 | ||||||||||||||||
Non-earning assets | 625,522 | 619,411 | 624,594 | 649,169 | 636,028 | ||||||||||||||||
Total assets | $ | 6,645,540 | $ | 6,605,826 | $ | 6,074,069 | $ | 6,126,852 | $ | 5,989,921 | |||||||||||
Interest-bearing deposits | $ | 3,656,833 | $ | 3,651,406 | $ | 3,549,515 | $ | 3,490,165 | $ | 3,429,063 | |||||||||||
Short-term borrowings | 64,010 | 59,103 | 55,616 | 104,598 | 124,183 | ||||||||||||||||
FHLB advances and other borrowings | 693,721 | 692,470 | 532,733 | 531,419 | 591,516 | ||||||||||||||||
Subordinated debt | 169,657 | 169,560 | 170,026 | 182,149 | 106,090 | ||||||||||||||||
Trust preferred debentures | 48,618 | 48,487 | 48,357 | 48,229 | 48,105 | ||||||||||||||||
Total interest-bearing liabilities | 4,632,839 | 4,621,026 | 4,356,247 | 4,356,560 | 4,298,957 | ||||||||||||||||
Noninterest-bearing deposits | 1,303,963 | 1,280,983 | 986,178 | 1,028,670 | 967,192 | ||||||||||||||||
Other noninterest-bearing liabilities | 75,859 | 71,853 | 78,943 | 83,125 | 72,610 | ||||||||||||||||
Shareholders' equity | 632,879 | 631,964 | 652,701 | 658,497 | 651,162 | ||||||||||||||||
Total liabilities and shareholders' equity | $ | 6,645,540 | $ | 6,605,826 | $ | 6,074,069 | $ | 6,126,852 | $ | 5,989,921 | |||||||||||
Yields | |||||||||||||||||||||
Earning Assets | |||||||||||||||||||||
Cash and cash equivalents | 0.10 | % | 0.14 | % | 1.26 | % | 1.62 | % | 2.14 | % | |||||||||||
Investment securities | 2.86 | % | 3.05 | % | 3.23 | % | 3.10 | % | 3.00 | % | |||||||||||
Loans | 4.57 | % | 4.64 | % | 5.01 | % | 5.22 | % | 5.31 | % | |||||||||||
Loans held for sale | 2.92 | % | 4.07 | % | 3.87 | % | 4.12 | % | 3.02 | % | |||||||||||
Nonmarketable equity securities | 5.26 | % | 5.40 | % | 5.39 | % | 5.31 | % | 5.33 | % | |||||||||||
Total interest-earning assets | 4.01 | % | 4.10 | % | 4.56 | % | 4.70 | % | 4.85 | % | |||||||||||
Interest-Bearing Liabilities | |||||||||||||||||||||
Interest-bearing deposits | 0.46 | % | 0.61 | % | 0.95 | % | 1.03 | % | 1.08 | % | |||||||||||
Short-term borrowings | 0.17 | % | 0.19 | % | 0.73 | % | 0.67 | % | 0.68 | % | |||||||||||
FHLB advances and other borrowings | 1.85 | % | 1.69 | % | 2.24 | % | 2.26 | % | 2.36 | % | |||||||||||
Subordinated debt | 5.58 | % | 5.85 | % | 5.90 | % | 5.94 | % | 6.30 | % | |||||||||||
Trust preferred debentures | 4.16 | % | 4.86 | % | 6.02 | % | 6.41 | % | 6.83 | % | |||||||||||
Total interest-bearing liabilities | 0.89 | % | 1.01 | % | 1.35 | % | 1.43 | % | 1.44 | % | |||||||||||
Cost of Deposits | 0.34 | % | 0.45 | % | 0.74 | % | 0.80 | % | 0.84 | % | |||||||||||
Net Interest Margin | 3.33 | % | 3.32 | % | 3.48 | % | 3.56 | % | 3.70 | % | |||||||||||
MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||||
As of and for the Quarter Ended | |||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||
(dollars in thousands, except per share data) | 2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||||
Asset Quality | |||||||||||||||||||||
Loans 30-89 days past due | $ | 28,188 | $ | 36,551 | $ | 40,392 | $ | 29,876 | $ | 23,118 | |||||||||||
Nonperforming loans | 67,443 | 60,513 | 58,166 | 42,082 | 45,168 | ||||||||||||||||
Nonperforming assets | 84,795 | 74,707 | 67,158 | 50,027 | 50,058 | ||||||||||||||||
Net charge-offs | 5,292 | 3,062 | 12,835 | 2,194 | 5,369 | ||||||||||||||||
Loans 30-89 days past due to total loans | 0.57 | % | 0.76 | % | 0.92 | % | 0.68 | % | 0.53 | % | |||||||||||
Nonperforming loans to total loans | 1.36 | % | 1.25 | % | 1.33 | % | 0.96 | % | 1.04 | % | |||||||||||
Nonperforming assets to total assets | 1.27 | % | 1.12 | % | 1.08 | % | 0.82 | % | 0.82 | % | |||||||||||
Allowance for credit losses to total loans | 1.07 | % | 0.97 | % | 0.88 | % | 0.64 | % | 0.58 | % | |||||||||||
Allowance for credit losses to nonperforming loans | 78.25 | % | 77.82 | % | 66.27 | % | 66.60 | % | 55.29 | % | |||||||||||
Net charge-offs to average loans | 0.44 | % | 0.26 | % | 1.18 | % | 0.20 | % | 0.49 | % | |||||||||||
Wealth Management | |||||||||||||||||||||
Trust assets under administration | $ | 3,260,893 | $ | 3,253,784 | $ | 2,967,536 | $ | 3,409,959 | $ | 3,281,260 | |||||||||||
Market Data | |||||||||||||||||||||
Book value per share at period end | $ | 27.51 | $ | 27.62 | $ | 26.99 | $ | 27.10 | $ | 26.93 | |||||||||||
Tangible book value per share at period end (1) | $ | 19.03 | $ | 18.72 | $ | 18.19 | $ | 18.64 | $ | 18.40 | |||||||||||
Market price at period end | $ | 12.85 | $ | 14.95 | $ | 17.49 | $ | 28.96 | $ | 26.05 | |||||||||||
Shares outstanding at period end | 22,602,844 | 22,937,296 | 23,381,496 | 24,420,345 | 24,338,748 | ||||||||||||||||
Capital | |||||||||||||||||||||
Total capital to risk-weighted assets | 13.34 | % | 13.67 | % | 13.73 | % | 14.72 | % | 14.82 | % | |||||||||||
Tier 1 capital to risk-weighted assets | 9.40 | % | 9.71 | % | 9.76 | % | 10.52 | % | 10.35 | % | |||||||||||
Tier 1 leverage ratio | 7.72 | % | 7.75 | % | 8.39 | % | 8.74 | % | 8.77 | % | |||||||||||
Tier 1 common capital to risk-weighted assets | 8.18 | % | 8.44 | % | 8.47 | % | 9.20 | % | 9.02 | % | |||||||||||
Tangible common equity to tangible assets (1) | 6.61 | % | 6.67 | % | 7.08 | % | 7.74 | % | 7.58 | % | |||||||||||
(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures. | |||||||||||||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) | ||||||||||||||||||||||||||
Adjusted Earnings Reconciliation | ||||||||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||||
(dollars in thousands, except per share data) | 2020 | 2020 | 2020 | 2019 | 2019 | |||||||||||||||||||||
Income before income taxes - GAAP | $ | 3,270 | $ | 15,993 | $ | 2,005 | $ | 16,071 | $ | 16,670 | ||||||||||||||||
Adjustments to noninterest income: | ||||||||||||||||||||||||||
Gain on sales of investment securities, net | 1,721 | - | - | 635 | 25 | |||||||||||||||||||||
Other | (17 | ) | 11 | (13 | ) | (6 | ) | - | ||||||||||||||||||
Total adjustments to noninterest income | 1,704 | 11 | (13 | ) | 629 | 25 | ||||||||||||||||||||
Adjustments to noninterest expense: | ||||||||||||||||||||||||||
Loss (gain) on mortgage servicing rights held for sale | 188 | 391 | 496 | 95 | (70 | ) | ||||||||||||||||||||
Loss on repurchase of subordinated debt | - | - | 193 | 1,778 | - | |||||||||||||||||||||
Impairment related to branch optimization | 12,651 | 60 | 146 | - | 3,229 | |||||||||||||||||||||
Integration and acquisition expenses | 1,199 | (6 | ) | 885 | 3,332 | 2,063 | ||||||||||||||||||||
Total adjustments to noninterest expense | 14,038 | 445 | 1,720 | 5,205 | 5,222 | |||||||||||||||||||||
Adjusted earnings pre tax | 15,604 | 16,427 | 3,738 | 20,647 | 21,867 | |||||||||||||||||||||
Adjusted earnings tax | 3,581 | 3,543 | 932 | 4,537 | 5,445 | |||||||||||||||||||||
Adjusted earnings - non-GAAP | 12,023 | 12,884 | 2,806 | 16,110 | 16,422 | |||||||||||||||||||||
Preferred stock dividends, net | - | - | - | - | (22 | ) | ||||||||||||||||||||
Adjusted earnings available to common shareholders - non-GAAP | $ | 12,023 | $ | 12,884 | $ | 2,806 | $ | 16,110 | $ | 16,444 | ||||||||||||||||
Adjusted diluted earnings per common share | $ | 0.52 | $ | 0.55 | $ | 0.11 | $ | 0.64 | $ | 0.66 | ||||||||||||||||
Adjusted return on average assets | 0.72 | % | - | 0.78 | % | - | 0.19 | % | - | 1.04 | % | - | 1.09 | % | ||||||||||||
Adjusted return on average shareholders' equity | 7.56 | % | - | 8.20 | % | - | 1.73 | % | - | 9.71 | % | - | 10.01 | % | ||||||||||||
Adjusted return on average tangible common equity | 11.04 | % | - | 12.14 | % | - | 2.53 | % | - | 14.15 | % | - | 14.52 | % | ||||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) | ||||||||||||||||||||||||||
Efficiency Ratio Reconciliation | ||||||||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||||
(dollars in thousands) | 2020 | 2020 | 2020 | 2019 | 2019 | |||||||||||||||||||||
Noninterest expense - GAAP | $ | 54,659 | $ | 40,782 | $ | 42,675 | $ | 46,325 | $ | 48,025 | ||||||||||||||||
(Loss) gain on mortgage servicing rights held for sale | (188 | ) | (391 | ) | (496 | ) | (95 | ) | 70 | |||||||||||||||||
Loss on repurchase of subordinated debt | - | - | (193 | ) | (1,778 | ) | - | |||||||||||||||||||
Impairment related to branch optimization | (12,651 | ) | (60 | ) | (146 | ) | - | (3,229 | ) | |||||||||||||||||
Integration and acquisition expenses | (1,199 | ) | 6 | (885 | ) | (3,332 | ) | (2,063 | ) | |||||||||||||||||
Adjusted noninterest expense | $ | 40,621 | $ | 40,337 | $ | 40,955 | $ | 41,120 | $ | 42,803 | ||||||||||||||||
Net interest income - GAAP | $ | 49,980 | $ | 48,989 | $ | 46,651 | $ | 48,687 | $ | 49,450 | ||||||||||||||||
Effect of tax-exempt income | 430 | 438 | 485 | 474 | 502 | |||||||||||||||||||||
Adjusted net interest income | 50,410 | 49,427 | 47,136 | 49,161 | 49,952 | |||||||||||||||||||||
Noninterest income - GAAP | $ | 18,919 | $ | 19,396 | $ | 8,598 | $ | 19,014 | $ | 19,606 | ||||||||||||||||
Loan servicing rights impairment | 1,418 | 107 | 8,468 | 1,613 | 1,060 | |||||||||||||||||||||
Gain on sales of investment securities, net | (1,721 | ) | - | - | (635 | ) | (25 | ) | ||||||||||||||||||
Other | 17 | (11 | ) | 13 | 6 | - | ||||||||||||||||||||
Adjusted noninterest income | 18,633 | 19,492 | 17,079 | 19,998 | 20,641 | |||||||||||||||||||||
Adjusted total revenue | $ | 69,043 | $ | 68,919 | $ | 64,215 | $ | 69,159 | $ | 70,593 | ||||||||||||||||
Efficiency ratio | 58.83 | % | 58.53 | % | 63.78 | % | 59.46 | % | 60.63 | % | ||||||||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) | ||||||||||||||||||||||||||
Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share | ||||||||||||||||||||||||||
As of | ||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||||
(dollars in thousands, except per share data) | 2020 | 2020 | 2020 | 2019 | 2019 | |||||||||||||||||||||
Shareholders' Equity to Tangible Common Equity | ||||||||||||||||||||||||||
Total shareholders' equity—GAAP | $ | 621,880 | $ | 633,589 | $ | 631,160 | $ | 661,911 | $ | 655,522 | ||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||
Preferred stock | - | - | - | - | - | |||||||||||||||||||||
Goodwill | (161,904 | ) | (172,796 | ) | (172,796 | ) | (171,758 | ) | (171,074 | ) | ||||||||||||||||
Other intangibles, net | (29,938 | ) | (31,495 | ) | (33,124 | ) | (34,886 | ) | (36,690 | ) | ||||||||||||||||
Tangible common equity | $ | 430,038 | $ | 429,298 | $ | 425,240 | $ | 455,267 | $ | 447,758 | ||||||||||||||||
Total Assets to Tangible Assets: | ||||||||||||||||||||||||||
Total assets—GAAP | $ | 6,700,045 | $ | 6,644,498 | $ | 6,208,230 | $ | 6,087,017 | $ | 6,113,904 | ||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||
Goodwill | (161,904 | ) | (172,796 | ) | (172,796 | ) | (171,758 | ) | (171,074 | ) | ||||||||||||||||
Other intangibles, net | (29,938 | ) | (31,495 | ) | (33,124 | ) | (34,886 | ) | (36,690 | ) | ||||||||||||||||
Tangible assets | $ | 6,508,203 | $ | 6,440,207 | $ | 6,002,310 | $ | 5,880,373 | $ | 5,906,140 | ||||||||||||||||
Common Shares Outstanding | 22,602,844 | 22,937,296 | 23,381,496 | 24,420,345 | 24,338,748 | |||||||||||||||||||||
Tangible Common Equity to Tangible Assets | 6.61 | % | 6.67 | % | 7.08 | % | 7.74 | % | 7.58 | % | ||||||||||||||||
Tangible Book Value Per Share | $ | 19.03 | $ | 18.72 | $ | 18.19 | $ | 18.64 | $ | 18.40 | ||||||||||||||||
Return on Average Tangible Common Equity (ROATCE) | ||||||||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||||
(dollars in thousands) | 2020 | 2020 | 2020 | 2019 | 2019 | |||||||||||||||||||||
Net income available to common shareholders | $ | 86 | $ | 12,569 | $ | 1,549 | $ | 12,792 | $ | 12,677 | ||||||||||||||||
Average total shareholders' equity—GAAP | $ | 632,879 | $ | 631,964 | $ | 652,701 | $ | 658,497 | $ | 651,162 | ||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||
Preferred stock | - | - | - | - | (814 | ) | ||||||||||||||||||||
Goodwill | (168,771 | ) | (172,796 | ) | (171,890 | ) | (171,082 | ) | (166,389 | ) | ||||||||||||||||
Other intangibles, net | (30,690 | ) | (32,275 | ) | (33,951 | ) | (35,745 | ) | (34,519 | ) | ||||||||||||||||
Average tangible common equity | $ | 433,418 | $ | 426,893 | $ | 446,860 | $ | 451,670 | $ | 449,440 | ||||||||||||||||
ROATCE | 0.08 | % | 11.84 | % | 1.39 | % | 11.24 | % | 11.19 | % | ||||||||||||||||
