Midland States Bancorp, Inc. Announces 2021 First Quarter Results
Summary
Net income of $18.5 million, or $0.81 diluted earnings per share
Efficiency ratio improved to 56.88% from 58.55% in Q4 2020
Return on average shareholders’ equity of 12.04%
Return on average tangible common equity of 17.28%
Tier 1 leverage ratio increased 29 bps to 7.79%
Book value and tangible book value per share increased 2.2% and 3.5%, respectively
EFFINGHAM, Ill., April 22, 2021 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $18.5 million, or $0.81 diluted earnings per share, for the first quarter of 2021. This compares to net income of $8.3 million, or $0.36 diluted earnings per share, for the fourth quarter of 2020, which was negatively impacted by $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on mortgage servicing rights (“MSRs”) held-for-sale, and $0.2 million in integration and acquisition expenses, and to net income of $1.5 million, or $0.06 diluted earnings per share, for the first quarter of 2020, which was negatively impacted by an $8.5 million impairment on commercial MSRs and $0.9 million in integration and acquisition expenses.
Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “Our first quarter results reflect a significant increase in our level of profitability resulting from the actions we took last year to increase efficiencies and optimize our business model. Despite operating in a low growth, low interest rate environment, we are seeing substantial improvement in our performance metrics including our efficiency ratio, return on average assets, and return on average tangible equity, as well as strong increases in our capital ratios and book value.
“We continued to execute on our strategy to increase our recurring fee income with the announcement of our acquisition of ATG Trust Company, which we expect to close during the second quarter of 2021. The addition of ATG Trust will further increase our assets under administration and provide additional expertise in specialized areas that will improve our ability to attract new clients to our wealth management business.
“During the first quarter, we saw an elevated level of loan payoffs and paydowns, which impacted our total loan balances. However, we are seeing encouraging signs of improving economic conditions in our markets and a growing loan pipeline. As a result, we believe that we will see stronger loan production and loan growth as we move through the year. The stronger loan growth and redeployment of our excess liquidity into higher yielding assets should enable us to realize additional operating leverage and generate further improvement in our level of profitability going forward,” said Mr. Ludwig.
Adjusted Earnings
Financial results for the fourth quarter of 2020 were impacted by $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on residential MSRs held-for sale, and $0.2 million in integration and acquisition expenses. Excluding these amounts and certain income, adjusted earnings were $12.5 million, or $0.54 per share, for the fourth quarter of 2020.
Financial results for the first quarter of 2020 were impacted by $0.9 million in integration and acquisition expenses, a $0.5 million loss on residential MSRs held-for-sale, and a $0.2 million loss on the repurchase of subordinated debt. Excluding these amounts and certain income and other expenses, adjusted earnings were $2.8 million, or $0.11 diluted earnings per share, for the first 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 first quarter of 2021 was 3.45%, compared to 3.47% for the fourth quarter of 2020. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 8 and 10 basis points to net interest margin in the first quarter of 2021 and fourth quarter of 2020, respectively. Excluding the impact of accretion income, net interest margin was unchanged from the fourth quarter of 2020, as a favorable shift in the mix of earning assets and a reduction in the average cost of funds was offset by a decline in the average yield on loans and securities.
Relative to the first quarter of 2020, net interest margin decreased from 3.48%. Accretion income on purchased loan portfolios contributed 16 basis points to net interest margin in the first quarter of 2020. Excluding the impact of accretion income, net interest margin increased 5 basis points compared to the first quarter of 2020, primarily due to a reduction in the average cost of deposits and the accelerated recognition of Paycheck Protection Program (“PPP”) loan income upon forgiveness.
Net Interest Income
Net interest income for the first quarter of 2021 was $51.9 million, a decrease of 3.1% from $53.5 million for the fourth quarter of 2020. Excluding accretion income, net interest income decreased $1.2 million from the prior quarter, which was primarily due to lower PPP loan income. Accretion income associated with purchased loan portfolios totaled $1.2 million for the first quarter of 2021, compared with $1.6 million for the fourth quarter of 2020. PPP loan income totaled $2.6 million, including loan origination fees of $2.1 million, in the first quarter of 2021, compared to $3.7 million, including loan origination fees of $3.1 million, in the fourth quarter of 2020.
Relative to the first quarter of 2020, net interest income increased $5.2 million, or 11.2%. Accretion income for the first quarter of 2020 was $2.2 million. Excluding the impact of accretion income, net interest income increased primarily due to organic loan growth and a significant decline in the cost of funds.
Noninterest Income
Noninterest income for the first quarter of 2021 was $14.8 million, an increase of 3.3% from $14.3 million for the fourth quarter of 2020. Impairment on commercial MSRs impacted noninterest income by $1.3 million and $2.3 million in the first quarter of 2021 and fourth quarter of 2020, respectively. Excluding the impairments, noninterest income decreased 3.5% primarily due to lower levels of residential mortgage banking revenue and service charges on deposit accounts.
Relative to the first quarter of 2020, noninterest income increased 72.3% from $8.6 million. The increase was primarily attributable to a lower level of impairment on commercial MSRs.
Wealth management revenue for the first quarter of 2021 was $5.9 million, an increase of 1.1% from the fourth quarter of 2020. Compared to the first quarter of 2020, wealth management revenue increased 4.5%.
Noninterest Expense
Noninterest expense for the first quarter of 2021 was $39.1 million, which included $0.2 million in integration and acquisition expenses, compared with $47.0 million in the fourth quarter of 2020, which included $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on residential MSRs held-for sale, and $0.2 million in integration and acquisition expenses. Excluding the FHLB prepayment charges, losses on MSRs held-for sale, and integration and acquisition expenses, noninterest expense decreased by $2.5 million, primarily due to lower salaries and employee benefits expense resulting from the Company’s branch network and facilities optimization initiative implemented during the fourth quarter of 2020, as well as a one-time vacation rollover accrual recorded in the prior quarter.
Relative to the first quarter of 2020, noninterest expense decreased 6.2% from $41.7 million, which included $0.9 million in integration and acquisition expenses, a $0.5 million loss on residential MSRs held-for-sale, and a $0.2 million loss on the repurchase of subordinated debt. Excluding the integration and acquisition expenses, the losses on residential MSRs held-for-sale and the loss on the repurchase of subordinated debt, noninterest expense declined $1.1 million, primarily due to lower salaries and employee benefits expense and lower occupancy and equipment expense resulting from the Company’s branch network and facilities optimization initiative.
Loan Portfolio
Total loans outstanding were $4.91 billion at March 31, 2021, compared with $5.10 billion at December 31, 2020 and $4.38 billion at March 31, 2020. The decrease in total loans from December 31, 2020 was primarily attributable to elevated payoffs and paydowns across most of the Company’s major portfolios, as well as lower end-of-period balances on commercial FHA warehouse lines of credit, which was partially offset by an increase in PPP loans following the origination of $79.3 million of loans in the second round of the program.
Equipment finance balances decreased $2.9 million from December 31, 2020 to $858.6 million at March 31, 2021, which are booked within the commercial loans and leases portfolio.
The increase in total loans from March 31, 2020 was primarily attributable to the growth in equipment finance balances, consumer loans, and PPP loans.
Deposits
Total deposits were $5.34 billion at March 31, 2021, compared with $5.10 billion at December 31, 2020, and $4.65 billion at March 31, 2020. The increase in total deposits from the end of the prior quarter was primarily attributable to strong inflows of retail deposits resulting from federal government stimulus payments and PPP-related commercial deposits.
Asset Quality
Nonperforming loans totaled $52.8 million, or 1.08% of total loans, at March 31, 2021, compared with $54.1 million, or 1.06% of total loans, at December 31, 2020. The decrease in nonperforming loans was primarily attributable to the resolution of long-term problem loans. At March 31, 2020, nonperforming loans totaled $58.2 million, or 1.33% of total loans.
Net charge-offs for the first quarter of 2021 were $1.7 million, or 0.14% of average loans on an annualized basis.
The Company recorded a provision for credit losses of $3.6 million for the first quarter of 2021, which was primarily related to additions to specific reserves.
The Company’s allowance for credit losses on loans was 1.28% of total loans and 118.7% of nonperforming loans at March 31, 2021, compared with 1.18% of total loans and 111.8% of nonperforming loans at December 31, 2020. Approximately 90.3% of the allowance for credit losses on loans at March 31, 2021 was allocated to general reserves.
Capital
At March 31, 2021, 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 |
| |
Total capital to risk-weighted assets | 12.18% | 13.73% | 10.50% |
Tier 1 capital to risk-weighted assets | 11.15% | 9.62% | 8.50% |
Tier 1 leverage ratio | 9.03% | 7.79% | 4.00% |
Common equity Tier 1 capital | 11.15% | 8.39% | 7.00% |
Tangible common equity to tangible assets (1) | NA | 6.67% | 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 first quarter of 2021, the Company repurchased 65,840 shares of its common stock at a weighted average price of $18.35 under its stock repurchase program, which authorized the repurchase of up to $50 million of its common stock. As of March 31, 2021, the Company had $5.2 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, April 23, 2021, to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 9390877. A recorded replay can be accessed through April 30, 2021, by dialing (855) 859-2056; conference ID: 9390877.
A slide presentation relating to the first quarter 2021 financial 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 March 31, 2021, the Company had total assets of approximately $6.88 billion, and its Wealth Management Group had assets under administration of approximately $3.56 billion. Midland provides a full range of commercial and consumer banking products and services and 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 Pre-Tax, Pre-Provision Earnings,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Adjusted Pre-Tax, Pre-Provision Return on Average Assets,” “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 and 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; developments and uncertainty related to the future use and availability of some reference rates, such as the London Inter-Bank Offered Rate, as well as other alternative reference rates, and the adoption of a substitute; 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 | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(dollars in thousands, except per share data) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
Earnings Summary | ||||||||||||||||||||
Net interest income | $ | 51,868 | $ | 53,516 | $ | 49,980 | $ | 48,989 | $ | 46,651 | ||||||||||
Provision for credit losses | 3,565 | 10,058 | 11,728 | 10,997 | 11,578 | |||||||||||||||
Noninterest income | 14,816 | 14,336 | 18,919 | 19,396 | 8,598 | |||||||||||||||
Noninterest expense | 39,079 | 47,048 | 53,901 | 41,395 | 41,666 | |||||||||||||||
Income before income taxes | 24,040 | 10,746 | 3,270 | 15,993 | 2,005 | |||||||||||||||
Income taxes | 5,502 | 2,413 | 3,184 | 3,424 | 456 | |||||||||||||||
Net income | $ | 18,538 | $ | 8,333 | $ | 86 | $ | 12,569 | $ | 1,549 | ||||||||||
Diluted earnings per common share | $ | 0.81 | $ | 0.36 | $ | - | $ | 0.53 | $ | 0.06 | ||||||||||
Weighted average shares outstanding - diluted | 22,578,553 | 22,656,343 | 22,937,837 | 23,339,964 | 24,538,002 | |||||||||||||||
Return on average assets | 1.11 | % | 0.49 | % | 0.01 | % | 0.77 | % | 0.10 | % | ||||||||||
Return on average shareholders' equity | 12.04 | % | 5.32 | % | 0.05 | % | 8.00 | % | 0.96 | % | ||||||||||
Return on average tangible common equity (1) | 17.28 | % | 7.68 | % | 0.08 | % | 11.84 | % | 1.39 | % | ||||||||||
Net interest margin | 3.45 | % | 3.47 | % | 3.33 | % | 3.32 | % | 3.48 | % | ||||||||||
Efficiency ratio (1) | 56.88 | % | 58.55 | % | 57.74 | % | 59.42 | % | 62.21 | % | ||||||||||
Adjusted Earnings Performance Summary (1) | ||||||||||||||||||||
Adjusted earnings | $ | 18,662 | $ | 12,471 | $ | 12,023 | $ | 12,884 | $ | 2,806 | ||||||||||
Adjusted diluted earnings per common share | $ | 0.82 | $ | 0.54 | $ | 0.52 | $ | 0.55 | $ | 0.11 | ||||||||||
Adjusted return on average assets | 1.12 | % | 0.73 | % | 0.72 | % | 0.78 | % | 0.19 | % | ||||||||||
Adjusted return on average shareholders' equity | 12.12 | % | 7.97 | % | 7.56 | % | 8.20 | % | 1.73 | % | ||||||||||
Adjusted return on average tangible common equity | 17.39 | % | 11.50 | % | 11.04 | % | 12.14 | % | 2.53 | % | ||||||||||
Adjusted pre-tax, pre-provision earnings | $ | 29,051 | $ | 28,855 | $ | 28,751 | $ | 27,531 | $ | 23,785 | ||||||||||
Adjusted pre-tax, pre-provision return on average assets | 1.75 | % | 1.69 | % | 1.72 | % | 1.68 | % | 1.58 | % | ||||||||||
(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 | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(in thousands, except per share data) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
Net interest income: | ||||||||||||||||||||
Interest income | $ | 60,503 | $ | 62,712 | $ | 60,314 | $ | 60,548 | $ | 61,314 | ||||||||||
Interest expense | 8,635 | 9,196 | 10,334 | 11,559 | 14,663 | |||||||||||||||
Net interest income | 51,868 | 53,516 | 49,980 | 48,989 | 46,651 | |||||||||||||||
Provision for credit losses: | ||||||||||||||||||||
Provision for credit losses on loans | 3,950 | 10,000 | 10,970 | 11,610 | 10,569 | |||||||||||||||
Provision for credit losses on unfunded commitments | (535 | ) | - | 577 | (665 | ) | 934 | |||||||||||||
Provision for other credit losses | 150 | 58 | 181 | 52 | 75 | |||||||||||||||
Total provision for credit losses | 3,565 | 10,058 | 11,728 | 10,997 | 11,578 | |||||||||||||||
Net interest income after provision for credit losses | 48,303 | 43,458 | 38,252 | 37,992 | 35,073 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||
Wealth management revenue | 5,931 | 5,868 | 5,559 | 5,698 | 5,677 | |||||||||||||||
Commercial FHA revenue | 292 | 400 | 926 | 3,414 | 1,267 | |||||||||||||||
Residential mortgage banking revenue | 1,574 | 2,285 | 3,049 | 2,723 | 1,755 | |||||||||||||||
Service charges on deposit accounts | 1,826 | 2,149 | 2,092 | 1,706 | 2,656 | |||||||||||||||
Interchange revenue | 3,375 | 3,137 | 3,283 | 3,013 | 2,833 | |||||||||||||||
Gain on sales of investment securities, net | - | - | 1,721 | - | - | |||||||||||||||
Impairment on commercial mortgage servicing rights | (1,275 | ) | (2,344 | ) | (1,418 | ) | (107 | ) | (8,468 | ) | ||||||||||
Company-owned life insurance | 860 | 893 | 897 | 892 | 900 | |||||||||||||||
Other income | 2,233 | 1,948 | 2,810 | 2,057 | 1,978 | |||||||||||||||
Total noninterest income | 14,816 | 14,336 | 18,919 | 19,396 | 8,598 | |||||||||||||||
Noninterest expense: | ||||||||||||||||||||
Salaries and employee benefits | 20,528 | 22,636 | 21,118 | 20,740 | 21,063 | |||||||||||||||
Occupancy and equipment | 3,940 | 3,531 | 4,866 | 4,286 | 4,869 | |||||||||||||||
Data processing | 5,993 | 5,987 | 5,721 | 5,458 | 5,477 | |||||||||||||||
Professional | 2,185 | 1,912 | 1,861 | 1,606 | 1,855 | |||||||||||||||
Amortization of intangible assets | 1,515 | 1,556 | 1,557 | 1,629 | 1,762 | |||||||||||||||
Loss on mortgage servicing rights held for sale | - | 617 | 188 | 391 | 496 | |||||||||||||||
Impairment related to facilities optimization | - | (10 | ) | 12,651 | 60 | 146 | ||||||||||||||
FHLB advances prepayment fees | 8 | 4,872 | - | - | - | |||||||||||||||
Other expense | 4,910 | 5,947 | 5,939 | 7,225 | 5,998 | |||||||||||||||
Total noninterest expense | 39,079 | 47,048 | 53,901 | 41,395 | 41,666 | |||||||||||||||
Income before income taxes | 24,040 | 10,746 | 3,270 | 15,993 | 2,005 | |||||||||||||||
Income taxes | 5,502 | 2,413 | 3,184 | 3,424 | 456 | |||||||||||||||
Net income | $ | 18,538 | $ | 8,333 | $ | 86 | $ | 12,569 | $ | 1,549 | ||||||||||
Basic earnings per common share | $ | 0.81 | $ | 0.36 | $ | 0.00 | $ | 0.53 | $ | 0.06 | ||||||||||
Diluted earnings per common share | $ | 0.81 | $ | 0.36 | $ | 0.00 | $ | 0.53 | $ | 0.06 | ||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
As of | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(in thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 631,219 | $ | 341,640 | $ | 461,196 | $ | 519,868 | $ | 449,396 | ||||||||||
Investment securities | 690,390 | 686,135 | 618,974 | 639,693 | 661,894 | |||||||||||||||
Loans | 4,910,806 | 5,103,331 | 4,941,466 | 4,839,423 | 4,376,204 | |||||||||||||||
Allowance for credit losses on loans | (62,687 | ) | (60,443 | ) | (52,771 | ) | (47,093 | ) | (38,545 | ) | ||||||||||
Total loans, net | 4,848,119 | 5,042,888 | 4,888,695 | 4,792,330 | 4,337,659 | |||||||||||||||
Loans held for sale | 55,174 | 138,090 | 62,500 | 32,403 | 113,852 | |||||||||||||||
Premises and equipment, net | 73,255 | 74,124 | 74,967 | 89,046 | 90,118 | |||||||||||||||
Other real estate owned | 20,304 | 20,247 | 15,961 | 12,728 | 7,892 | |||||||||||||||
Loan servicing rights, at lower of cost or fair value | 36,876 | 39,276 | 42,465 | 44,239 | 44,566 | |||||||||||||||
Goodwill | 161,904 | 161,904 | 161,904 | 172,796 | 172,796 | |||||||||||||||
Other intangible assets, net | 26,867 | 28,382 | 29,938 | 31,495 | 33,124 | |||||||||||||||
Cash surrender value of life insurance policies | 146,864 | 146,004 | 145,112 | 144,215 | 143,323 | |||||||||||||||
Other assets | 193,814 | 189,850 | 198,333 | 165,685 | 153,610 | |||||||||||||||
Total assets | $ | 6,884,786 | $ | 6,868,540 | $ | 6,700,045 | $ | 6,644,498 | $ | 6,208,230 | ||||||||||
Liabilities and Shareholders' Equity | ||||||||||||||||||||
Noninterest-bearing deposits | $ | 1,522,433 | $ | 1,469,579 | $ | 1,355,188 | $ | 1,273,267 | $ | 1,052,726 | ||||||||||
Interest-bearing deposits | 3,818,080 | 3,631,437 | 3,673,548 | 3,669,840 | 3,597,914 | |||||||||||||||
Total deposits | 5,340,513 | 5,101,016 | 5,028,736 | 4,943,107 | 4,650,640 | |||||||||||||||
Short-term borrowings | 71,728 | 68,957 | 58,625 | 77,136 | 43,578 | |||||||||||||||
FHLB advances and other borrowings | 529,171 | 779,171 | 693,640 | 693,865 | 593,089 | |||||||||||||||
Subordinated debt | 169,888 | 169,795 | 169,702 | 169,610 | 169,505 | |||||||||||||||
Trust preferred debentures | 48,954 | 48,814 | 48,682 | 48,551 | 48,420 | |||||||||||||||
Other liabilities | 89,065 | 79,396 | 78,780 | 78,640 | 71,838 | |||||||||||||||
Total liabilities | 6,249,319 | 6,247,149 | 6,078,165 | 6,010,909 | 5,577,070 | |||||||||||||||
Total shareholders’ equity | 635,467 | 621,391 | 621,880 | 633,589 | 631,160 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 6,884,786 | $ | 6,868,540 | $ | 6,700,045 | $ | 6,644,498 | $ | 6,208,230 | ||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
As of | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(in thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
Loan Portfolio | ||||||||||||||||||||
Commercial loans and leases | $ | 1,977,440 | $ | 2,095,639 | $ | 1,938,691 | $ | 1,856,435 | $ | 1,439,145 | ||||||||||
Commercial real estate | 1,494,031 | 1,525,973 | 1,496,758 | 1,495,183 | 1,507,280 | |||||||||||||||
Construction and land development | 191,870 | 172,737 | 177,894 | 207,593 | 208,361 | |||||||||||||||
Residential real estate | 398,501 | 442,880 | 470,829 | 509,453 | 548,014 | |||||||||||||||
Consumer | 848,964 | 866,102 | 857,294 | 770,759 | 673,404 | |||||||||||||||
Total loans | $ | 4,910,806 | $ | 5,103,331 | $ | 4,941,466 | $ | 4,839,423 | $ | 4,376,204 | ||||||||||
Deposit Portfolio | ||||||||||||||||||||
Noninterest-bearing demand | $ | 1,522,433 | $ | 1,469,579 | $ | 1,355,188 | $ | 1,273,267 | $ | 1,052,726 | ||||||||||
Interest-bearing: | ||||||||||||||||||||
Checking | 1,601,449 | 1,568,888 | 1,581,216 | 1,484,728 | 1,425,022 | |||||||||||||||
Money market | 819,455 | 785,871 | 826,454 | 877,675 | 849,642 | |||||||||||||||
Savings | 653,256 | 597,966 | 580,748 | 594,685 | 534,457 | |||||||||||||||
Time | 718,788 | 655,620 | 661,872 | 689,841 | 765,870 | |||||||||||||||
Brokered time | 25,132 | 23,092 | 23,258 | 22,911 | 22,923 | |||||||||||||||
Total deposits | $ | 5,340,513 | $ | 5,101,016 | $ | 5,028,736 | $ | 4,943,107 | $ | 4,650,640 | ||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(dollars in thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
Average Balance Sheets | ||||||||||||||||||||
Cash and cash equivalents | $ | 350,061 | $ | 415,686 | $ | 491,728 | $ | 489,941 | $ | 337,851 | ||||||||||
Investment securities | 680,202 | 672,937 | 628,705 | 650,356 | 662,450 | |||||||||||||||
Loans | 4,992,802 | 4,998,912 | 4,803,940 | 4,696,288 | 4,384,206 | |||||||||||||||
Loans held for sale | 65,365 | 45,196 | 44,880 | 99,169 | 19,844 | |||||||||||||||
Nonmarketable equity securities | 55,935 | 51,906 | 50,765 | 50,661 | 45,124 | |||||||||||||||
Total interest-earning assets | 6,144,365 | 6,184,637 | 6,020,018 | 5,986,415 | 5,449,475 | |||||||||||||||
Non-earning assets | 602,017 | 602,716 | 625,522 | 619,411 | 624,594 | |||||||||||||||
Total assets | $ | 6,746,382 | $ | 6,787,353 | $ | 6,645,540 | $ | 6,605,826 | $ | 6,074,069 | ||||||||||
Interest-bearing deposits | $ | 3,757,108 | $ | 3,680,645 | $ | 3,656,833 | $ | 3,651,406 | $ | 3,549,515 | ||||||||||
Short-term borrowings | 75,544 | 62,432 | 64,010 | 59,103 | 55,616 | |||||||||||||||
FHLB advances and other borrowings | 617,504 | 682,981 | 693,721 | 692,470 | 532,733 | |||||||||||||||
Subordinated debt | 169,844 | 169,751 | 169,657 | 169,560 | 170,026 | |||||||||||||||
Trust preferred debentures | 48,887 | 48,751 | 48,618 | 48,487 | 48,357 | |||||||||||||||
Total interest-bearing liabilities | 4,668,887 | 4,644,560 | 4,632,839 | 4,621,026 | 4,356,247 | |||||||||||||||
Noninterest-bearing deposits | 1,370,604 | 1,446,359 | 1,303,963 | 1,280,983 | 986,178 | |||||||||||||||
Other noninterest-bearing liabilities | 82,230 | 73,840 | 75,859 | 71,853 | 78,943 | |||||||||||||||
Shareholders' equity | 624,661 | 622,594 | 632,879 | 631,964 | 652,701 | |||||||||||||||
Total liabilities and shareholders' equity | $ | 6,746,382 | $ | 6,787,353 | $ | 6,645,540 | $ | 6,605,826 | $ | 6,074,069 | ||||||||||
Yields | ||||||||||||||||||||
Earning Assets | ||||||||||||||||||||
Cash and cash equivalents | 0.11 | % | 0.12 | % | 0.10 | % | 0.14 | % | 1.26 | % | ||||||||||
Investment securities | 2.51 | % | 2.65 | % | 2.86 | % | 3.05 | % | 3.23 | % | ||||||||||
Loans | 4.50 | % | 4.58 | % | 4.57 | % | 4.64 | % | 5.01 | % | ||||||||||
Loans held for sale | 2.74 | % | 3.14 | % | 2.92 | % | 4.07 | % | 3.87 | % | ||||||||||
Nonmarketable equity securities | 4.93 | % | 5.22 | % | 5.26 | % | 5.40 | % | 5.39 | % | ||||||||||
Total interest-earning assets | 4.02 | % | 4.06 | % | 4.01 | % | 4.10 | % | 4.56 | % | ||||||||||
Interest-Bearing Liabilities | ||||||||||||||||||||
Interest-bearing deposits | 0.34 | % | 0.36 | % | 0.46 | % | 0.61 | % | 0.95 | % | ||||||||||
Short-term borrowings | 0.13 | % | 0.14 | % | 0.17 | % | 0.19 | % | 0.73 | % | ||||||||||
FHLB advances and other borrowings | 1.69 | % | 1.71 | % | 1.85 | % | 1.69 | % | 2.24 | % | ||||||||||
Subordinated debt | 5.57 | % | 5.60 | % | 5.58 | % | 5.85 | % | 5.90 | % | ||||||||||
Trust preferred debentures | 4.08 | % | 4.03 | % | 4.16 | % | 4.86 | % | 6.02 | % | ||||||||||
Total interest-bearing liabilities | 0.75 | % | 0.79 | % | 0.89 | % | 1.01 | % | 1.35 | % | ||||||||||
Cost of Deposits | 0.25 | % | 0.26 | % | 0.34 | % | 0.45 | % | 0.74 | % | ||||||||||
Net Interest Margin | 3.45 | % | 3.47 | % | 3.33 | % | 3.32 | % | 3.48 | % | ||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
As of and for the Quarter Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(dollars in thousands, except per share data) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
Asset Quality | ||||||||||||||||||||
Loans 30-89 days past due | $ | 24,819 | $ | 31,460 | $ | 28,188 | $ | 36,551 | $ | 40,392 | ||||||||||
Nonperforming loans | 52,826 | 54,070 | 67,443 | 60,513 | 58,166 | |||||||||||||||
Nonperforming assets | 75,004 | 75,432 | 84,795 | 74,707 | 67,158 | |||||||||||||||
Net charge-offs | 1,706 | 2,328 | 5,292 | 3,062 | 12,835 | |||||||||||||||
Loans 30-89 days past due to total loans | 0.51 | % | 0.62 | % | 0.57 | % | 0.76 | % | 0.92 | % | ||||||||||
Nonperforming loans to total loans | 1.08 | % | 1.06 | % | 1.36 | % | 1.25 | % | 1.33 | % | ||||||||||
Nonperforming assets to total assets | 1.09 | % | 1.10 | % | 1.27 | % | 1.12 | % | 1.08 | % | ||||||||||
Allowance for credit losses to total loans | 1.28 | % | 1.18 | % | 1.07 | % | 0.97 | % | 0.88 | % | ||||||||||
Allowance for credit losses to nonperforming loans | 118.67 | % | 111.79 | % | 78.25 | % | 77.82 | % | 66.27 | % | ||||||||||
Net charge-offs to average loans | 0.14 | % | 0.19 | % | 0.44 | % | 0.26 | % | 1.18 | % | ||||||||||
Wealth Management | ||||||||||||||||||||
Trust assets under administration | $ | 3,560,427 | $ | 3,480,759 | $ | 3,260,893 | $ | 3,253,784 | $ | 2,967,536 | ||||||||||
Market Data | ||||||||||||||||||||
Book value per share at period end | $ | 28.43 | $ | 27.83 | $ | 27.51 | $ | 27.62 | $ | 26.99 | ||||||||||
Tangible book value per share at period end (1) | $ | 19.98 | $ | 19.31 | $ | 19.03 | $ | 18.72 | $ | 18.19 | ||||||||||
Market price at period end | $ | 27.74 | $ | 17.87 | $ | 12.85 | $ | 14.95 | $ | 17.49 | ||||||||||
Shares outstanding at period end | 22,351,740 | 22,325,471 | 22,602,844 | 22,937,296 | 23,381,496 | |||||||||||||||
Capital | ||||||||||||||||||||
Total capital to risk-weighted assets | 13.73 | % | 13.24 | % | 13.34 | % | 13.67 | % | 13.73 | % | ||||||||||
Tier 1 capital to risk-weighted assets | 9.62 | % | 9.20 | % | 9.40 | % | 9.71 | % | 9.76 | % | ||||||||||
Tier 1 common capital to risk-weighted assets | 8.39 | % | 7.99 | % | 8.18 | % | 8.44 | % | 8.47 | % | ||||||||||
Tier 1 leverage ratio | 7.79 | % | 7.50 | % | 7.72 | % | 7.75 | % | 8.39 | % | ||||||||||
Tangible common equity to tangible assets (1) | 6.67 | % | 6.46 | % | 6.61 | % | 6.67 | % | 7.08 | % | ||||||||||
(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 | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(dollars in thousands, except per share data) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
Income before income taxes - GAAP | $ | 24,040 | $ | 10,746 | $ | 3,270 | $ | 15,993 | $ | 2,005 | ||||||||||
Adjustments to noninterest income: | ||||||||||||||||||||
Gain on sales of investment securities, net | - | - | 1,721 | - | - | |||||||||||||||
Other | 75 | 3 | (17 | ) | 11 | (13 | ) | |||||||||||||
Total adjustments to noninterest income | 75 | 3 | 1,704 | 11 | (13 | ) | ||||||||||||||
Adjustments to noninterest expense: | ||||||||||||||||||||
Loss on mortgage servicing rights held for sale | - | 617 | 188 | 391 | 496 | |||||||||||||||
Loss on repurchase of subordinated debt | - | - | - | - | 193 | |||||||||||||||
Impairment related to facilities optimization | - | (10 | ) | 12,651 | 60 | 146 | ||||||||||||||
FHLB advances prepayment fees | 8 | 4,872 | - | - | - | |||||||||||||||
Integration and acquisition expenses | 238 | 231 | 1,200 | (6 | ) | 886 | ||||||||||||||
Total adjustments to noninterest expense | 246 | 5,710 | 14,039 | 445 | 1,721 | |||||||||||||||
Adjusted earnings pre tax | 24,211 | 16,453 | 15,605 | 16,427 | 3,739 | |||||||||||||||
Adjusted earnings tax | 5,549 | 3,982 | 3,582 | 3,543 | 933 | |||||||||||||||
Adjusted earnings - non-GAAP | $ | 18,662 | $ | 12,471 | $ | 12,023 | $ | 12,884 | $ | 2,806 | ||||||||||
Adjusted diluted earnings per common share | $ | 0.82 | $ | 0.54 | $ | 0.52 | $ | 0.55 | $ | 0.11 | ||||||||||
Adjusted return on average assets | 1.12 | % | 0.73 | % | 0.72 | % | 0.78 | % | 0.19 | % | ||||||||||
Adjusted return on average shareholders' equity | 12.12 | % | 7.97 | % | 7.56 | % | 8.20 | % | 1.73 | % | ||||||||||
Adjusted return on average tangible common equity | 17.39 | % | 11.50 | % | 11.04 | % | 12.14 | % | 2.53 | % | ||||||||||
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation | ||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(dollars in thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
Adjusted earnings pre tax - non-GAAP | $ | 24,211 | $ | 16,453 | $ | 15,605 | $ | 16,427 | $ | 3,739 | ||||||||||
Provision for credit losses | 3,565 | 10,058 | 11,728 | 10,997 | 11,578 | |||||||||||||||
Impairment on commercial mortgage servicing rights | 1,275 | 2,344 | 1,418 | 107 | 8,468 | |||||||||||||||
Adjusted pre-tax, pre-provision earnings - non-GAAP | $ | 29,051 | $ | 28,855 | $ | 28,751 | $ | 27,531 | $ | 23,785 | ||||||||||
Adjusted pre-tax, pre-provision return on average assets | 1.75 | % | 1.69 | % | 1.72 | % | 1.68 | % | 1.58 | % | ||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) | ||||||||||||||||||||
Efficiency Ratio Reconciliation | ||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(dollars in thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
Noninterest expense - GAAP | $ | 39,079 | $ | 47,048 | $ | 53,901 | $ | 41,395 | $ | 41,666 | ||||||||||
Loss on mortgage servicing rights held for sale | - | (617 | ) | (188 | ) | (391 | ) | (496 | ) | |||||||||||
Loss on repurchase of subordinated debt | - | - | - | - | (193 | ) | ||||||||||||||
Impairment related to facilities optimization | - | 10 | (12,651 | ) | (60 | ) | (146 | ) | ||||||||||||
FHLB advances prepayment fees | (8 | ) | (4,872 | ) | - | - | - | |||||||||||||
Integration and acquisition expenses | (238 | ) | (231 | ) | (1,200 | ) | 6 | (885 | ) | |||||||||||
Adjusted noninterest expense | $ | 38,833 | $ | 41,338 | $ | 39,862 | $ | 40,950 | $ | 39,946 | ||||||||||
Net interest income - GAAP | $ | 51,868 | $ | 53,516 | $ | 49,980 | $ | 48,989 | $ | 46,651 | ||||||||||
Effect of tax-exempt income | 386 | 413 | 430 | 438 | 485 | |||||||||||||||
Adjusted net interest income | 52,254 | 53,929 | 50,410 | 49,427 | 47,136 | |||||||||||||||
Noninterest income - GAAP | 14,816 | 14,336 | 18,919 | 19,396 | 8,598 | |||||||||||||||
Impairment on commercial mortgage servicing rights | 1,275 | 2,344 | 1,418 | 107 | 8,468 | |||||||||||||||
Gain on sales of investment securities, net | - | - | (1,721 | ) | - | - | ||||||||||||||
Other | (75 | ) | (3 | ) | 17 | (11 | ) | 13 | ||||||||||||
Adjusted noninterest income | 16,016 | 16,677 | 18,633 | 19,492 | 17,079 | |||||||||||||||
Adjusted total revenue | $ | 68,270 | $ | 70,606 | $ | 69,043 | $ | 68,919 | $ | 64,215 | ||||||||||
Efficiency ratio | 56.88 | % | 58.55 | % | 57.74 | % | 59.42 | % | 62.21 | % | ||||||||||
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 | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(dollars in thousands, except per share data) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
Shareholders' Equity to Tangible Common Equity | ||||||||||||||||||||
Total shareholders' equity—GAAP | $ | 635,467 | $ | 621,391 | $ | 621,880 | $ | 633,589 | $ | 631,160 | ||||||||||
Adjustments: | ||||||||||||||||||||
Goodwill | (161,904 | ) | (161,904 | ) | (161,904 | ) | (172,796 | ) | (172,796 | ) | ||||||||||
Other intangible assets, net | (26,867 | ) | (28,382 | ) | (29,938 | ) | (31,495 | ) | (33,124 | ) | ||||||||||
Tangible common equity | $ | 446,696 | $ | 431,105 | $ | 430,038 | $ | 429,298 | $ | 425,240 | ||||||||||
Total Assets to Tangible Assets: | ||||||||||||||||||||
Total assets—GAAP | $ | 6,884,786 | $ | 6,868,540 | $ | 6,700,045 | $ | 6,644,498 | $ | 6,208,230 | ||||||||||
Adjustments: | ||||||||||||||||||||
Goodwill | (161,904 | ) | (161,904 | ) | (161,904 | ) | (172,796 | ) | (172,796 | ) | ||||||||||
Other intangible assets, net | (26,867 | ) | (28,382 | ) | (29,938 | ) | (31,495 | ) | (33,124 | ) | ||||||||||
Tangible assets | $ | 6,696,015 | $ | 6,678,254 | $ | 6,508,203 | $ | 6,440,207 | $ | 6,002,310 | ||||||||||
Common Shares Outstanding | 22,351,740 | 22,325,471 | 22,602,844 | 22,937,296 | 23,381,496 | |||||||||||||||
Tangible Common Equity to Tangible Assets | 6.67 | % | 6.46 | % | 6.61 | % | 6.67 | % | 7.08 | % | ||||||||||
Tangible Book Value Per Share | $ | 19.98 | $ | 19.31 | $ | 19.03 | $ | 18.72 | $ | 18.19 | ||||||||||
Return on Average Tangible Common Equity (ROATCE) | ||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(dollars in thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
Net income available to common shareholders | $ | 18,538 | $ | 8,333 | $ | 86 | $ | 12,569 | $ | 1,549 | ||||||||||
Average total shareholders' equity—GAAP | $ | 624,661 | $ | 622,594 | $ | 632,879 | $ | 631,964 | $ | 652,701 | ||||||||||
Adjustments: | ||||||||||||||||||||
Goodwill | (161,904 | ) | (161,904 | ) | (168,771 | ) | (172,796 | ) | (171,890 | ) | ||||||||||
Other intangible assets, net | (27,578 | ) | (29,123 | ) | (30,690 | ) | (32,275 | ) | (33,951 | ) | ||||||||||
Average tangible common equity | $ | 435,179 | $ | 431,567 | $ | 433,418 | $ | 426,893 | $ | 446,860 | ||||||||||
ROATCE | 17.28 | % | 7.68 | % | 0.08 | % | 11.84 | % | 1.39 | % | ||||||||||
