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Midland States Bancorp, Inc. Announces 2021 Second Quarter Results

·31 min read

Summary

  • Net income of $20.1 million, or $0.88 diluted earnings per share

  • Return on average shareholders’ equity of 12.59%

  • Return on average tangible common equity of 17.85%

  • Tangible common equity to tangible assets ratio increased 45 bps to 7.12%

  • Book value and tangible book value per share increased 1.9% and 2.5%, respectively

  • Acquisition of ATG Trust Company completed in June 2021

EFFINGHAM, Ill., July 22, 2021 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $20.1 million, or $0.88 diluted earnings per share, for the second quarter of 2021, which included a $6.8 million tax benefit related to the settlement of a prior tax issue, $3.6 million in professional fees related to the settlement, and a $3.7 million charge related to the prepayment of a longer-term FHLB advance. This compares to net income of $18.5 million, or $0.81 diluted earnings per share, for the first quarter of 2021, and to net income of $12.6 million, or $0.53 diluted earnings per share, for the second quarter of 2020.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We continue to see strong improvement in our level of profitability resulting from the changes we have made in our operations to generate a more consistent revenue mix and increase our focus on businesses that produce higher returns. The higher level of profitability we are generating is strengthening our capital ratios and enhancing our ability to support organic and acquisitive growth in the future.

“Economic conditions are steadily improving and creating more loan demand. During the second quarter, we saw increased production in our equipment finance, construction, and commercial real estate lending areas, which helped offset continued runoff in PPP loans and a decline in utilization of commercial FHA warehouse lines of credit. Excluding PPP loans and commercial FHA warehouse lines of credit, total loans increased at an annualized rate of 6% during the second quarter, which was at the high end of our expected range. The increased economic activity is also leading to higher levels of non-interest income, which increased 18% from the prior quarter. The increase in non-interest income was partially driven by a 10% increase in wealth management revenue resulting from our acquisition of ATG Trust Company in June.

“We continue to expect an increase in loan growth during the second half of the year. The loan pipeline in our Community Banking group is approximately 14% higher than it was at the end of the first quarter, which reflects improving loan demand and the contributions we are seeing from new bankers added over the past several months. As loan growth increases, we expect that we will see further improvement in our level of profitability driven by additional operating leverage and a favorable shift in our mix of earning assets,” said Mr. Ludwig.

Adjusted Earnings

Financial results for the second quarter of 2021 were impacted by a $6.8 million tax benefit related to the settlement of a prior tax issue, $3.8 million of integration and acquisition expenses inclusive of the $3.6 million in professional fees related to the settlement, and a $3.7 million charge related to the prepayment of a longer-term FHLB advance. Excluding these amounts and certain other income and expense, adjusted earnings were $19.8 million, or $0.86 diluted earnings per share, for the second quarter of 2021.

Financial results for the second quarter of 2020 were impacted by a $0.4 million loss on residential mortgage servicing rights (“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 second quarter of 2021 was 3.29%, compared to 3.45% for the first quarter of 2021. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 9 and 8 basis points to net interest margin in the second quarter of 2021 and first quarter of 2021, respectively. Excluding the impact of accretion income, net interest margin declined 17 basis points from the first quarter of 2021, due primarily to an unfavorable shift in the mix of earning assets.

Relative to the second quarter of 2020, net interest margin decreased from 3.32%. Accretion income on purchased loan portfolios contributed 12 basis points to net interest margin in the second quarter of 2020. Excluding the impact of accretion income, net interest margin was unchanged compared to the second quarter of 2020.

Net Interest Income

Net interest income for the second quarter of 2021 was $50.1 million, a decrease of 3.4% from $51.9 million for the first quarter of 2021. Excluding accretion income, net interest income decreased $1.9 million from the prior quarter, which was primarily due to lower levels of loan prepayment fees, an unfavorable shift in the mix of earning assets, and the recovery of interest on a previously charged-off loan during the first quarter of 2021. Accretion income associated with purchased loan portfolios totaled $1.3 million for the second quarter of 2021, compared with $1.2 million for the first quarter of 2021. PPP loan income totaled $2.5 million, including loan origination fees of $2.0 million, in the second quarter of 2021, compared to $2.6 million, including loan origination fees of $2.1 million, in the first quarter of 2021.

Relative to the second quarter of 2020, net interest income increased $1.1 million, or 2.3%. Accretion income for the second quarter of 2020 was $1.8 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 second quarter of 2021 was $17.4 million, an increase of 17.6% from $14.8 million for the first quarter of 2021. Impairment on commercial MSRs impacted noninterest income by $1.1 million and $1.3 million in the second quarter of 2021 and first quarter of 2021, respectively. Excluding the impairments, noninterest income increased 15.4% primarily due to higher levels of wealth management and interchange revenue, as well as gains on the sale of investment securities and other real estate owned.

Relative to the second quarter of 2020, noninterest income decreased 10.2% from $19.4 million. The decrease was primarily attributable to a lower level of commercial FHA revenue due to the sale of the loan origination platform, partially offset by higher wealth management revenue.

Wealth management revenue for the second quarter of 2021 was $6.5 million, an increase of 10.1% from the first quarter of 2021, primarily due to the one month contribution of ATG Trust Company following its acquisition at the beginning of June. Compared to the second quarter of 2020, wealth management revenue increased 14.6%, primarily due to the increase in assets under administration over the past year and the one month contribution of ATG Trust Company.

Noninterest Expense

Noninterest expense for the second quarter of 2021 was $48.9 million, which included $3.6 million in professional fees related to the settlement of the prior tax issue and $3.7 million in FHLB advance prepayment fees, compared with $39.1 million in the first quarter of 2021, which included $0.2 million in integration and acquisition expenses. Excluding the professional fees related to the settlement of the prior tax issue, FHLB advance prepayment fees, and integration and acquisition expenses, noninterest expense increased by $2.5 million, primarily due to an increase in salaries and employees benefit expense resulting from higher incentive compensation.

Relative to the second quarter of 2020, noninterest expense increased 18.2% from $41.4 million, which included a $0.4 million loss on residential MSRs held for sale and $0.1 million in integration and acquisition expenses. Excluding the professional fees related to the settlement of the prior tax issue, FHLB advance prepayment fees, loss on residential MSRs held for sale, and integration and acquisition expenses, noninterest expense increased $0.4 million, primarily due to higher salaries and employee benefits expense.

Loan Portfolio

Total loans outstanding were $4.84 billion at June 30, 2021, compared with $4.91 billion at March 31, 2021 and $4.84 billion at June 30, 2020. The decrease in total loans from March 31, 2021 was primarily attributable to lower end-of-period balances on commercial FHA warehouse lines of credit, forgiveness of PPP loans, and runoff in the residential real estate portfolio resulting from refinancings, which was partially offset by higher commercial real estate, construction and consumer loans.

Equipment finance balances increased $12.9 million from March 31, 2021 to $871.5 million at June 30, 2021, which are booked within the commercial loans and leases portfolio.

Compared to loan balances at June 30, 2020, growth in equipment finance balances, commercial real estate, and consumer loans was offset by declines in residential real estate loans and PPP loans held in the commercial portfolio.

Deposits

Total deposits were $5.20 billion at June 30, 2021, compared with $5.34 billion at March 31, 2021, and $4.94 billion at June 30, 2020. The decrease in total deposits from the end of the prior quarter was primarily attributable to a decline in commercial FHA servicing deposits and outflows of retail deposits consistent with the increase in economic activity in the Company’s markets.

Asset Quality

Nonperforming loans totaled $61.4 million, or 1.27% of total loans, at June 30, 2021, compared with $52.8 million, or 1.08% of total loans, at March 31, 2021. The increase in nonperforming loans was primarily attributable to three loans in the hotel/motel portfolio placed on nonaccrual during the quarter. At June 30, 2020, nonperforming loans totaled $60.5 million, or 1.25% of total loans.

Net charge-offs for the second quarter of 2021 were $4.0 million, or 0.33% of average loans on an annualized basis, compared to net charge-offs of $1.7 million, or 0.14% of average loans on an annualized basis, for the first quarter of 2021 and $3.1 million, or 0.26% of average loans on an annualized basis, for the second quarter of 2020.

The Company recorded a negative provision for credit losses of $0.5 million for the second quarter of 2021. No provision for credit losses on loans was recorded due to general improvement in portfolio mix and economic forecasts, while a negative provision of $0.5 million was recorded for credit losses on unfunded commitments and available-for-sale securities.

The Company’s allowance for credit losses on loans was 1.21% of total loans and 95.6% of nonperforming loans at June 30, 2021, compared with 1.28% of total loans and 118.7% of nonperforming loans at March 31, 2021. Approximately 91.6% of the allowance for credit losses on loans at June 30, 2021 was allocated to general reserves.

Capital

At June 30, 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:

Bank Level
Ratios as of
June 30, 2021

Consolidated
Ratios as of
June 30, 2021

Minimum
Regulatory
Requirements (2)

Total capital to risk-weighted assets

11.98%

13.11%

10.50%

Tier 1 capital to risk-weighted assets

11.06%

9.64%

8.50%

Tier 1 leverage ratio

9.19%

8.00%

4.00%

Common equity Tier 1 capital

11.06%

8.44%

7.00%

Tangible common equity to tangible assets (1)

NA

7.12%

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 second quarter of 2021, the Company did not repurchase any shares of its common stock. As of June 30, 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, July 23, 2021, to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 6112677. A recorded replay can be accessed through July 30, 2021, by dialing (855) 859-2056; conference ID: 6112677.

A slide presentation relating to the second 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 June 30, 2021, the Company had total assets of approximately $6.63 billion, and its Wealth Management Group had assets under administration of approximately $4.08 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

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands, except per share data)

2021

2021

2020

2020

2020

Earnings Summary

Net interest income

$

50,110

$

51,868

$

53,516

$

49,980

$

48,989

Provision for credit losses

(455

)

3,565

10,058

11,728

10,997

Noninterest income

17,417

14,816

14,336

18,919

19,396

Noninterest expense

48,941

39,079

47,048

53,901

41,395

Income before income taxes

19,041

24,040

10,746

3,270

15,993

Income taxes

(1,083

)

5,502

2,413

3,184

3,424

Net income

$

20,124

$

18,538

$

8,333

$

86

$

12,569

Diluted earnings per common share

$

0.88

$

0.81

$

0.36

$

-

$

0.53

Weighted average shares outstanding - diluted

22,677,515

22,578,553

22,656,343

22,937,837

23,339,964

Return on average assets

1.20

%

1.11

%

0.49

%

0.01

%

0.77

%

Return on average shareholders' equity

12.59

%

12.04

%

5.32

%

0.05

%

8.00

%

Return on average tangible common equity (1)

17.85

%

17.28

%

7.68

%

0.08

%

11.84

%

Net interest margin

3.29

%

3.45

%

3.47

%

3.33

%

3.32

%

Efficiency ratio (1)

60.19

%

56.88

%

58.55

%

57.74

%

59.42

%

Adjusted Earnings Performance Summary (1)

Adjusted earnings

$

19,755

$

18,662

$

12,471

$

12,023

$

12,884

Adjusted diluted earnings per common share

$

0.86

$

0.82

$

0.54

$

0.52

$

0.55

Adjusted return on average assets

1.17

%

1.12

%

0.73

%

0.72

%

0.78

%

Adjusted return on average shareholders' equity

12.36

%

12.12

%

7.97

%

7.56

%

8.20

%

Adjusted return on average tangible common equity

17.52

%

17.39

%

11.50

%

11.04

%

12.14

%

Adjusted pre-tax, pre-provision earnings

$

26,967

$

29,051

$

28,855

$

28,751

$

27,531

Adjusted pre-tax, pre-provision return on average assets

1.60

%

1.75

%

1.69

%

1.72

%

1.68

%

(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

June 30,

March 31,

December 31,

September 30,

June 30,

(in thousands, except per share data)

2021

2021

2020

2020

2020

Net interest income:

Interest income

$

58,397

$

60,503

$

62,712

$

60,314

$

60,548

Interest expense

8,287

8,635

9,196

10,334

11,559

Net interest income

50,110

51,868

53,516

49,980

48,989

Provision for credit losses:

Provision for credit losses on loans

-

3,950

10,000

10,970

11,610

Provision for credit losses on unfunded commitments

(265

)

(535

)

-

577

(665

)

Provision for other credit losses

(190

)

150

58

181

52

Total provision for credit losses

(455

)

3,565

10,058

11,728

10,997

Net interest income after provision for credit losses

50,565

48,303

43,458

38,252

37,992

Noninterest income:

Wealth management revenue

6,529

5,931

5,868

5,559

5,698

Commercial FHA revenue

342

292

400

926

3,414

Residential mortgage banking revenue

1,562

1,574

2,285

3,049

2,723

Service charges on deposit accounts

1,916

1,826

2,149

2,092

1,706

Interchange revenue

3,797

3,375

3,137

3,283

3,013

Gain on sales of investment securities, net

377

-

-

1,721

-

Impairment on commercial mortgage servicing rights

(1,148

)

(1,275

)

(2,344

)

(1,418

)

(107

)

Company-owned life insurance

863

860

893

897

892

Other income

3,179

2,233

1,948

2,810

2,057

Total noninterest income

17,417

14,816

14,336

18,919

19,396

Noninterest expense:

Salaries and employee benefits

22,071

20,528

22,636

21,118

20,740

Occupancy and equipment

3,796

3,940

3,531

4,866

4,286

Data processing

6,288

5,993

5,987

5,721

5,458

Professional

5,549

2,185

1,912

1,861

1,606

Amortization of intangible assets

1,470

1,515

1,556

1,557

1,629

Loss on mortgage servicing rights held for sale

143

-

617

188

391

Impairment related to facilities optimization

-

-

(10

)

12,651

60

FHLB advances prepayment fees

3,669

8

4,872

-

-

Other expense

5,955

4,910

5,947

5,939

7,225

Total noninterest expense

48,941

39,079

47,048

53,901

41,395

Income before income taxes

19,041

24,040

10,746

3,270

15,993

Income taxes

(1,083

)

5,502

2,413

3,184

3,424

Net income

$

20,124

$

18,538

$

8,333

$

86

$

12,569

Basic earnings per common share

$

0.88

$

0.81

$

0.36

$

0.00

$

0.53

Diluted earnings per common share

$

0.88

$

0.81

$

0.36

$

0.00

$

0.53


MIDLAND STATES BANCORP, INC.

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

As of

June 30,

March 31,

December 31,

September 30,

June 30,

(in thousands)

2021

2021

2020

2020

2020

Assets

Cash and cash equivalents

$

425,100

$

631,219

$

341,640

$

461,196

$

519,868

Investment securities

756,831

690,390

686,135

618,974

639,693

Loans

4,835,866

4,910,806

5,103,331

4,941,466

4,839,423

Allowance for credit losses on loans

(58,664

)

(62,687

)

(60,443

)

(52,771

)

(47,093

)

Total loans, net

4,777,202

4,848,119

5,042,888

4,888,695

4,792,330

Loans held for sale

12,187

55,174

138,090

62,500

32,403

Premises and equipment, net

71,803

73,255

74,124

74,967

89,046

Other real estate owned

12,768

20,304

20,247

15,961

12,728

Loan servicing rights, at lower of cost or fair value

34,577

36,876

39,276

42,465

44,239

Goodwill

161,904

161,904

161,904

161,904

172,796

Other intangible assets, net

27,900

26,867

28,382

29,938

31,495

Cash surrender value of life insurance policies

148,277

146,864

146,004

145,112

144,215

Other assets

201,461

193,814

189,850

198,333

165,685

Total assets

$

6,630,010

$

6,884,786

$

6,868,540

$

6,700,045

$

6,644,498

Liabilities and Shareholders' Equity

Noninterest-bearing deposits

$

1,366,453

$

1,522,433

$

1,469,579

$

1,355,188

$

1,273,267

Interest-bearing deposits

3,829,898

3,818,080

3,631,437

3,673,548

3,669,840

Total deposits

5,196,351

5,340,513

5,101,016

5,028,736

4,943,107

Short-term borrowings

75,985

71,728

68,957

58,625

77,136

FHLB advances and other borrowings

440,171

529,171

779,171

693,640

693,865

Subordinated debt

138,906

169,888

169,795

169,702

169,610

Trust preferred debentures

49,094

48,954

48,814

48,682

48,551

Other liabilities

81,317

89,065

79,396

78,780

78,640

Total liabilities

5,981,824

6,249,319

6,247,149

6,078,165

6,010,909

Total shareholders’ equity

648,186

635,467

621,391

621,880

633,589

Total liabilities and shareholders’ equity

$

6,630,010

$

6,884,786

$

6,868,540

$

6,700,045

$

6,644,498


MIDLAND STATES BANCORP, INC.

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

As of

June 30,

March 31,

December 31,

September 30,

June 30,

(in thousands)

2021

2021

2020

2020

2020

Loan Portfolio

Commercial loans and leases

$

1,831,241

$

1,977,440

$

2,095,639

$

1,938,691

$

1,856,435

Commercial real estate

1,540,489

1,494,031

1,525,973

1,496,758

1,495,183

Construction and land development

212,508

191,870

172,737

177,894

207,593

Residential real estate

366,612

398,501

442,880

470,829

509,453

Consumer

885,016

848,964

866,102

857,294

770,759

Total loans

$

4,835,866

$

4,910,806

$

5,103,331

$

4,941,466

$

4,839,423

Deposit Portfolio

Noninterest-bearing demand

$

1,366,453

$

1,522,433

$

1,469,579

$

1,355,188

$

1,273,267

Interest-bearing:

Checking

1,619,436

1,601,449

1,568,888

1,581,216

1,484,728

Money market

787,688

819,455

785,871

826,454

877,675

Savings

669,277

653,256

597,966

580,748

594,685

Time

721,502

718,788

655,620

661,872

689,841

Brokered time

31,995

25,132

23,092

23,258

22,911

Total deposits

$

5,196,351

$

5,340,513

$

5,101,016

$

5,028,736

$

4,943,107


MIDLAND STATES BANCORP, INC.

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

For the Quarter Ended

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands)

2021

2021

2020

2020

2020

Average Balance Sheets

Cash and cash equivalents

$

509,886

$

350,061

$

415,686

$

491,728

$

489,941

Investment securities

734,462

680,202

672,937

628,705

650,356

Loans

4,826,234

4,992,802

4,998,912

4,803,940

4,696,288

Loans held for sale

36,299

65,365

45,196

44,880

99,169

Nonmarketable equity securities

49,388

55,935

51,906

50,765

50,661

Total interest-earning assets

6,156,269

6,144,365

6,184,637

6,020,018

5,986,415

Non-earning assets

589,336

602,017

602,716

625,522

619,411

Total assets

$

6,745,605

$

6,746,382

$

6,787,353

$

6,645,540

$

6,605,826

Interest-bearing deposits

$

3,815,179

$

3,757,108

$

3,680,645

$

3,656,833

$

3,651,406

Short-term borrowings

65,727

75,544

62,432

64,010

59,103

FHLB advances and other borrowings

519,490

617,504

682,981

693,721

692,470

Subordinated debt

165,155

169,844

169,751

169,657

169,560

Trust preferred debentures

49,026

48,887

48,751

48,618

48,487

Total interest-bearing liabilities

4,614,577

4,668,887

4,644,560

4,632,839

4,621,026

Noninterest-bearing deposits

1,411,428

1,370,604

1,446,359

1,303,963

1,280,983

Other noninterest-bearing liabilities

78,521

82,230

73,840

75,859

71,853

Shareholders' equity

641,079

624,661

622,594

632,879

631,964

Total liabilities and shareholders' equity

$

6,745,605

$

6,746,382

$

6,787,353

$

6,645,540

$

6,605,826

Yields

Earning Assets

Cash and cash equivalents

0.11

%

0.11

%

0.12

%

0.10

%

0.14

%

Investment securities

2.43

%

2.51

%

2.65

%

2.86

%

3.05

%

Loans

4.43

%

4.50

%

4.58

%

4.57

%

4.64

%

Loans held for sale

2.88

%

2.74

%

3.14

%

2.92

%

4.07

%

Nonmarketable equity securities

4.94

%

4.93

%

5.22

%

5.26

%

5.40

%

Total interest-earning assets

3.83

%

4.02

%

4.06

%

4.01

%

4.10

%

Interest-Bearing Liabilities

Interest-bearing deposits

0.31

%

0.34

%

0.36

%

0.46

%

0.61

%

Short-term borrowings

0.12

%

0.13

%

0.14

%

0.17

%

0.19

%

FHLB advances and other borrowings

1.91

%

1.69

%

1.71

%

1.85

%

1.69

%

Subordinated debt

5.61

%

5.57

%

5.60

%

5.58

%

5.85

%

Trust preferred debentures

4.00

%

4.08

%

4.03

%

4.16

%

4.86

%

Total interest-bearing liabilities

0.72

%

0.75

%

0.79

%

0.89

%

1.01

%

Cost of Deposits

0.23

%

0.25

%

0.26

%

0.34

%

0.45

%

Net Interest Margin

3.29

%

3.45

%

3.47

%

3.33

%

3.32

%


MIDLAND STATES BANCORP, INC.

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

As of and for the Quarter Ended

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands, except per share data)

2021

2021

2020

2020

2020

Asset Quality

Loans 30-89 days past due

$

20,224

$

24,819

$

31,460

$

28,188

$

36,551

Nonperforming loans

61,363

52,826

54,070

67,443

60,513

Nonperforming assets

76,926

75,004

75,432

84,795

74,707

Net charge-offs

4,023

1,706

2,328

5,292

3,062

Loans 30-89 days past due to total loans

0.42

%

0.51

%

0.62

%

0.57

%

0.76

%

Nonperforming loans to total loans

1.27

%

1.08

%

1.06

%

1.36

%

1.25

%

Nonperforming assets to total assets

1.16

%

1.09

%

1.10

%

1.27

%

1.12

%

Allowance for credit losses to total loans

1.21

%

1.28

%

1.18

%

1.07

%

0.97

%

Allowance for credit losses to nonperforming loans

95.60

%

118.67

%

111.79

%

78.25

%

77.82

%

Net charge-offs to average loans

0.33

%

0.14

%

0.19

%

0.44

%

0.26

%

Wealth Management

Trust assets under administration

$

4,077,581

$

3,560,427

$

3,480,759

$

3,260,893

$

3,253,784

Market Data

Book value per share at period end

$

28.96

$

28.43

$

27.83

$

27.51

$

27.62

Tangible book value per share at period end (1)

$

20.48

$

19.98

$

19.31

$

19.03

$

18.72

Market price at period end

$

26.27

$

27.74

$

17.87

$

12.85

$

14.95

Shares outstanding at period end

22,380,492

22,351,740

22,325,471

22,602,844

22,937,296

Capital

Total capital to risk-weighted assets

13.11

%

13.73

%

13.24

%

13.34

%

13.67

%

Tier 1 capital to risk-weighted assets

9.64

%

9.62

%

9.20

%

9.40

%

9.71

%

Tier 1 common capital to risk-weighted assets

8.44

%

8.39

%

7.99

%

8.18

%

8.44

%

Tier 1 leverage ratio

8.00

%

7.79

%

7.50

%

7.72

%

7.75

%

Tangible common equity to tangible assets (1)

7.12

%

6.67

%

6.46

%

6.61

%

6.67

%

(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

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands, except per share data)

2021

2021

2020

2020

2020

Income before income taxes - GAAP

$

19,041

$

24,040

$

10,746

$

3,270

$

15,993

Adjustments to noninterest income:

Gain on sales of investment securities, net

377

-

-

1,721

-

Other income

(27

)

75

3

(17

)

11

Total adjustments to noninterest income

350

75

3

1,704

11

Adjustments to noninterest expense:

Loss on mortgage servicing rights held for sale

143

-

617

188

391

Impairment related to facilities optimization

-

-

(10

)

12,651

60

FHLB advances prepayment fees

3,669

8

4,872

-

-

Integration and acquisition expenses

3,771

238

231

1,200

(6

)

Total adjustments to noninterest expense

7,583

246

5,710

14,039

445

Adjusted earnings pre tax

26,274

24,211

16,453

15,605

16,427

Adjusted earnings tax

6,519

5,549

3,982

3,582

3,543

Adjusted earnings - non-GAAP

$

19,755

$

18,662

$

12,471

$

12,023

$

12,884

Adjusted diluted earnings per common share

$

0.86

$

0.82

$

0.54

$

0.52

$

0.55

Adjusted return on average assets

1.17

%

1.12

%

0.73

%

0.72

%

0.78

%

Adjusted return on average shareholders' equity

12.36

%

12.12

%

7.97

%

7.56

%

8.20

%

Adjusted return on average tangible common equity

17.52

%

17.39

%

11.50

%

11.04

%

12.14

%

Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation

For the Quarter Ended

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands)

2021

2021

2020

2020

2020

Adjusted earnings pre tax - non- GAAP

$

26,274

$

24,211

$

16,453

$

15,605

$

16,427

Provision for credit losses

(455

)

3,565

10,058

11,728

10,997

Impairment on commercial mortgage servicing rights

1,148

1,275

2,344

1,418

107

Adjusted pre-tax, pre-provision earnings - non-GAAP

$

26,967

$

29,051

$

28,855

$

28,751

$

27,531

Adjusted pre-tax, pre-provision return on average assets

1.60

%

1.75

%

1.69

%

1.72

%

1.68

%


MIDLAND STATES BANCORP, INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)

Efficiency Ratio Reconciliation

For the Quarter Ended

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands)

2021

2021

2020

2020

2020

Noninterest expense - GAAP

$

48,941

$

39,079

$

47,048

$

53,901

$

41,395

Loss on mortgage servicing rights held for sale

(143

)

-

(617

)

(188

)

(391

)

Impairment related to facilities optimization

-

-

10

(12,651

)

(60

)

FHLB advances prepayment fees

(3,669

)

(8

)

(4,872

)

-

-

Integration and acquisition expenses

(3,771

)

(238

)

(231

)

(1,200

)

6

Adjusted noninterest expense

$

41,358

$

38,833

$

41,338

$

39,862

$

40,950

Net interest income - GAAP

$

50,110

$

51,868

$

53,516

$

49,980

$

48,989

Effect of tax-exempt income

383

386

413

430

438

Adjusted net interest income

50,493

52,254

53,929

50,410

49,427

Noninterest income - GAAP

17,417

14,816

14,336

18,919

19,396

Impairment on commercial mortgage servicing rights

1,148

1,275

2,344

1,418

107

Gain on sales of investment securities, net

(377

)

-

-

(1,721

)

-

Other

27

(75

)

(3

)

17

(11

)

Adjusted noninterest income

18,215

16,016

16,677

18,633

19,492

Adjusted total revenue

$

68,709

$

68,270

$

70,607

$

69,043

$

68,919

Efficiency ratio

60.19

%

56.88

%

58.55

%

57.74

%

59.42

%


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

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands, except per share data)

2021

2021

2020

2020

2020

Shareholders' Equity to Tangible Common Equity

Total shareholders' equity—GAAP

$

648,186

$

635,467

$

621,391

$

621,880

$

633,589

Adjustments:

Goodwill

(161,904

)

(161,904

)

(161,904

)

(161,904

)

(172,796

)

Other intangible assets, net

(27,900

)

(26,867

)

(28,382

)

(29,938

)

(31,495

)

Tangible common equity

$

458,382

$

446,696

$

431,105

$

430,038

$

429,298

Total Assets to Tangible Assets:

Total assets—GAAP

$

6,630,010

$

6,884,786

$

6,868,540

$

6,700,045

$

6,644,498

Adjustments:

Goodwill

(161,904

)

(161,904

)

(161,904

)

(161,904

)

(172,796

)

Other intangible assets, net

(27,900

)

(26,867

)

(28,382

)

(29,938

)

(31,495

)

Tangible assets

$

6,440,206

$

6,696,015

$

6,678,254

$

6,508,203

$

6,440,207

Common Shares Outstanding

22,380,492

22,351,740

22,325,471

22,602,844

22,937,296

Tangible Common Equity to Tangible Assets

7.12

%

6.67

%

6.46

%

6.61

%

6.67

%

Tangible Book Value Per Share

$

20.48

$

19.98

$

19.31

$

19.03

$

18.72

Return on Average Tangible Common Equity (ROATCE)

For the Quarter Ended

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands)

2021

2021

2020

2020

2020

Net income available to common shareholders

$

20,124

$

18,538

$

8,333

$

86

$

12,569

Average total shareholders' equity—GAAP

$

641,079

$

624,661

$

622,594

$

632,879

$

631,964

Adjustments:

Goodwill

(161,904

)

(161,904

)

(161,904

)

(168,771

)

(172,796

)

Other intangible assets, net

(26,931

)

(27,578

)

(29,123

)

(30,690

)

(32,275

)

Average tangible common equity

$

452,244

$

435,179

$

431,567

$

433,418

$

426,893

ROATCE

17.85

%

17.28

%

7.68

%

0.08

%

11.84

%