Midland States Bancorp Inc (MSBI) Reports Mixed Q4 Earnings Amid Economic Headwinds
Net Income: Q4 net income available to common shareholders increased to $18.5 million, or $0.84 per diluted share, from $9.2 million, or $0.41 per diluted share in Q3.
Adjusted Earnings: Adjusted earnings available to common shareholders were $19.8 million, or $0.89 per diluted share, compared to $17.3 million, or $0.78 per diluted share in Q3.
Capital Ratios: Common equity tier 1 capital ratio improved to 8.40% from 8.07% in the previous quarter.
Net Interest Margin: Slight increase to 3.21% from 3.20% in the prior quarter.
Efficiency Ratio: Improved to 55.2% from 55.8% in Q3, indicating better cost management.
Loan Portfolio: Total loans decreased to $6.13 billion from $6.28 billion in Q3 due to selective loan origination and runoff of equipment finance and consumer loans.
Noninterest Income: Increased to $20.5 million in Q4, including a $1.1 million gain from the sale of Visa B stock.
On January 25, 2024, Midland States Bancorp Inc (NASDAQ:MSBI) released its 8-K filing, detailing its financial performance for the fourth quarter of 2023. The company, a diversified financial holding company, reported a net income available to common shareholders of $18.5 million, or $0.84 per diluted share, marking a significant increase from the $9.2 million, or $0.41 per diluted share, reported in the third quarter of 2023. This performance also contrasts with the $29.7 million, or $1.30 per diluted share, reported in the fourth quarter of 2022.
Adjusted earnings, which exclude certain non-recurring transactions, stood at $19.8 million, or $0.89 per diluted share, compared to $17.3 million, or $0.78 per diluted share in the previous quarter. The company's tangible book value per share also saw a healthy increase of 7.8% from the prior quarter to $23.35.
Financial Performance and Challenges
Midland States Bancorp Inc (NASDAQ:MSBI) experienced a mixed quarter with several financial achievements, including an improved common equity tier 1 capital ratio and a slight increase in net interest margin. However, the company faced challenges in its loan portfolio, which decreased by $149.8 million, or 2.4%, from the previous quarter. This decline was attributed to a more selective and deliberate approach to loan origination, balancing liquidity and funding costs, and the intentional runoff of equipment finance and consumer loans.
President and CEO Jeffrey G. Ludwig commented on the quarter's results, stating,
While continuing to prioritize prudent risk management, we delivered another quarter of strong financial results with a higher level of earnings and returns than the prior quarter, as well as a slight increase in our net interest margin and improvement in our efficiency ratio."
Ludwig also highlighted the company's focus on high-quality commercial relationships and the inflow of commercial deposits, which has enabled an improved deposit mix.
Income Statement and Balance Sheet Highlights
The company's net interest income, on a tax-equivalent basis, was $58.3 million for the fourth quarter, a slight decrease from the $58.8 million reported in the third quarter. The tax-equivalent net interest margin was 3.21%, compared to 3.20% in the prior quarter. Noninterest income saw a substantial increase to $20.5 million, boosted by a $1.1 million gain from the sale of Visa B stock and incremental servicing revenues.
On the balance sheet, total assets stood at $7.87 billion, with portfolio loans at $6.13 billion. The company's loan quality metrics showed some deterioration, with loans 30-89 days past due increasing to $82.8 million, and non-performing loans remaining flat at $56.4 million.
Deposits decreased slightly to $6.31 billion, with a shift in the deposit mix from noninterest-bearing to interest-bearing deposits due to rising interest rates. The cost of interest-bearing deposits increased by 13 basis points to 2.93% in the fourth quarter.
Looking Forward
Despite the challenges, Midland States Bancorp Inc (NASDAQ:MSBI) remains optimistic about its future performance. The company is investing in areas such as Wealth Management and expanding its presence in the St. Louis market. Additionally, the Banking-as-a-Service initiative is expected to contribute to deposit gathering and fee income in 2024.
For more detailed information and financial tables, please refer to the full 8-K filing.
Midland States Bancorp Inc (NASDAQ:MSBI) continues to navigate the complex financial landscape with a focus on maintaining strong financial performance and capitalizing on strategic growth opportunities.
Explore the complete 8-K earnings release (here) from Midland States Bancorp Inc for further details.
This article first appeared on GuruFocus.
