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 | % | ||||||||||