Highlights
- Net income of $16.3 million, or $0.67 diluted earnings per share
- Return on average assets of 1.14%
- Return on average shareholders’ equity of 10.81% and return on average tangible common equity of 16.40%
- Book value per share increased 2.2% to $25.50 and tangible book value per share increased 3.8% to $17.00
EFFINGHAM, Ill., Jan. 24, 2019 (GLOBE NEWSWIRE) — Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $16.3 million, or $0.67 diluted earnings per share, for the fourth quarter of 2018. This compares to net income of $8.5 million, or $0.35 diluted earnings per share, for the third quarter of 2018, which included $9.6 million of integration and acquisition expenses, and net income of $2.0 million, or $0.10 diluted earnings per share, for the fourth quarter of 2017, which included $2.7 million in integration and acquisition expenses and $4.5 million in tax expense related to the revaluation of the Company’s net deferred tax assets as a result of the decrease in the federal corporate tax rate.
“Having successfully completed the integration of Alpine Bancorporation, we are delivering on the higher level of earnings and profitability that we projected from this transaction,” said Jeffrey G. Ludwig, President and Chief Executive Officer of the Company. “We finished 2018 with positive trends in many areas including strong production from our commercial and consumer lending businesses, continued growth in our wealth management revenue, and an expansion in our net interest margin, excluding accretion income. We are also very pleased with our strong capital generation, as our tangible book value per share increased nearly 4% in the fourth quarter, and we saw significant increases in all of our capital ratios.”
Factors Affecting Comparability
The Company acquired Alpine Bancorporation, Inc. (“Alpine”) in February 2018. The financial position and results of operations of Alpine prior to its acquisition date are not included in the Company’s financial results.
Net Interest Income
Net interest income for the fourth quarter of 2018 was $48.5 million, an increase of 7.7% from $45.1 million for the third quarter of 2018. Excluding accretion income, net interest income increased $0.9 million, which is a 7.9% annualized increase from prior quarter. Accretion income associated with purchased loan portfolios totaled $4.3 million for the fourth quarter of 2018, compared with $1.7 million for the third quarter of 2018.
Relative to the fourth quarter of 2017, net interest income increased $12.5 million, or 34.7%. Accretion income for the fourth quarter of 2017 was $2.7 million. The increase in net interest income resulted from an $18.1 million increase in interest income on interest-earning assets, offset in part by a $5.6 million increase in interest expense. These increases were due to the impact of the acquisition of Alpine, as well as organic growth.
Net Interest Margin
Net interest margin for the fourth quarter of 2018 was 3.85%, compared to 3.59% for the third quarter of 2018. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 31 and 10 basis points to net interest margin in the fourth quarter of 2018 and third quarter of 2018, respectively. Excluding the impact of accretion income, net interest margin increased five basis points from the third quarter of 2018, primarily due to the impact of higher average loan yields.
Relative to the fourth quarter of 2017, net interest margin increased from 3.73%. Accretion income on purchased loan portfolios contributed 26 basis points to net interest margin in the fourth quarter of 2017. Excluding the impact of accretion income, net interest margin increased seven basis points from the fourth quarter of 2017 primarily due to the impact of higher average loan yields.
Noninterest Income
Noninterest income for the fourth quarter of 2018 was $21.2 million, an increase of 15.9% from $18.3 million for the third quarter of 2018. The increase was primarily attributable to higher commercial FHA revenue, community banking fees, net gain on sales of investment securities, and other income.
Relative to the fourth quarter of 2017, noninterest income increased 51.2% from $14.0 million. The increase was attributable to growth in all fee generating areas, partially due to the impact of the acquisition of Alpine, with the exception of residential mortgage banking revenue.
Wealth management revenue for the fourth quarter of 2018 was $5.7 million, an increase of 3.4% from $5.5 million in the third quarter of 2018. Compared to the fourth quarter of 2017, wealth management revenue increased 57.5%, which was primarily attributable to the addition of Alpine’s wealth management business.
Commercial FHA revenue for the fourth quarter of 2018 was $4.2 million, compared to $3.1 million in the third quarter of 2018. Commercial FHA revenue in the fourth quarter of 2018 included a $1.4 million recapture of mortgage servicing rights impairment. The Company originated $62.3 million in rate lock commitments during the fourth quarter of 2018, compared to $82.8 million in the prior quarter. Compared to the fourth quarter of 2017, commercial FHA revenue increased 34.1%.
Other income for the fourth quarter of 2018 was $3.9 million, compared to $3.0 million in the third quarter of 2018. The increase was primarily attributable to a gain on proceeds from our bank-owned life insurance program. Compared to the fourth quarter of 2017, other income increased 65.2%.
Noninterest Expense
Noninterest expense for the fourth quarter of 2018 was $45.4 million, which included $0.6 million in integration and acquisition expenses, compared with $50.3 million for the third quarter of 2018, which included $9.6 million in integration and acquisition expenses and $0.3 million in loss on mortgage servicing rights held for sale. Excluding integration and acquisition expenses and loss on mortgage servicing rights held for sale, noninterest expense increased $4.3 million, or 10.7%, from the prior quarter. The increase was primarily due to higher variable compensation and higher professional fees.
Relative to the fourth quarter of 2017, noninterest expense increased 25.4% from $36.2 million. Excluding integration and acquisition expenses and loss on mortgage servicing rights held for sale, noninterest expense increased 35.6% from $33.1 million. The increase was primarily due to the addition of personnel and facilities from Alpine.
Loan Portfolio
Total loans outstanding were $4.14 billion at December 31, 2018, compared with $4.16 billion at September 30, 2018 and $3.23 billion at December 31, 2017. The decrease in total loans from September 30, 2018 was primarily attributable to a decline in the commercial real estate portfolio, which was partially offset by organic growth in commercial loans and leases, and consumer lending. Equipment financing balances increased $64.7 million from September 30, 2018, which are booked within the commercial loans and leases portfolio. The increase in total loans from December 31, 2017 was primarily attributable to the addition of Alpine’s loans.
Deposits
Total deposits were $4.07 billion at December 31, 2018, compared with $4.14 billion at September 30, 2018, and $3.13 billion at December 31, 2017. The decrease in total deposits from September 30, 2018 was primarily related to outflows of public funds and the runoff of brokered deposits. The increase in total deposits from December 31, 2017 was primarily attributable to the addition of Alpine’s deposits.
Asset Quality
Nonperforming loans totaled $42.9 million, or 1.04% of total loans, at December 31, 2018, compared with $38.6 million, or 0.93% of total loans, at September 30, 2018, and $26.8 million, or 0.83% of total loans, at December 31, 2017. The increase in nonperforming loans during the fourth quarter of 2018 was primarily attributable to the downgrade of three commercial real estate loans.
Net charge-offs for the fourth quarter of 2018 were $2.2 million, or 0.21% of average loans on an annualized basis.
The Company recorded a provision for loan losses of $3.5 million for the fourth quarter of 2018. The Company’s allowance for loan losses was 0.51% of total loans and 48.7% of nonperforming loans at December 31, 2018, compared with 0.47% of total loans and 50.9% of nonperforming loans at September 30, 2018. Fair market value discounts recorded in connection with acquired loan portfolios represented 0.53% of total loans at December 31, 2018, compared with 0.59% of total loans at September 30, 2018.
Capital
At December 31, 2018, the Company exceeded all regulatory capital requirements under Basel III and was considered to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:
| December 31, 2018 |
Well Capitalized Regulatory Requirements |
|
| Total capital to risk-weighted assets | 12.79% | 10.00% |
| Tier 1 capital to risk-weighted assets | 10.25% | 8.00% |
| Tier 1 leverage ratio | 8.53% | 5.00% |
| Common equity Tier 1 capital | 8.76% | 6.50% |
| Tangible common equity to tangible assets (1) | 7.43% | NA |
(1) A non-GAAP financial measure. Refer to page 14 for a reconciliation to the comparable GAAP financial measures.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, January 25, 2019 to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; passcode: 6178589. A recorded replay can be accessed through February 1, 2019 by dialing (855) 859-2056; passcode: 6178589.
A slide presentation relating to the fourth quarter 2018 results will be accessible prior to the scheduled conference call. 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.
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 December 31, 2018, the Company had total assets of approximately $5.64 billion and its Wealth Management Group had assets under administration of approximately $2.95 billion. Midland provides a full range of commercial and consumer banking products and services, business equipment financing, merchant credit card services, trust and investment management, and insurance and financial planning services. In addition, multi-family and healthcare facility FHA financing is provided through Love Funding, Midland’s non-bank subsidiary. For additional information, visit https://www.midlandsb.com/ or follow Midland on LinkedIn at https://www.linkedin.com/company/midland-states-bank.
Non-GAAP Financial Measures
Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP. These non-GAAP financial measures include “Adjusted Earnings,” “Adjusted Diluted Earnings Per Common Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.
Forward-Looking Statements
Readers should note that in addition to the historical information contained herein, this press release includes “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company’s plans, objectives, future performance, goals and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; 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” or “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 [email protected] or (217) 342-7321
Stephen A. Erickson, Chief Financial Officer, at [email protected] or (217) 540-1712
Douglas J. Tucker, Sr. V.P., Corporate Counsel, at [email protected] or (217) 342-7321
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||
| Earnings Summary | ||||||||||||||||||||
| Net interest income | $ | 48,535 | $ | 45,081 | $ | 48,286 | $ | 38,185 | $ | 36,036 | ||||||||||
| Provision for loan losses | 3,467 | 2,103 | 1,854 | 2,006 | 6,076 | |||||||||||||||
| Noninterest income | 21,170 | 18,272 | 15,847 | 16,502 | 13,998 | |||||||||||||||
| Noninterest expense | 45,375 | 50,317 | 46,452 | 49,499 | 36,192 | |||||||||||||||
| Income before income taxes | 20,863 | 10,933 | 15,827 | 3,182 | 7,766 | |||||||||||||||
| Income taxes | 4,527 | 2,436 | 3,045 | 1,376 | 5,775 | |||||||||||||||
| Net income | 16,336 | 8,497 | 12,782 | 1,806 | 1,991 | |||||||||||||||
| Preferred stock dividends, net | 34 | 35 | 36 | 36 | 37 | |||||||||||||||
| Net income available to common shareholders | $ | 16,302 | $ | 8,462 | $ | 12,746 | $ | 1,770 | $ | 1,954 | ||||||||||
| Diluted earnings per common share | $ | 0.67 | $ | 0.35 | $ | 0.52 | $ | 0.08 | $ | 0.10 | ||||||||||
| Weighted average shares outstanding – diluted | 24,200,346 | 24,325,743 | 24,268,111 | 21,351,511 | 19,741,833 | |||||||||||||||
| Return on average assets | 1.14 | % | 0.59 | % | 0.91 | % | 0.15 | % | 0.18 | % | ||||||||||
| Return on average shareholders’ equity | 10.81 | % | 5.68 | % | 8.77 | % | 1.47 | % | 1.74 | % | ||||||||||
| Return on average tangible common equity (1) | 16.40 | % | 8.69 | % | 13.48 | % | 2.05 | % | 2.31 | % | ||||||||||
| Net interest margin | 3.85 | % | 3.59 | % | 3.91 | % | 3.69 | % | 3.73 | % | ||||||||||
| Efficiency ratio (1) | 65.50 | % | 63.02 | % | 67.76 | % | 68.39 | % | 64.64 | % | ||||||||||
| Adjusted Earnings Performance Summary | ||||||||||||||||||||
| Adjusted earnings (1) | $ | 16,397 | $ | 15,632 | $ | 14,469 | $ | 10,265 | $ | 8,403 | ||||||||||
| Adjusted diluted earnings per common share (1) | $ | 0.67 | $ | 0.64 | $ | 0.59 | $ | 0.48 | $ | 0.42 | ||||||||||
| Adjusted return on average assets (1) | 1.14 | % | 1.09 | % | 1.03 | % | 0.87 | % | 0.76 | % | ||||||||||
| Adjusted return on average shareholders’ equity (1) | 10.85 | % | 10.45 | % | 9.93 | % | 8.34 | % | 7.34 | % | ||||||||||
| Adjusted return on average tangible common equity (1) | 16.46 | % | 16.02 | % | 15.27 | % | 11.86 | % | 9.88 | % | ||||||||||
| (1) Non-GAAP financial measures. Refer to pages 12 – 14 for a reconciliation to the comparable GAAP financial measures. | ||||||||||||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (in thousands, except per share data) | 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||
| Net interest income: | ||||||||||||||||||||
| Total interest income | $ | 61,592 | $ | 56,987 | $ | 58,283 | $ | 46,505 | $ | 43,500 | ||||||||||
| Total interest expense | 13,057 | 11,906 | 9,997 | 8,320 | 7,464 | |||||||||||||||
| Net interest income | 48,535 | 45,081 | 48,286 | 38,185 | 36,036 | |||||||||||||||
| Provision for loan losses | 3,467 | 2,103 | 1,854 | 2,006 | 6,076 | |||||||||||||||
| Net interest income after provision for loan losses | 45,068 | 42,978 | 46,432 | 36,179 | 29,960 | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Commercial FHA revenue | 4,194 | 3,130 | 326 | 3,330 | 3,127 | |||||||||||||||
| Residential mortgage banking revenue | 1,041 | 1,154 | 2,116 | 1,418 | 1,556 | |||||||||||||||
| Wealth management revenue | 5,651 | 5,467 | 5,316 | 4,079 | 3,587 | |||||||||||||||
| Service charges on deposit accounts | 2,976 | 2,804 | 2,693 | 1,967 | 1,828 | |||||||||||||||
| Interchange revenue | 2,941 | 2,759 | 2,929 | 2,045 | 1,538 | |||||||||||||||
| Gain (loss) on sales of investment securities, net | 469 | – | (70 | ) | 65 | 2 | ||||||||||||||
| Other income | 3,898 | 2,958 | 2,537 | 3,598 | 2,360 | |||||||||||||||
| Total noninterest income | 21,170 | 18,272 | 15,847 | 16,502 | 13,998 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Salaries and employee benefits | 23,020 | 22,528 | 23,467 | 28,395 | 17,344 | |||||||||||||||
| Occupancy and equipment | 4,914 | 5,040 | 4,708 | 4,252 | 3,859 | |||||||||||||||
| Data processing | 5,660 | 10,817 | 5,106 | 4,479 | 3,640 | |||||||||||||||
| Professional | 2,752 | 3,087 | 3,185 | 3,758 | 3,953 | |||||||||||||||
| Amortization of intangible assets | 1,852 | 1,853 | 1,576 | 1,675 | 1,035 | |||||||||||||||
| Loss on mortgage servicing rights held for sale | – | 270 | 188 | – | 442 | |||||||||||||||
| Other expense | 7,177 | 6,722 | 8,222 | 6,940 | 5,919 | |||||||||||||||
| Total noninterest expense | 45,375 | 50,317 | 46,452 | 49,499 | 36,192 | |||||||||||||||
| Income before income taxes | 20,863 | 10,933 | 15,827 | 3,182 | 7,766 | |||||||||||||||
| Income taxes | 4,527 | 2,436 | 3,045 | 1,376 | 5,775 | |||||||||||||||
| Net income | 16,336 | 8,497 | 12,782 | 1,806 | 1,991 | |||||||||||||||
| Preferred stock dividends, net | 34 | 35 | 36 | 36 | 37 | |||||||||||||||
| Net income available to common shareholders | $ | 16,302 | $ | 8,462 | $ | 12,746 | $ | 1,770 | $ | 1,954 | ||||||||||
| Basic earnings per common share | $ | 0.68 | $ | 0.35 | $ | 0.53 | $ | 0.08 | $ | 0.10 | ||||||||||
| Diluted earnings per common share | $ | 0.67 | $ | 0.35 | $ | 0.52 | $ | 0.08 | $ | 0.10 | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||||||
| As of | ||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||||||
| (in thousands) | 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 213,700 | $ | 242,433 | $ | 276,331 | $ | 331,183 | $ | 215,202 | ||||||||||||||
| Investment securities | 660,785 | 685,753 | 708,001 | 738,172 | 450,525 | |||||||||||||||||||
| Loans | 4,137,551 | 4,156,282 | 4,095,811 | 4,029,150 | 3,226,678 | |||||||||||||||||||
| Allowance for loan losses | (20,903 | ) | (19,631 | ) | (18,246 | ) | (17,704 | ) | (16,431 | ) | ||||||||||||||
| Total loans, net | 4,116,648 | 4,136,651 | 4,077,565 | 4,011,446 | 3,210,247 | |||||||||||||||||||
| Loans held for sale, at fair value | 30,401 | 35,246 | 41,449 | 25,267 | 50,089 | |||||||||||||||||||
| Premises and equipment, net | 94,840 | 95,062 | 94,783 | 95,332 | 76,162 | |||||||||||||||||||
| Other real estate owned | 3,483 | 3,684 | 3,911 | 5,059 | 5,708 | |||||||||||||||||||
| Mortgage servicing rights, at lower of cost or fair value | 53,447 | 51,626 | 52,381 | 56,427 | 56,352 | |||||||||||||||||||
| Mortgage servicing rights held for sale | 3,545 | 4,419 | 4,806 | 3,962 | 10,176 | |||||||||||||||||||
| Intangible assets | 37,376 | 39,228 | 41,081 | 46,473 | 16,932 | |||||||||||||||||||
| Goodwill | 164,673 | 164,044 | 164,044 | 155,674 | 98,624 | |||||||||||||||||||
| Cash surrender value of life insurance policies | 138,783 | 138,600 | 137,681 | 136,766 | 113,366 | |||||||||||||||||||
| Other assets | 119,992 | 127,866 | 128,567 | 117,611 | 109,318 | |||||||||||||||||||
| Total assets | $ | 5,637,673 | $ | 5,724,612 | $ | 5,730,600 | $ | 5,723,372 | $ | 4,412,701 | ||||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 972,164 | $ | 991,311 | $ | 1,001,802 | $ | 1,037,710 | $ | 724,443 | ||||||||||||||
| Interest-bearing deposits | 3,102,006 | 3,151,895 | 3,158,055 | 3,196,105 | 2,406,646 | |||||||||||||||||||
| Total deposits | 4,074,170 | 4,143,206 | 4,159,857 | 4,233,815 | 3,131,089 | |||||||||||||||||||
| Short-term borrowings | 124,235 | 145,450 | 114,536 | 130,693 | 156,126 | |||||||||||||||||||
| FHLB advances and other borrowings | 640,631 | 652,253 | 678,873 | 587,493 | 496,436 | |||||||||||||||||||
| Subordinated debt | 94,134 | 94,093 | 94,053 | 94,013 | 93,972 | |||||||||||||||||||
| Trust preferred debentures | 47,794 | 47,676 | 47,559 | 47,443 | 47,330 | |||||||||||||||||||
| Other liabilities | 48,184 | 47,788 | 43,187 | 44,530 | 38,203 | |||||||||||||||||||
| Total liabilities | 5,029,148 | 5,130,466 | 5,138,065 | 5,137,987 | 3,963,156 | |||||||||||||||||||
| Total shareholders’ equity | 608,525 | 594,146 | 592,535 | 585,385 | 449,545 | |||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 5,637,673 | $ | 5,724,612 | $ | 5,730,600 | $ | 5,723,372 | $ | 4,412,701 | ||||||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (in thousands) | 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||
| Loan Portfolio | ||||||||||||||||||||
| Commercial loans and leases | $ | 1,074,935 | $ | 1,034,546 | $ | 991,164 | $ | 1,026,253 | $ | 761,073 | ||||||||||
| Commercial real estate loans | 1,639,155 | 1,711,926 | 1,711,296 | 1,773,510 | 1,440,011 | |||||||||||||||
| Construction and land development loans | 232,229 | 239,480 | 247,889 | 234,837 | 200,587 | |||||||||||||||
| Residential real estate loans | 578,048 | 586,134 | 601,808 | 570,321 | 453,552 | |||||||||||||||
| Consumer loans | 613,184 | 584,196 | 543,654 | 424,229 | 371,455 | |||||||||||||||
| Total loans | $ | 4,137,551 | $ | 4,156,282 | $ | 4,095,811 | $ | 4,029,150 | $ | 3,226,678 | ||||||||||
| Deposit Portfolio | ||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 972,164 | $ | 991,311 | $ | 1,001,802 | $ | 1,037,710 | $ | 724,443 | ||||||||||
| Interest-bearing: | ||||||||||||||||||||
| Checking accounts | 1,002,275 | 1,047,914 | 1,024,506 | 993,253 | 785,934 | |||||||||||||||
| Money market accounts | 862,171 | 836,151 | 843,984 | 840,415 | 646,426 | |||||||||||||||
| Savings accounts | 442,132 | 445,640 | 460,560 | 466,887 | 281,212 | |||||||||||||||
| Time deposits | 633,787 | 633,654 | 638,215 | 672,034 | 502,810 | |||||||||||||||
| Brokered deposits | 161,641 | 188,536 | 190,790 | 223,516 | 190,264 | |||||||||||||||
| Total deposits | $ | 4,074,170 | $ | 4,143,206 | $ | 4,159,857 | $ | 4,233,815 | $ | 3,131,089 | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (dollars in thousands) | 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||
| Average Balance Sheets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 155,280 | $ | 154,526 | $ | 227,499 | $ | 138,275 | $ | 173,540 | ||||||||||
| Investment securities | 676,483 | 700,018 | 731,017 | 548,168 | 461,475 | |||||||||||||||
| Loans | 4,139,831 | 4,106,367 | 3,982,958 | 3,477,917 | 3,198,036 | |||||||||||||||
| Loans held for sale | 51,981 | 48,715 | 31,220 | 40,841 | 40,615 | |||||||||||||||
| Nonmarketable equity securities | 42,708 | 42,770 | 38,872 | 34,890 | 33,703 | |||||||||||||||
| Total interest-earning assets | 5,066,283 | 5,052,396 | 5,011,566 | 4,240,091 | 3,907,369 | |||||||||||||||
| Non-earning assets | 624,378 | 639,323 | 639,864 | 536,750 | 497,502 | |||||||||||||||
| Total assets | $ | 5,690,661 | $ | 5,691,719 | $ | 5,651,430 | $ | 4,776,841 | $ | 4,404,871 | ||||||||||
| Interest-bearing deposits | $ | 3,123,134 | $ | 3,172,422 | $ | 3,158,816 | $ | 2,675,339 | $ | 2,433,461 | ||||||||||
| Short-term borrowings | 143,869 | 139,215 | 120,794 | 148,703 | 181,480 | |||||||||||||||
| FHLB advances and other borrowings | 645,642 | 608,153 | 573,107 | 489,567 | 472,709 | |||||||||||||||
| Subordinated debt | 94,115 | 94,075 | 94,035 | 93,993 | 88,832 | |||||||||||||||
| Trust preferred debentures | 47,737 | 47,601 | 47,488 | 47,373 | 47,263 | |||||||||||||||
| Total interest-bearing liabilities | 4,054,497 | 4,061,466 | 3,994,240 | 3,454,975 | 3,223,745 | |||||||||||||||
| Noninterest-bearing deposits | 989,954 | 989,142 | 1,025,308 | 782,164 | 684,907 | |||||||||||||||
| Other noninterest-bearing liabilities | 46,487 | 47,654 | 47,229 | 40,761 | 42,251 | |||||||||||||||
| Shareholders’ equity | 599,723 | 593,457 | 584,653 | 498,941 | 453,968 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 5,690,661 | $ | 5,691,719 | $ | 5,651,430 | $ | 4,776,841 | $ | 4,404,871 | ||||||||||
| Yields | ||||||||||||||||||||
| Cash and cash equivalents | 2.24 | % | 1.96 | % | 1.79 | % | 1.53 | % | 1.28 | % | ||||||||||
| Investment securities | 3.04 | % | 3.01 | % | 2.91 | % | 2.87 | % | 3.01 | % | ||||||||||
| Loans | 5.28 | % | 4.88 | % | 5.21 | % | 4.85 | % | 4.88 | % | ||||||||||
| Loans held for sale | 3.92 | % | 4.17 | % | 3.79 | % | 4.25 | % | 3.62 | % | ||||||||||
| Nonmarketable equity securities | 5.20 | % | 5.01 | % | 4.97 | % | 4.64 | % | 4.78 | % | ||||||||||
| Total interest-earning assets | 4.87 | % | 4.52 | % | 4.71 | % | 4.49 | % | 4.48 | % | ||||||||||
| Interest-bearing deposits | 0.86 | % | 0.77 | % | 0.64 | % | 0.62 | % | 0.58 | % | ||||||||||
| Short-term borrowings | 0.67 | % | 0.61 | % | 0.38 | % | 0.34 | % | 0.26 | % | ||||||||||
| FHLB advances and other borrowings | 2.26 | % | 2.09 | % | 1.81 | % | 1.55 | % | 1.42 | % | ||||||||||
| Subordinated debt | 6.43 | % | 6.44 | % | 6.44 | % | 6.44 | % | 6.46 | % | ||||||||||
| Trust preferred debentures | 6.93 | % | 6.81 | % | 6.59 | % | 5.94 | % | 5.51 | % | ||||||||||
| Total interest-bearing liabilities | 1.28 | % | 1.16 | % | 1.00 | % | 0.98 | % | 0.92 | % | ||||||||||
| Net interest margin | 3.85 | % | 3.59 | % | 3.91 | % | 3.69 | % | 3.73 | % | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| As of and for the Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||
| Asset Quality | ||||||||||||||||||||
| Loans 30-89 days past due | $ | 25,213 | $ | 22,678 | $ | 19,362 | $ | 20,138 | $ | 15,405 | ||||||||||
| Nonperforming loans | 42,899 | 38,561 | 28,342 | 26,499 | 26,760 | |||||||||||||||
| Nonperforming assets | 45,899 | 41,638 | 31,542 | 29,938 | 30,894 | |||||||||||||||
| Net charge-offs | 2,195 | 718 | 1,312 | 733 | 6,506 | |||||||||||||||
| Loans 30-89 days past due to total loans | 0.61 | % | 0.55 | % | 0.47 | % | 0.50 | % | 0.48 | % | ||||||||||
| Nonperforming loans to total loans | 1.04 | % | 0.93 | % | 0.69 | % | 0.66 | % | 0.83 | % | ||||||||||
| Nonperforming assets to total assets | 0.81 | % | 0.73 | % | 0.55 | % | 0.52 | % | 0.70 | % | ||||||||||
| Allowance for loan losses to total loans | 0.51 | % | 0.47 | % | 0.45 | % | 0.44 | % | 0.51 | % | ||||||||||
| Allowance for loan losses to nonperforming loans | 48.73 | % | 50.91 | % | 64.38 | % | 66.81 | % | 61.40 | % | ||||||||||
| Net charge-offs to average loans | 0.21 | % | 0.07 | % | 0.13 | % | 0.09 | % | 0.81 | % | ||||||||||
| Wealth Management | ||||||||||||||||||||
| Trust assets under administration | $ | 2,945,084 | $ | 3,218,013 | $ | 3,188,909 | $ | 3,125,051 | $ | 2,051,249 | ||||||||||
| Market Data | ||||||||||||||||||||
| Book value per share at period end | $ | 25.50 | $ | 24.96 | $ | 24.92 | $ | 24.67 | $ | 23.35 | ||||||||||
| Tangible book value per share at period end (1) | $ | 17.00 | $ | 16.38 | $ | 16.25 | $ | 16.11 | $ | 17.31 | ||||||||||
| Market price at period end | $ | 22.34 | $ | 32.10 | $ | 34.26 | $ | 31.56 | $ | 32.48 | ||||||||||
| Shares outstanding at period end | 23,751,798 | 23,694,637 | 23,664,596 | 23,612,430 | 19,122,049 | |||||||||||||||
| Capital | ||||||||||||||||||||
| Total capital to risk-weighted assets | 12.79 | % | 12.35 | % | 12.27 | % | 12.37 | % | 13.26 | % | ||||||||||
| Tier 1 capital to risk-weighted assets | 10.25 | % | 9.85 | % | 9.78 | % | 9.84 | % | 10.19 | % | ||||||||||
| Tier 1 leverage ratio | 8.53 | % | 8.24 | % | 8.16 | % | 9.55 | % | 8.63 | % | ||||||||||
| Tier 1 common capital to risk-weighted assets | 8.76 | % | 8.37 | % | 8.28 | % | 8.30 | % | 8.45 | % | ||||||||||
| Tangible common equity to tangible assets (1) | 7.43 | % | 7.03 | % | 6.96 | % | 6.89 | % | 7.70 | % | ||||||||||
| (1) Non-GAAP financial measures. Refer to pages 12 – 14 for a reconciliation to the comparable GAAP financial measures. | ||||||||||||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||
| Adjusted Earnings Reconciliation | ||||||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||||||
| (dollars in thousands, except per share data) | 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||||||
| Income before income taxes – GAAP | $ | 20,863 | $ | 10,933 | $ | 15,827 | $ | 3,182 | $ | 7,766 | ||||||||||||||
| Adjustments to noninterest income: | ||||||||||||||||||||||||
| Gain (loss) on sales of investment securities, net | 469 | – | (70 | ) | 65 | 2 | ||||||||||||||||||
| Other | (1 | ) | (12 | ) | (48 | ) | 150 | 37 | ||||||||||||||||
| Total adjustments to noninterest income | 468 | (12 | ) | (118 | ) | 215 | 39 | |||||||||||||||||
| Adjustments to noninterest expense: | ||||||||||||||||||||||||
| Loss on mortgage servicing rights held for sale | – | 270 | 188 | – | 442 | |||||||||||||||||||
| Integration and acquisition expenses | 553 | 9,559 | 2,019 | 11,884 | 2,686 | |||||||||||||||||||
| Total adjustments to noninterest expense | 553 | 9,829 | 2,207 | 11,884 | 3,128 | |||||||||||||||||||
| Adjusted earnings pre tax | 20,948 | 20,774 | 18,152 | 14,851 | 10,855 | |||||||||||||||||||
| Adjusted earnings tax | 4,551 | 5,142 | 3,683 | 4,586 | 6,992 | |||||||||||||||||||
| Revaluation of net deferred tax assets | – | – | – | – | (4,540 | ) | ||||||||||||||||||
| Adjusted earnings – non-GAAP | 16,397 | 15,632 | 14,469 | 10,265 | 8,403 | |||||||||||||||||||
| Preferred stock dividends, net | 34 | 35 | 36 | 36 | 37 | |||||||||||||||||||
| Adjusted earnings available to common shareholders – non-GAAP | $ | 16,363 | $ | 15,597 | $ | 14,433 | $ | 10,229 | $ | 8,366 | ||||||||||||||
| Adjusted diluted earnings per common share | $ | 0.67 | $ | 0.64 | $ | 0.59 | $ | 0.48 | $ | 0.42 | ||||||||||||||
| Adjusted return on average assets | 1.14 | % | 1.09 | % | 1.03 | % | 0.87 | % | 0.76 | % | ||||||||||||||
| Adjusted return on average shareholders’ equity | 10.85 | % | 10.45 | % | 9.93 | % | 8.34 | % | 7.34 | % | ||||||||||||||
| Adjusted return on average tangible common equity | 16.46 | % | 16.02 | % | 15.27 | % | 11.86 | % | 9.88 | % | ||||||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (continued) | |||||||||||||||||||||||||
| Efficiency Ratio Reconciliation | |||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
| (dollars in thousands) | 2018 | 2018 | 2018 | 2018 | 2017 | ||||||||||||||||||||
| Noninterest expense – GAAP | $ | 45,375 | $ | 50,317 | $ | 46,452 | $ | 49,499 | $ | 36,192 | |||||||||||||||
| Loss on mortgage servicing rights held for sale | – | (270 | ) | (188 | ) | – | (442 | ) | |||||||||||||||||
| Integration and acquisition expenses | (553 | ) | (9,559 | ) | (2,019 | ) | (11,884 | ) | (2,686 | ) | |||||||||||||||
| Adjusted noninterest expense | $ | 44,822 | $ | 40,488 | $ | 44,245 | $ | 37,615 | $ | 33,064 | |||||||||||||||
| Net interest income – GAAP | $ | 48,535 | $ | 45,081 | $ | 48,286 | $ | 38,185 | $ | 36,036 | |||||||||||||||
| Effect of tax-exempt income | 574 | 585 | 541 | 394 | 659 | ||||||||||||||||||||
| Adjusted net interest income | 49,109 | 45,666 | 48,827 | 38,579 | 36,695 | ||||||||||||||||||||
| Noninterest income – GAAP | $ | 21,170 | $ | 18,272 | $ | 15,847 | $ | 16,502 | $ | 13,998 | |||||||||||||||
| Mortgage servicing rights (recapture) impairment | (1,380 | ) | 297 | 500 | 133 | 494 | |||||||||||||||||||
| (Gain) loss on sales of investment securities, net | (469 | ) | – | 70 | (65 | ) | (2 | ) | |||||||||||||||||
| Other | 1 | 12 | 48 | (150 | ) | (37 | ) | ||||||||||||||||||
| Adjusted noninterest income | 19,322 | 18,581 | 16,465 | 16,420 | 14,453 | ||||||||||||||||||||
| Adjusted total revenue | $ | 68,431 | $ | 64,247 | $ | 65,292 | $ | 54,999 | $ | 51,148 | |||||||||||||||
| Efficiency ratio | 65.50 | % | 63.02 | % | 67.76 | % | 68.39 | % | 64.64 | % | |||||||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (continued) | |||||||||||||||||||||||||
| Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share | |||||||||||||||||||||||||
| As of | |||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
| (dollars in thousands, except per share data) | 2018 | 2018 | 2018 | 2018 | 2017 | ||||||||||||||||||||
| Shareholders’ Equity to Tangible Common Equity | |||||||||||||||||||||||||
| Total shareholders’ equity—GAAP | $ | 608,525 | $ | 594,146 | $ | 592,535 | $ | 585,385 | $ | 449,545 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||||
| Preferred stock | (2,781 | ) | (2,829 | ) | (2,876 | ) | (2,923 | ) | (2,970 | ) | |||||||||||||||
| Goodwill | (164,673 | ) | (164,044 | ) | (164,044 | ) | (155,674 | ) | (98,624 | ) | |||||||||||||||
| Other intangibles | (37,376 | ) | (39,228 | ) | (41,081 | ) | (46,473 | ) | (16,932 | ) | |||||||||||||||
| Tangible common equity | $ | 403,695 | $ | 388,045 | $ | 384,534 | $ | 380,315 | $ | 331,019 | |||||||||||||||
| Total Assets to Tangible Assets: | |||||||||||||||||||||||||
| Total assets—GAAP | $ | 5,637,673 | $ | 5,724,612 | $ | 5,730,600 | $ | 5,723,372 | $ | 4,412,701 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||||
| Goodwill | (164,673 | ) | (164,044 | ) | (164,044 | ) | (155,674 | ) | (98,624 | ) | |||||||||||||||
| Other intangibles | (37,376 | ) | (39,228 | ) | (41,081 | ) | (46,473 | ) | (16,932 | ) | |||||||||||||||
| Tangible assets | $ | 5,435,624 | $ | 5,521,340 | $ | 5,525,475 | $ | 5,521,225 | $ | 4,297,145 | |||||||||||||||
| Common Shares Outstanding | 23,751,798 | 23,694,637 | 23,664,596 | 23,612,430 | 19,122,049 | ||||||||||||||||||||
| Tangible Common Equity to Tangible Assets | 7.43 | % | 7.03 | % | 6.96 | % | 6.89 | % | 7.70 | % | |||||||||||||||
| Tangible Book Value Per Share | $ | 17.00 | $ | 16.38 | $ | 16.25 | $ | 16.11 | $ | 17.31 | |||||||||||||||
| Return on Average Tangible Common Equity (ROATCE) | |||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
| (dollars in thousands) | 2018 | 2018 | 2018 | 2018 | 2017 | ||||||||||||||||||||
| Net income available to common shareholders | $ | 16,302 | $ | 8,462 | $ | 12,746 | $ | 1,770 | $ | 1,954 | |||||||||||||||
| Average total shareholders’ equity—GAAP | $ | 599,723 | $ | 593,457 | $ | 584,653 | $ | 498,941 | $ | 453,968 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||||
| Preferred stock | (2,812 | ) | (2,859 | ) | (2,905 | ) | (2,952 | ) | (2,997 | ) | |||||||||||||||
| Goodwill | (164,051 | ) | (164,044 | ) | (158,461 | ) | (118,996 | ) | (97,406 | ) | |||||||||||||||
| Other intangibles | (38,394 | ) | (40,228 | ) | (44,098 | ) | (27,156 | ) | (17,495 | ) | |||||||||||||||
| Average tangible common equity | $ | 394,466 | $ | 386,326 | $ | 379,189 | $ | 349,837 | $ | 336,070 | |||||||||||||||
| ROATCE | 16.40 | % | 8.69 | % | 13.48 | % | 2.05 | % | 2.31 | % | |||||||||||||||
