Press Release

Midland States Bancorp, Inc. Announces 2018 First Quarter Results

Highlights

  • Net income of $1.8 million, or $0.08 diluted earnings per share, which included $11.9 million, or $0.44 per diluted share, of integration and acquisition expenses

  • Acquisition of Alpine Bancorporation, Inc. completed on February 28, 2018

  • Total assets surpassed $5.7 billion at March 31, 2018

  • Wealth management assets under administration reached $3.1 billion at March 31, 2018

EFFINGHAM, Ill., April 26, 2018 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq:MSBI) (the “Company”) today reported financial results for the first quarter of 2018, which included $11.9 million, or $0.44 per diluted share, of integration and acquisition expenses.  Inclusive of these expenses, the Company reported net income of $1.8 million, or $0.08 diluted earnings per share, for the first quarter of 2018.  This compares to net income of $2.0 million, or $0.10 diluted earnings per share, for the fourth quarter of 2017, and net income of $8.5 million, or $0.52 diluted earnings per share, for the first quarter of 2017.  Financial results for the first quarter of 2018 include one month of operations of Alpine Bank, which was acquired on February 28, 2018. 

“Our first quarter performance was highlighted by the completion of our acquisition of Alpine Bancorporation,” said Leon J. Holschbach, Chief Executive Officer of the Company.  “Alpine significantly strengthens our franchise by providing a talented team of bankers, an attractive deposit base, and another $1 billion in assets for our wealth management business.  Aside from completing the acquisition, we saw a number of positive operating trends during the first quarter including an expansion in our net interest margin, excluding the impact of accretion income, and good expense management.  As we integrate Alpine’s operations and work to achieve the synergies we project for this transaction, we believe we will drive additional efficiencies and positively impact our level of profitability in the future.”

Adjusted Earnings

Financial results for the first quarter of 2018 included $11.9 million in integration and acquisition expenses.  Excluding these expenses, adjusted earnings were $11.3 million, or $0.52 diluted earnings per share, for the first quarter of 2018. 

Financial results for the fourth quarter of 2017 included $4.5 million of additional tax expense related to the revaluation of the Company’s net deferred tax assets, $2.7 million in integration and acquisition expenses, and $0.4 million in loss on mortgage servicing rights (“MSRs”) held-for-sale.  Excluding these expenses, adjusted earnings were $8.4 million, or $0.42 diluted earnings per share, for the fourth quarter of 2017. 

The increase in adjusted earnings per share was primarily attributable to the earnings contribution from Alpine Bank and a decrease in the provision for loan losses.

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.

Factors Affecting Comparability

Most recently, Midland acquired Alpine Bancorporation, Inc., Centrue Financial Corporation (“Centrue”) and CedarPoint Investment Advisors (“CedarPoint”) in February 2018, June 2017 and March 2017, respectively. The financial position and results of operations of these entities prior to their acquisition dates are not included in the Company’s financial results for periods prior to their respective acquisition dates.

Net Interest Income

Net interest income for the first quarter of 2018 was $38.2 million, an increase of 6.0% from $36.0 million for the fourth quarter of 2017.  The increase in net interest income was primarily attributable to the one month of net interest income contributed by Alpine Bank.

The Company’s net interest income benefits from accretion income associated with purchased loan portfolios.  Accretion income totaled $2.0 million for the first quarter of 2018, compared with $2.7 million for the fourth quarter of 2017. 

Relative to the first quarter of 2017, net interest income increased $10.7 million, or 39.1%.  Accretion income for the first quarter of 2017 was $2.7 million.  The increase in net interest income resulted from a $14.7 million increase in interest income on interest-earning assets, offset in part by a $3.9 million increase in interest expense. These increases were due to the full quarter impact of Centrue Bank, the one month impact of Alpine Bank, as well as organic growth.

Net Interest Margin

Net interest margin for the first quarter of 2018 was 3.69%, compared to 3.73% for the fourth quarter of 2017.  The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 16 and 26 basis points to net interest margin in the first quarter of 2018 and fourth quarter of 2017, respectively.  Excluding the impact of accretion income, net interest margin was positively impacted by loan yields increasing more than funding costs, combined with an enhanced earning asset mix.

Relative to the first quarter of 2017, the net interest margin decreased from 3.87%.  Accretion income on purchased loan portfolios contributed 35 basis points to net interest margin in the first quarter of 2017.  Excluding the impact of accretion income, the net interest margin was relatively unchanged. 

Noninterest Income

Noninterest income for the first quarter of 2018 was $16.6 million, an increase of 18.6% from $14.0 million for the fourth quarter of 2017.  The increase was primarily attributable to one month of noninterest income contributed by Alpine Bank.

Wealth management revenue for the first quarter of 2018 was $4.2 million, an increase of 16.6% from $3.6 million in the fourth quarter of 2017.  The increase was primarily attributable to the one month contribution of Alpine Bank’s wealth management business, which added $1.1 billion in assets under administration.  Compared to the first quarter of 2017, wealth management revenue increased 45.6%, which was attributable to 10% organic growth in assets under administration, the acquisition of CedarPoint in March 2017, and the addition of Alpine Bank’s wealth management business at the end of February 2018.

Commercial FHA revenue for the first quarter of 2018 was $3.3 million, an increase of 6.5% from $3.1 million in the fourth quarter of 2017.  The Company originated $80.4 million in rate lock commitments during the first quarter of 2018, compared to $98.5 million in the prior quarter.  Compared to the first quarter of 2017, commercial FHA revenue decreased 50.3%.

Residential mortgage banking revenue for the first quarter of 2018 was $1.4 million, a decrease of 8.9% from $1.6 million in the fourth quarter of 2017.  Compared to the first quarter of 2017, residential mortgage banking revenue decreased 51.4%, primarily due to a smaller loan production team.

Relative to the first quarter of 2017, noninterest income increased 1.6% from $16.3 million.  The increase was primarily due to greater wealth management and core banking fees, partially offset by lower commercial FHA and residential mortgage banking revenue.

Noninterest Expense

Noninterest expense for the first quarter of 2018 was $49.6 million, compared with $36.2 million for the fourth quarter of 2018.  Noninterest expense for the first quarter of 2018 included $11.9 million of integration and acquisition expenses, while noninterest expense for the fourth quarter of 2017 included $2.7 million in integration and acquisition expenses and $0.4 million in losses on MSRs held-for-sale.  Excluding these expenses, noninterest expense increased $4.7 million, or 14.1%, from the prior quarter.  The increase was primarily due to one month of expenses associated with the addition of Alpine Bank’s operations, combined with increased expenses from the expansion of the equipment financing business, as well as increased payroll taxes.

Relative to the first quarter of 2017, noninterest expense, excluding integration and acquisition expenses, increased 27.7% from $29.5 million.  The increase was primarily due to the addition of personnel and facilities from the three acquisitions completed over the past year. 

Income Tax Expense

Income tax expense was $1.4 million for the first quarter of 2018, compared to $5.8 million for the fourth quarter of 2017, which included $4.5 million of additional tax expense related to the revaluation of the Company’s net deferred tax assets. 

Income tax expense for the first quarter of 2018 reflects the impact of the reduction in the federal corporate tax rate from 35% to 21% pursuant to the Tax Cuts and Jobs Act that was signed into law in December 2017; however, the Company recorded $0.7 million of additional state tax expense related to the revaluation of the Company’s state deferred tax assets and liabilities as a result of the Alpine acquisition.

Loan Portfolio

Total loans outstanding were $4.03 billion at March 31, 2018, compared with $3.23 billion at December 31, 2017 and $2.45 billion at March 31, 2017.  The increase in total loans from December 31, 2017 was primarily attributable to the addition of Alpine’s loan portfolio.  The increase in total loans from March 31, 2017 was due to 4.2% organic growth and the addition of the Alpine and Centrue loan portfolios. 

Deposits

Total deposits were $4.23 billion at March 31, 2018, compared with $3.13 billion at December 31, 2017, and $2.53 billion at March 31, 2017.  The increase in total deposits from December 31, 2017 was primarily attributable to the addition of Alpine’s deposits. The increase in total deposits from March 31, 2017 was primarily attributable to the addition of Alpine’s and Centrue’s deposits.

Asset Quality

Non-performing loans totaled $26.5 million, or 0.66% of total loans, at March 31, 2018, compared with $26.8 million, or 0.83% of total loans, at December 31, 2017, and $28.9 million, or 1.18% of total loans, at March 31, 2017.  The decrease in non-performing loans as a percentage of total loans at March 31, 2018 compared to the end of the prior quarter was due to the addition of the Alpine loan portfolio.

Net charge-offs for the first quarter of 2018 were $0.7 million, or 0.09% of average loans on an annualized basis. 

The Company recorded a provision for loan losses of $2.0 million for the first quarter of 2018.  The Company’s allowance for loan losses was 0.44% of total loans and 66.8% of non-performing loans at March 31, 2018, compared with 0.51% of total loans and 61.4% of non-performing loans at December 31, 2017.  Fair market value discounts recorded in connection with acquired loan portfolios represented 0.65% of total loans at March 31, 2018, compared with 0.51% of total loans at December 31, 2017.

Capital

At March 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:

  March 31, 2018 Well Capitalized
Regulatory Requirements
Total capital to risk-weighted assets 12.37% 10.00%
Tier 1 capital to risk-weighted assets 9.84% 8.00%
Tier 1 leverage ratio 9.55% 5.00%
Common equity Tier 1 capital 8.30% 6.50%
Tangible common equity to tangible assets 6.89% NA

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, April 27, 2018 to discuss its financial results.  The call can be accessed via telephone at (877) 516-3531 (passcode: 1096996).  A recorded replay can be accessed through May 4, 2018 by dialing (855) 859-2056; passcode: 1096996.

A slide presentation relating to the first 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 and Alpine Bank.  As of March 31, 2018, the Company had total assets of approximately $5.7 billion and its Wealth Management Group had assets under administration of approximately $3.1 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 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 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," 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 we do 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, at jludwig@midlandsb.com or (217) 342-7321
Stephen A. Erickson, Chief Financial Officer, at serickson@midlandsb.com or (217) 540-1712
Douglas J. Tucker, Sr. V.P., Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321


 

                                             
MIDLAND STATES BANCORP, INC.      
CONSOLIDATED FINANCIAL SUMMARY (unaudited)      
                                             
    For the Quarter Ended      
    March 31,    December 31,    September 30,    June 30,    March 31, 
(dollars in thousands, except per share data)   2018   2017   2017   2017   2017
Earnings Summary                                            
Net interest income   $   38,185     $   36,036     $   36,765     $   29,400     $   27,461      
Provision for loan losses       2,006         6,076         1,489         458         1,533      
Noninterest income       16,605         13,998         15,403         13,619         16,342      
Noninterest expense       49,602         36,192         48,363         37,645         30,797      
Income before income taxes       3,182         7,766         2,316         4,916         11,473      
Income taxes       1,376         5,775         280         1,377         2,983      
Net income    $   1,806     $   1,991     $   2,036     $   3,539      $    8,490      
                                             
Diluted earnings per common share   $ 0.08     $ 0.10     $ 0.10     $ 0.20     $ 0.52      
Weighted average shares outstanding - diluted     21,351,511       19,741,833       19,704,217       17,320,089       16,351,637      
Return on average assets     0.15 %     0.18 %     0.18 %     0.39 %     1.05 %    
Return on average shareholders' equity     1.47 %     1.74 %     1.78 %     3.93 %     10.58 %    
Return on average tangible common shareholders' equity     2.09 %     2.35 %     2.41 %     4.92 %     12.78 %    
Net interest margin     3.69 %     3.73 %     3.78 %     3.70 %     3.87 %    
Efficiency ratio (1)     68.45 %     64.64 %     69.00 %     66.54 %     66.34 %    
                                             
Adjusted Earnings Performance Summary                                            
Adjusted earnings (1)   $ 11,301     $ 8,403     $ 9,173     $ 8,076     $ 9,243      
Adjusted diluted earnings per common share (1)   $ 0.52     $ 0.42     $ 0.46     $ 0.46     $ 0.56      
Adjusted return on average assets (1)     0.96 %     0.76 %     0.82 %     0.89 %     1.14 %    
Adjusted return on average shareholders' equity (1)     9.19 %     7.34 %     8.03 %     8.97 %     11.52 %    
Adjusted return on average tangible common shareholders' equity (1)     13.10 %     9.92 %     10.87 %     11.23 %     13.91 %    
                                             
(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  
    March 31,    December 31,    September 30,    June 30,    March 31, 
(in thousands, except per share data)   2018   2017   2017   2017   2017
Net interest income:                                        
Total interest income   $   46,505     $ 43,500     $ 43,246     $ 34,528     $ 31,839  
Total interest expense       8,320       7,464       6,481       5,128       4,378  
Net interest income       38,185       36,036       36,765       29,400       27,461  
Provision for loan losses       2,006       6,076       1,489       458       1,533  
Net interest income after provision for loan losses       36,179       29,960       35,276       28,942       25,928  
Noninterest income:                                        
Commercial FHA revenue       3,330       3,127       3,777       4,153       6,695  
Residential mortgage banking revenue       1,418       1,556       2,317       2,330       2,916  
Wealth management revenue       4,182       3,587       3,475       3,406       2,872  
Service charges on deposit accounts       1,967       1,828       2,133       1,122       892  
Interchange revenue       2,090       1,538       1,724       1,114       977  
Gain on sales of investment securities, net       65       2       98       55       67  
Other income       3,553       2,360       1,879       1,439       1,923  
Total noninterest income       16,605       13,998       15,403       13,619       16,342  
Noninterest expense:                                        
Salaries and employee benefits       28,395       17,344       22,411       21,842       17,115  
Occupancy and equipment       4,252       3,859       4,144       3,472       3,184  
Data processing       4,288       3,640       5,786       2,949       2,796  
Professional       4,499       3,611       4,151       3,142       2,992  
Amortization of intangible assets       1,675       1,035       1,187       579       525  
Loss on mortgage servicing rights held for sale       -       442       3,617         -         -  
Other       6,493       6,261       7,067       5,661       4,185  
Total noninterest expense       49,602       36,192       48,363       37,645       30,797  
Income before income taxes       3,182       7,766       2,316       4,916       11,473  
Income taxes       1,376       5,775       280       1,377       2,983  
Net income   $   1,806     $ 1,991     $ 2,036     $ 3,539     $ 8,490  
                                         
Basic earnings per common share   $ 0.08     $ 0.10     $ 0.10     $ 0.21     $ 0.54  
Diluted earnings per common share   $ 0.08     $ 0.10     $ 0.10     $ 0.20     $ 0.52  
                                         

 

                                         
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                                         
    At Quarter Ended  
    March 31,    December 31,    September 30,    June 30,    March 31, 
(in thousands)   2018   2017   2017   2017   2017
Assets                                        
Cash and cash equivalents   $ 331,183       $ 215,202       $ 183,572       $ 334,356       $ 218,096    
Investment securities      738,172         450,525         467,852         460,711         335,608    
Loans     4,029,150         3,226,678         3,157,972         3,184,063         2,454,950    
Allowance for loan losses     (17,704 )       (16,431 )       (16,861 )       (15,424 )       (15,805 )  
Total loans, net     4,011,446         3,210,247         3,141,111         3,168,639         2,439,145    
Loans held for sale at fair value     25,267         50,089         35,874         41,689         39,900    
Premises and equipment, net     95,332         76,162         80,941         76,598         66,914    
Other real estate owned     5,059         5,708         6,379         7,036         3,680    
Mortgage servicing rights at lower of cost or market     56,427         56,352         56,299         70,277         68,557    
Mortgage servicing rights held for sale     3,962         10,176         10,618           -           -    
Intangible assets     46,473         16,932         17,966         18,459         8,633    
Goodwill     155,674         98,624         97,351         96,940         50,807    
Cash surrender value of life insurance policies     136,766         113,366         112,591         111,802         74,806    
Other assets     117,611         109,318         137,207         105,135         67,431    
Total assets   $ 5,723,372       $ 4,412,701       $ 4,347,761       $ 4,491,642       $ 3,373,577    
                                         
Liabilities and Shareholders' Equity                                        
Noninterest bearing deposits   $ 1,037,710       $ 724,443       $ 674,118       $ 780,803       $ 528,021    
Interest bearing deposits     3,196,105         2,406,646         2,440,349         2,552,228         1,999,455    
Total deposits     4,233,815         3,131,089         3,114,467         3,333,031         2,527,476    
Short-term borrowings     130,693         156,126         153,443         170,629         124,035    
FHLB advances and other borrowings     587,493         496,436         488,870         400,304         250,353    
Subordinated debt     94,013         93,972         54,581         54,556         54,532    
Trust preferred debentures     47,443         47,330         47,218         47,107         39,137    
Other liabilities     44,530         38,203         38,493         34,063         43,711    
Total liabilities     5,137,987         3,963,156         3,897,072         4,039,690         3,039,244    
Total shareholders’ equity     585,385         449,545         450,689         451,952         334,333    
Total liabilities and shareholders’ equity   $ 5,723,372       $ 4,412,701       $ 4,347,761       $ 4,491,642       $ 3,373,577    
                                         

 

                                         
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                                         
    At Quarter Ended  
    March 31,    December 31,    September 30,    June 30,    March 31, 
(in thousands)   2018   2017   2017   2017   2017
Loan Portfolio                                        
Commercial loans   $ 802,752     $ 555,930     $ 513,544     $ 571,111     $ 475,408  
Commercial real estate loans     1,773,510       1,440,011       1,472,284       1,470,487       997,200  
Construction and land development loans     234,837       200,587       182,513       176,098       171,047  
Residential real estate loans     570,321       453,552       445,747       428,464       277,402  
Consumer loans     424,229       371,455       343,038       335,902       337,081  
Lease financing loans     223,501       205,143       200,846       202,001       196,812  
Total loans   $ 4,029,150     $ 3,226,678     $ 3,157,972     $ 3,184,063     $ 2,454,950  
                                         
Deposit Portfolio                                        
Noninterest-bearing demand deposits   $ 1,037,710     $ 724,443     $ 674,118     $ 780,803     $ 528,021  
NOW accounts     993,253       785,935       800,649       841,640       751,193  
Money market accounts     840,415       646,426       633,844       578,077       415,322  
Savings accounts     466,887       281,212       278,977       291,912       169,715  
Time deposits     672,034       502,810       493,777       525,647       394,508  
Brokered deposits     223,516       190,263       233,102       314,952       268,717  
Total deposits   $ 4,233,815     $ 3,131,089     $ 3,114,467     $ 3,333,031     $ 2,527,476  
                                         

 

                                         
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                                         
    For the Quarter Ended  
    March 31,    December 31,    September 30,    June 30,    March 31, 
(dollars in thousands)   2018   2017   2017   2017   2017
Average Balance Sheets                                        
Cash and cash equivalents   $ 138,275     $ 173,540     $ 202,407     $ 192,483     $ 163,595  
Investment securities     548,168       461,475       474,216       362,268       328,880  
Loans     3,477,917       3,198,036       3,173,027       2,620,875       2,361,380  
Loans held for sale     40,841       40,615       46,441       61,759       73,914  
Nonmarketable equity securities     34,890       33,703       31,224       22,246       20,047  
Total interest-earning assets     4,240,091       3,907,369       3,927,315       3,259,631       2,947,816  
Non-earning assets     536,750       497,502       498,364       372,525       336,761  
Total assets   $ 4,776,841     $ 4,404,871     $ 4,425,679     $ 3,632,156     $ 3,284,577  
Interest-bearing deposits   $ 2,675,339     $ 2,433,461     $ 2,527,490     $ 2,116,564     $ 1,896,569  
Short-term borrowings     148,703       181,480       182,015       146,144       143,583  
FHLB advances and other borrowings     489,567       472,709       434,860       290,401       248,045  
Subordinated debt     93,993       88,832       54,570       54,542       54,518  
Trust preferred debentures     47,373       47,263       47,152       40,820       39,084  
Total interest-bearing liabilities     3,454,975       3,223,745       3,246,087       2,648,471       2,381,799  
Non-interest-bearing deposits     782,164       684,907       688,986       579,977       525,868  
Other non-interest-bearing liabilities     40,761       42,251       37,289       42,373       51,468  
Shareholders' equity     498,941       453,968       453,317       361,335       325,442  
Total liabilities and shareholders' equity   $ 4,776,841     $ 4,404,871     $ 4,425,679     $ 3,632,156     $ 3,284,577  
                                         
Yields                                        
Cash and cash equivalents     1.53 %     1.28 %     1.19 %     1.02 %     0.77 %
Investment securities     2.87 %     3.01 %     2.86 %     3.33 %     3.21 %
Loans     4.85 %     4.88 %     4.90 %     4.71 %     4.91 %
Loans held for sale     4.25 %     3.62 %     3.74 %     4.67 %     4.22 %
Nonmarketable equity securities     4.64 %     4.78 %     4.20 %     4.31 %     4.41 %
Total interest-earning assets     4.49 %     4.48 %     4.44 %     4.33 %     4.47 %
Interest-bearing deposits     0.62 %     0.58 %     0.53 %     0.53 %     0.51 %
Short-term borrowings     0.34 %     0.26 %     0.22 %     0.23 %     0.23 %
FHLB advances and other borrowings     1.55 %     1.42 %     1.36 %     1.16 %     0.93 %
Subordinated debt     6.44 %     6.46 %     6.40 %     6.40 %     6.40 %
Trust preferred debentures     5.94 %     5.51 %     5.37 %     5.15 %     4.91 %
Total interest-bearing liabilities     0.98 %     0.92 %     0.79 %     0.78 %     0.75 %
Net interest margin     3.69 %     3.73 %     3.78 %     3.70 %     3.87 %
                                         

 

                                         
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                                         
    As of and for the Quarter Ended  
    March 31,    December 31,    September 30,    June 30,    March 31, 
(dollars in thousands, except per share data)   2018   2017   2017   2017   2017
Asset Quality                                        
Loans 30-89 days past due   $ 20,138     $ 15,405     $ 13,526     $ 13,566     $ 14,075  
Nonperforming loans     26,499       26,760       33,431       27,615       28,933  
Nonperforming assets     29,938       30,894       38,109       33,150       31,684  
Net charge-offs     732       6,506       52       839       590  
Loans 30-89 days past due to total loans     0.50 %     0.48 %     0.43 %     0.43 %     0.57 %
Nonperforming loans to total loans     0.66 %     0.83 %     1.06 %     0.87 %     1.18 %
Nonperforming assets to total assets     0.52 %     0.70 %     0.88 %     0.74 %     0.94 %
Allowance for loan losses to total loans     0.44 %     0.51 %     0.53 %     0.48 %     0.64 %
Allowance for loan losses to nonperforming loans     66.81 %     61.40 %     50.43 %     55.81 %     54.62 %
Net charge-offs to average loans     0.09 %     0.81 %     0.01 %     0.13 %     0.10 %
                                         
Wealth Management                                        
Trust assets under administration   $ 3,125,051     $ 2,051,249     $ 2,001,106     $ 1,929,513     $ 1,869,314  
                                         
Market Data                                        
Book value per share at period end   $ 24.67     $ 23.35     $ 23.45     $ 23.51     $ 21.19  
Tangible book value per share at period end (1)   $ 16.11     $ 17.31     $ 17.41     $ 17.47     $ 17.42  
Market price at period end   $ 31.56     $ 32.48     $ 31.68     $ 33.52     $ 34.39  
Shares outstanding at period end     23,612,430       19,122,049       19,093,153       19,087,409       15,780,651  
                                         
Capital                                        
Total capital to risk-weighted assets     12.37 %     13.26 %     12.21 %     11.98 %     13.48 %
Tier 1 capital to risk-weighted assets     9.84 %     10.19 %     10.20 %     10.05 %     10.97 %
Tier 1 leverage ratio     9.55 %     8.63 %     8.54 %     10.45 %     9.61 %
Tier 1 common capital to risk-weighted assets     8.30 %     8.45 %     8.50 %     8.36 %     9.10 %
Tangible common equity to tangible assets (1)     6.89 %     7.70 %     7.85 %     7.62 %     8.29 %
                                         
(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  
    March 31,    December 31,    September 30,    June 30,    March 31, 
(dollars in thousands, except per share data)   2018   2017   2017   2017   2017
Income before income taxes - GAAP   $   3,182     $   7,766       $   2,316     $   4,916       $   11,473    
Adjustments to noninterest income:                                        
Gain on sales of investment securities, net     65         2           98         55           67    
Gain (loss) on sale of other assets       150         37           45         (91 )         (58 )  
 Total adjustments to noninterest income       215         39           143         (36 )         9    
Adjustments to noninterest expense:                                        
Loss on mortgage servicing rights held for sale       -         442           3,617         -           -    
Integration and acquisition expenses       11,884         2,686           8,303         7,450           1,251    
 Total adjustments to noninterest expense       11,884         3,128           11,920         7,450           1,251    
Adjusted earnings pre tax     14,851         10,855           14,093         12,402           12,715    
Adjusted earnings tax        3,550         6,992           4,920         4,326           3,472    
Revaluation of net deferred tax assets       -         (4,540 )         -         -           -     
Adjusted earnings - non-GAAP   $   11,301     $   8,403       $   9,173     $   8,076       $   9,243    
Adjusted diluted earnings per common share   $   0.52     $   0.42       $   0.46     $   0.46       $   0.56    
Adjusted return on average assets       0.96 %       0.76   %       0.82 %       0.89   %       1.14   %
Adjusted return on average shareholders' equity       9.19 %       7.34   %       8.03 %       8.97   %       11.52   %
Adjusted return on average tangible common shareholders' equity       13.10 %       9.92   %       10.87 %       11.23   %       13.91   %
                                         

 

 
MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
                                         
                                         
Efficiency Ratio Reconciliation                                        
    For the Quarter Ended  
    March 31,    December 31,    September 30,    June 30,    March 31, 
(dollars in thousands)   2018   2017   2017   2017   2017
Noninterest expense - GAAP   $   49,602       $   36,192       $   48,364       $   37,644       $   30,798    
Loss on mortgage servicing rights held for sale       -           (442 )         (3,617 )         -           -    
Integration and acquisition expenses       (11,884 )         (2,686 )         (8,303 )         (7,450 )         (1,251 )  
Adjusted noninterest expense   $   37,718       $   33,064       $   36,444       $   30,194       $   29,547    
                                         
Net interest income - GAAP   $   38,185       $   36,036       $   36,765       $   29,400       $   27,461    
Effect of tax-exempt income       394           659           687           674           671    
Adjusted net interest income       38,579           36,695           37,452           30,074           28,132    
                                         
Noninterest income - GAAP   $   16,605       $   13,998       $   15,403       $   13,619       $   16,342    
Mortgage servicing rights impairment        133           494           104           1,650           76    
Gain on sales of investment securities, net     (65 )         (2 )         (98 )         (55 )         (67 )  
(Gain) loss on sale of other assets       (150 )         (37 )         (45 )         91           58    
Adjusted noninterest income       16,523           14,453           15,364           15,305           16,409    
                                         
Adjusted total revenue   $   55,102       $   51,148       $   52,816       $   45,379       $   44,541    
                                         
Efficiency ratio       68.45   %       64.64   %       69.00   %       66.54   %       66.34   %
                                         

 

                                         
MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
                                         
Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share                          
                                         
    As of and for the Quarter Ended  
    March 31,    December 31,    September 30,    June 30,    March 31, 
(dollars in thousands, except per share data)   2018   2017   2017   2017   2017
Shareholders' Equity to Tangible Common Equity                                        
Total shareholders' equity—GAAP   $   585,385       $   449,545       $   450,689       $   451,952       $   334,333    
Adjustments:                                        
Preferred Stock       (2,923 )         (2,970 )         (3,015 )         (3,134 )         -     
Goodwill       (155,674 )         (98,624 )         (97,351 )         (96,940 )         (50,807 )  
Other intangibles       (46,473 )         (16,932 )         (17,966 )         (18,459 )         (8,633 )  
Tangible common equity   $   380,315       $   331,019       $   332,357       $   333,419       $   274,893    
                                         
Total Assets to Tangible Assets:                                        
Total assets—GAAP   $   5,723,372       $   4,412,701       $   4,347,761       $   4,491,642       $   3,373,577    
Adjustments:                                        
Goodwill       (155,674 )         (98,624 )         (97,351 )         (96,940 )         (50,807 )  
Other intangibles       (46,473 )         (16,932 )         (17,966 )         (18,459 )         (8,633 )  
Tangible assets   $   5,521,225       $   4,297,145       $   4,232,444       $   4,376,243       $   3,314,137    
                                         
Common Shares Outstanding       23,612,430           19,122,049           19,093,153           19,087,409           15,780,651    
                                         
Tangible Common Equity to Tangible Assets       6.89   %       7.70   %       7.85   %       7.62   %       8.29   %
Tangible Book Value Per Share   $   16.11       $   17.31       $   17.41       $   17.47       $   17.42    
                                         
Return on Average Tangible Common Equity (ROATCE)                                  
                                         
  As of
    March 31,    December 31,    September 30,    June 30,    March 31, 
(dollars in thousands)   2018   2017   2017   2017   2017
                                         
Net Income   $   1,806       $   1,991       $   2,036       $   3,539       $   8,490    
                                         
Average total shareholders' equity—GAAP   $   498,941       $   453,968       $   453,317       $   361,335       $   325,442    
Adjustments:                                        
Preferred Stock        (2,952 )         (2,997 )         (3,126 )         (654 )         -     
Goodwill       (118,996 )         (97,406 )         (97,129 )         (61,424 )         (48,836 )  
Other intangibles       (27,156 )         (17,495 )         (18,153 )         (10,812 )         (7,144 )  
Average tangible common equity   $   349,837       $   336,070       $   334,909       $   288,445       $   269,462    
ROATCE       2.09   %       2.35   %       2.41   %       4.92   %       12.78   %
                                         

 

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