Press Release

Midland States Bancorp, Inc. Announces 2018 Third Quarter Results

Highlights

  • Net income of $8.5 million, or $0.35 diluted earnings per share
  • Adjusted earnings of $15.6 million, or $0.64 diluted earnings per share, primarily reflects the exclusion of $9.6 million of integration and acquisition expenses
  • Total loans increased $60.5 million from end of prior quarter, or 5.9% annualized
  • Efficiency ratio improved to 63.0%

EFFINGHAM, Ill., Oct. 25, 2018 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported 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.  This compares to net income of $12.8 million, or $0.52 diluted earnings per share, for the second quarter of 2018, which included $2.0 million of integration and acquisition expenses, and net income of $2.0 million, or $0.10 diluted earnings per share, for the third quarter of 2017, which included $8.3 million of integration and acquisition expenses and a $3.6 million loss on mortgage servicing rights held for sale.

“We executed well in the third quarter and delivered a strong increase in our adjusted earnings per share compared to the prior quarter,” said Leon J. Holschbach, Chief Executive Officer of the Company.  “We have substantially completed the integration of Alpine Bancorporation, and we are seeing improvement in our efficiency ratio as we realize the synergies from this acquisition.  We continue to effectively execute on our balance sheet management strategy by focusing our new loan production on areas with the most attractive risk-adjusted yields.  As a result, we have been able to generate solid loan growth while maintaining a relatively stable net interest margin, excluding accretion income.  We believe that prudently managing our balance sheet and realizing additional operating leverage from our increased scale will enable us to enhance profitability going forward.”

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.

Adjusted Earnings

Adjusted earnings were $15.6 million, or $0.64 diluted earnings per share, for the third quarter of 2018, which primarily reflects the exclusion of $9.6 million in integration and acquisition expenses.  This compares to adjusted earnings of $14.5 million, or $0.59 diluted earnings per share, for the second quarter of 2018, which primarily reflects the exclusion of $2.0 million in integration and acquisition expenses.

The increase in adjusted earnings per share was attributable to higher noninterest income and lower noninterest expense.

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 Income

Net interest income for the third quarter of 2018 was $45.1 million, a decrease of 6.6% from $48.3 million for the second quarter of 2018.  The decrease in net interest income was primarily attributable to a decline in accretion income on purchased loan portfolios.

Accretion income associated with purchased loan portfolios totaled $1.7 million for the third quarter of 2018, compared with $5.5 million for the second quarter of 2018.  Excluding accretion income, net interest income increased $600,000, which is a 5.6% annualized increase from the prior quarter.

Relative to the third quarter of 2017, net interest income increased $8.3 million, or 22.6%.  Accretion income for the third quarter of 2017 was $3.0 million.  The increase in net interest income resulted from a $13.7 million increase in interest income on interest-earning assets, offset in part by a $5.4 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 third quarter of 2018 was 3.59%, compared to 3.91% for the second quarter of 2018.  The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 10 and 40 basis points to net interest margin in the third quarter of 2018 and second quarter of 2018, respectively.  Excluding the impact of accretion income, net interest margin decreased two basis points from the second quarter of 2018, primarily due to an increase in the cost of interest-bearing liabilities.

Relative to the third quarter of 2017, net interest margin decreased from 3.78%.  Accretion income on purchased loan portfolios contributed 27 basis points to net interest margin in the third quarter of 2017.  Excluding the impact of accretion income, net interest margin declined two basis points from the third quarter of 2017 due to funding costs increasing faster than the yield on earning assets. 

Noninterest Income

Noninterest income for the third quarter of 2018 was $18.3 million, an increase of 15.3% from $15.8 million for the second quarter of 2018.  The increase was primarily attributable to an increase in commercial FHA revenue, which was partially offset by a decrease in residential mortgage banking revenue.

Relative to the third quarter of 2017, noninterest income increased 18.6% from $15.4 million.  The increase was primarily due to greater wealth management revenue and core banking fees, partially offset by lower commercial FHA and residential mortgage banking revenue.

Wealth management revenue for the third quarter of 2018 was $5.5 million, an increase of 2.8% from $5.3 million in the second quarter of 2018.  Compared to the third quarter of 2017, wealth management revenue increased 57.3%, which was attributable to 6.8% organic growth in assets under administration and the addition of Alpine’s wealth management business.

Commercial FHA revenue for the third quarter of 2018 was $3.1 million, compared to $0.3 million in the second quarter of 2018.  The Company originated $82.8 million in rate lock commitments during the third quarter of 2018, compared to $11.1 million in the prior quarter.  Compared to the third quarter of 2017, commercial FHA revenue decreased 17.1%.

Noninterest Expense

Noninterest expense for the third quarter of 2018 was $50.3 million, which included $9.6 million in integration and acquisition expense, compared with $46.5 million for the second quarter of 2018, which included $2.0 million in integration and acquisition expense.  Excluding integration and acquisition expense and loss on mortgage servicing rights held for sale, noninterest expense decreased $3.8 million, or 8.5%, from the prior quarter.  The decrease was primarily due to the realization of additional cost savings from the Alpine acquisition, the impact of efficiency enhancements in certain business areas, lower variable compensation and lower professional fees.

Relative to the third quarter of 2017, noninterest expense increased 4.0% from $48.4 million.  Excluding integration and acquisition expenses and loss on mortgage servicing rights held for sale, noninterest expense increased 11.1% from $36.4 million.  The increase was primarily due to the addition of personnel and facilities from Alpine. 

Loan Portfolio

Total loans outstanding were $4.16 billion at September 30, 2018, compared with $4.10 billion at June 30, 2018 and $3.16 billion at September 30, 2017.  The increase in total loans from June 30, 2018, was primarily attributable to organic growth in commercial loans and leases, and consumer lending.  Equipment financing balances increased $45.9 million from June 30, 2018, which are booked within the commercial loans and leases portfolio.  The increase in total loans from September 30, 2017 was primarily attributable to the addition of Alpine’s loans.

Deposits

Total deposits were $4.14 billion at September 30, 2018, compared with $4.16 billion at June 30, 2018, and $3.11 billion at September 30, 2017.  The decrease in total deposits from June 30, 2018 was primarily attributable to expected attrition in the Alpine deposit base following the system conversion, as well as the Company’s focus on managing deposit costs.  The increase in total deposits from September 30, 2017 was primarily attributable to the addition of Alpine’s deposits.

Asset Quality

Nonperforming loans totaled $38.6 million, or 0.93% of total loans, at September 30, 2018, compared with $28.3 million, or 0.69% of total loans, at June 30, 2018, and $33.4 million, or 1.06% of total loans, at September 30, 2017.  The increase in nonperforming loans during the third quarter of 2018 was primarily attributable to the downgrade of two commercial loans and one commercial real estate loan.

Net charge-offs for the third quarter of 2018 were $0.7 million, or 0.07% of average loans on an annualized basis. 

The Company recorded a provision for loan losses of $2.1 million for the third quarter of 2018.  The Company’s allowance for loan losses was 0.47% of total loans and 50.9% of non-performing loans at September 30, 2018, compared with 0.45% of total loans and 64.4% of non-performing loans at June 30, 2018.  Fair market value discounts recorded in connection with acquired loan portfolios represented 0.59% of total loans at September 30, 2018, compared with 0.62% of total loans at June 30, 2018.

Capital

At September 30, 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:

  September 30, 2018 Well Capitalized
Regulatory Requirements
Total capital to risk-weighted assets 12.35% 10.00%
Tier 1 capital to risk-weighted assets 9.85% 8.00%
Tier 1 leverage ratio 8.24% 5.00%
Common equity Tier 1 capital 8.37% 6.50%
Tangible common equity to tangible assets (1) 7.03% 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, October 26, 2018 to discuss its financial results.  The call can be accessed via telephone at (877) 516-3531; passcode: 4447968.  A recorded replay can be accessed through November 2, 2018 by dialing (855) 859-2056; passcode: 4447968.

A slide presentation relating to the third 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 September 30, 2018, the Company had total assets of approximately $5.7 billion, and its Wealth Management Group had assets under administration of approximately $3.2 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" 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, 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    
    September 30,    June 30,    March 31,      December 31,        September 30,     
(dollars in thousands, except per share data)   2018   2018   2018   2017   2017  
Earnings Summary                                          
Net interest income   $   45,081     $   48,286     $   38,185     $   36,036     $   36,765    
Provision for loan losses       2,103         1,854         2,006         6,076         1,489    
Noninterest income       18,272         15,847         16,502         13,998         15,403    
Noninterest expense       50,317         46,452         49,499         36,192         48,363    
Income before income taxes       10,933         15,827         3,182         7,766         2,316    
Income taxes       2,436         3,045         1,376         5,775         280    
Net income        8,497         12,782         1,806         1,991         2,036    
Preferred stock dividends, net       35         36         36         37         27    
Net income available to common shareholders   $   8,462     $   12,746     $   1,770     $   1,954     $   2,009    
                                           
Diluted earnings per common share   $   0.35     $   0.52     $   0.08     $   0.10     $   0.10    
Weighted average shares outstanding - diluted       24,325,743         24,268,111         21,351,511         19,741,833         19,704,217    
Return on average assets       0.59 %       0.91 %       0.15 %       0.18 %       0.18 %  
Return on average shareholders' equity       5.68 %       8.77 %       1.47 %       1.74 %       1.78 %  
Return on average tangible common equity (1)       8.69 %       13.48 %       2.05 %       2.31 %       2.38 %  
Net interest margin       3.59 %       3.91 %       3.69 %       3.73 %       3.78 %  
Efficiency ratio (1)       63.02 %       67.76 %       68.39 %       64.64 %       69.00 %  
                                           
Adjusted Earnings Performance Summary                                          
Adjusted earnings (1)   $ 15,632     $ 14,469     $ 10,265     $ 8,403     $ 9,173    
Adjusted diluted earnings per common share (1)   $ 0.64     $ 0.59     $ 0.48     $ 0.42     $ 0.46    
Adjusted return on average assets (1)     1.09 %     1.03 %     0.87 %     0.76 %     0.82 %  
Adjusted return on average shareholders' equity (1)     10.45 %     9.93 %     8.34 %     7.34 %     8.03 %  
Adjusted return on average tangible common equity (1)     16.02 %     15.27 %     11.86 %     9.88 %     10.83 %  
                                           
(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    
    September 30,    June 30,    March 31,    December 31,    September 30,   
(in thousands, except per share data)   2018   2018   2018   2017   2017  
Net interest income:                                          
Total interest income   $   56,987     $ 58,283       $ 46,505     $ 43,500     $ 43,246    
Total interest expense       11,906       9,997         8,320       7,464       6,481    
Net interest income       45,081         48,286           38,185         36,036         36,765    
Provision for loan losses       2,103       1,854         2,006       6,076       1,489    
Net interest income after provision for loan losses       42,978         46,432           36,179         29,960         35,276    
Noninterest income:                                          
Commercial FHA revenue       3,130       326         3,330       3,127       3,777    
Residential mortgage banking revenue       1,154       2,116         1,418       1,556       2,317    
Wealth management revenue       5,467       5,316         4,079       3,587       3,475    
Service charges on deposit accounts       2,804       2,693         1,967       1,828       2,133    
Interchange revenue       2,759       2,929         2,045       1,538       1,724    
(Loss) gain on sales of investment securities, net       -       (70 )       65       2       98    
Other income       2,958       2,537         3,598       2,360       1,879    
Total noninterest income       18,272         15,847           16,502         13,998         15,403    
Noninterest expense:                                          
Salaries and employee benefits       22,528       23,467         28,395       17,344       22,411    
Occupancy and equipment       5,040       4,708         4,252       3,859       4,144    
Data processing       10,817       5,106         4,479       3,640       5,786    
Professional       2,632       3,178         3,749       3,611       4,151    
Amortization of intangible assets       1,853       1,576         1,675       1,035       1,187    
Loss on mortgage servicing rights held for sale       270         188           -       442       3,617    
Other expense       7,177       8,229         6,949       6,261       7,067    
Total noninterest expense       50,317         46,452           49,499         36,192         48,363    
Income before income taxes       10,933         15,827           3,182         7,766         2,316    
Income taxes       2,436       3,045         1,376       5,775       280    
Net income       8,497         12,782           1,806         1,991         2,036    
Preferred stock dividends, net       35       36         36       37       27    
Net income available to common shareholders   $   8,462     $   12,746       $   1,770     $   1,954     $   2,009    
                                           
Basic earnings per common share   $ 0.35     $ 0.53       $ 0.08     $ 0.10     $ 0.10    
Diluted earnings per common share   $ 0.35     $ 0.52       $ 0.08     $ 0.10     $ 0.10    
                                           

 

                                         
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                                         
    As of  
    September 30,    June 30,    March 31,    December 31,    September 30, 
(in thousands)   2018   2018   2018   2017   2017
Assets                                        
Cash and cash equivalents   $ 242,433       $ 276,331       $ 331,183       $ 215,202       $ 183,572    
Investment securities      685,753         708,001         738,172         450,525         467,852    
Loans     4,156,282         4,095,811         4,029,150         3,226,678         3,157,972    
Allowance for loan losses     (19,631 )       (18,246 )       (17,704 )       (16,431 )       (16,861 )  
Total loans, net     4,136,651         4,077,565         4,011,446         3,210,247         3,141,111    
Loans held for sale, at fair value     35,246         41,449         25,267         50,089         35,874    
Premises and equipment, net     95,062         94,783         95,332         76,162         80,941    
Other real estate owned     3,684         3,911         5,059         5,708         6,379    
Mortgage servicing rights, at lower of cost or fair value     51,626         52,381         56,427         56,352         56,299    
Mortgage servicing rights held for sale     4,419         4,806         3,962         10,176         10,618    
Intangible assets     39,228         41,081         46,473         16,932         17,966    
Goodwill     164,044         164,044         155,674         98,624         97,351    
Cash surrender value of life insurance policies     138,600         137,681         136,766         113,366         112,591    
Other assets     127,866         128,567         117,611         109,318         137,207    
Total assets   $ 5,724,612       $ 5,730,600       $ 5,723,372       $ 4,412,701       $ 4,347,761    
                                         
Liabilities and Shareholders' Equity                                        
Noninterest-bearing deposits   $ 991,311       $ 1,001,802       $ 1,037,710       $ 724,443       $ 674,118    
Interest-bearing deposits     3,151,895         3,158,055         3,196,105         2,406,646         2,440,349    
Total deposits     4,143,206         4,159,857         4,233,815         3,131,089         3,114,467    
Short-term borrowings     145,450         114,536         130,693         156,126         153,443    
FHLB advances and other borrowings     652,253         678,873         587,493         496,436         488,870    
Subordinated debt     94,093         94,053         94,013         93,972         54,581    
Trust preferred debentures     47,676         47,559         47,443         47,330         47,218    
Other liabilities     47,788         43,187         44,530         38,203         38,493    
Total liabilities     5,130,466         5,138,065         5,137,987         3,963,156         3,897,072    
Total shareholders’ equity     594,146         592,535         585,385         449,545         450,689    
Total liabilities and shareholders’ equity   $ 5,724,612       $ 5,730,600       $ 5,723,372       $ 4,412,701       $ 4,347,761    

 

                                           
MIDLAND STATES BANCORP, INC.  
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)  
                                           
    As of    
    September 30,    June 30,    March 31,    December 31,    September 30,   
(in thousands)   2018   2018   2018   2017   2017  
Loan Portfolio                                          
Commercial loans and leases   $ 1,034,546     $ 991,164     $ 1,026,253     $ 761,073     $ 714,390    
Commercial real estate loans     1,711,926       1,711,296       1,773,510       1,440,011       1,472,284    
Construction and land development loans     239,480       247,889       234,837       200,587       182,513    
Residential real estate loans     586,134       601,808       570,321       453,552       445,747    
Consumer loans     584,196       543,654       424,229       371,455       343,038    
Total loans   $ 4,156,282     $ 4,095,811     $ 4,029,150     $ 3,226,678     $ 3,157,972    
                                           
Deposit Portfolio                                          
Noninterest-bearing demand deposits   $ 991,311     $ 1,001,802     $ 1,037,710     $ 724,443     $ 674,118    
Interest-bearing:                                          
Checking accounts     1,047,914       1,024,506       993,253       785,934       800,649    
Money market accounts     836,151       843,984       840,415       646,426       633,844    
Savings accounts     445,640       460,560       466,887       281,212       278,977    
Time deposits     633,654       638,215       672,034       502,810       493,777    
Brokered deposits     188,536       190,790       223,516       190,264       233,102    
Total deposits   $ 4,143,206     $ 4,159,857     $ 4,233,815     $ 3,131,089     $ 3,114,467    

 

                                         
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                                         
    For the Quarter Ended  
    September 30,    June 30,    March 31,    December 31,    September 30, 
(dollars in thousands)   2018   2018   2018   2017   2017
Average Balance Sheets                                        
Cash and cash equivalents   $ 154,526     $ 227,499     $ 138,275     $ 173,540     $ 202,407  
Investment securities     700,018       731,017       548,168       461,475       474,216  
Loans     4,106,367       3,982,958       3,477,917       3,198,036       3,173,027  
Loans held for sale     48,715       31,220       40,841       40,615       46,441  
Nonmarketable equity securities     42,770       38,872       34,890       33,703       31,224  
Total interest-earning assets     5,052,396       5,011,566       4,240,091       3,907,369       3,927,315  
Non-earning assets     639,323       639,864       536,750       497,502       498,364  
Total assets   $ 5,691,719     $ 5,651,430     $ 4,776,841     $ 4,404,871     $ 4,425,679  
                                         
Interest-bearing deposits   $ 3,172,422     $ 3,158,816     $ 2,675,339     $ 2,433,461     $ 2,527,490  
Short-term borrowings     139,215       120,794       148,703       181,480       182,015  
FHLB advances and other borrowings     608,153       573,107       489,567       472,709       434,860  
Subordinated debt     94,075       94,035       93,993       88,832       54,570  
Trust preferred debentures     47,601       47,488       47,373       47,263       47,152  
Total interest-bearing liabilities     4,061,466       3,994,240       3,454,975       3,223,745       3,246,087  
Noninterest-bearing deposits     989,142       1,025,308       782,164       684,907       688,986  
Other noninterest-bearing liabilities     47,654       47,229       40,761       42,251       37,289  
Shareholders' equity     593,457       584,653       498,941       453,968       453,317  
Total liabilities and shareholders' equity   $ 5,691,719     $ 5,651,430     $ 4,776,841     $ 4,404,871     $ 4,425,679  
                                         
Yields                                        
Cash and cash equivalents     1.96 %     1.79 %     1.53 %     1.28 %     1.19 %
Investment securities     3.01 %     2.91 %     2.87 %     3.01 %     2.86 %
Loans     4.88 %     5.21 %     4.85 %     4.88 %     4.90 %
Loans held for sale     4.17 %     3.79 %     4.25 %     3.62 %     3.74 %
Nonmarketable equity securities     5.01 %     4.97 %     4.64 %     4.78 %     4.20 %
Total interest-earning assets     4.52 %     4.71 %     4.49 %     4.48 %     4.44 %
Interest-bearing deposits     0.77 %     0.64 %     0.62 %     0.58 %     0.53 %
Short-term borrowings     0.61 %     0.38 %     0.34 %     0.26 %     0.22 %
FHLB advances and other borrowings     2.09 %     1.81 %     1.55 %     1.42 %     1.36 %
Subordinated debt     6.44 %     6.44 %     6.44 %     6.46 %     6.40 %
Trust preferred debentures     6.81 %     6.59 %     5.94 %     5.51 %     5.37 %
Total interest-bearing liabilities     1.16 %     1.00 %     0.98 %     0.92 %     0.79 %
Net interest margin     3.59 %     3.91 %     3.69 %     3.73 %     3.78 %
                                         

 

                                           
MIDLAND STATES BANCORP, INC.  
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)  
                                           
    As of and for the Quarter Ended    
    September 30,    June 30,    March 31,    December 31,    September 30,   
(dollars in thousands, except per share data)   2018   2018   2018   2017   2017  
Asset Quality                                          
Loans 30-89 days past due   $ 22,678     $ 19,362     $ 20,138     $ 15,405     $ 13,526    
Nonperforming loans     38,561       28,342       26,499       26,760       33,431    
Nonperforming assets     41,638       31,542       29,938       30,894       38,109    
Net charge-offs      718       1,312       732       6,506       52    
Loans 30-89 days past due to total loans     0.55 %     0.47 %     0.50 %     0.48 %     0.43 %  
Nonperforming loans to total loans     0.93 %     0.69 %     0.66 %     0.83 %     1.06 %  
Nonperforming assets to total assets     0.73 %     0.55 %     0.52 %     0.70 %     0.88 %  
Allowance for loan losses to total loans     0.47 %     0.45 %     0.44 %     0.51 %     0.53 %  
Allowance for loan losses to nonperforming loans     50.91 %     64.38 %     66.81 %     61.40 %     50.43 %  
Net charge-offs to average loans     0.07 %     0.13 %     0.09 %     0.81 %     0.01 %  
                                           
Wealth Management                                          
Trust assets under administration   $ 3,218,013     $ 3,188,909     $ 3,125,051     $ 2,051,249     $ 2,001,106    
                                           
Market Data                                          
Book value per share at period end   $ 24.96     $ 24.92     $ 24.67     $ 23.35     $ 23.45    
Tangible book value per share at period end (1)   $ 16.38     $ 16.25     $ 16.11     $ 17.31     $ 17.41    
Market price at period end   $ 32.10     $ 34.26     $ 31.56     $ 32.48     $ 31.68    
Shares outstanding at period end     23,694,637       23,664,596       23,612,430       19,122,049       19,093,153    
                                           
Capital                                          
Total capital to risk-weighted assets     12.35 %     12.27 %     12.37 %     13.26 %     12.21 %  
Tier 1 capital to risk-weighted assets     9.85 %     9.78 %     9.84 %     10.19 %     10.20 %  
Tier 1 leverage ratio     8.24 %     8.16 %     9.55 %     8.63 %     8.54 %  
Tier 1 common capital to risk-weighted assets     8.37 %     8.28 %     8.30 %     8.45 %     8.50 %  
Tangible common equity to tangible assets (1)     7.03 %     6.96 %     6.89 %     7.70 %     7.85 %  
                                           
(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  
    September 30,    June 30,    March 31,    December 31,    September 30, 
(dollars in thousands, except per share data)   2018   2018   2018   2017   2017
Income before income taxes - GAAP   $   10,933       $   15,827       $   3,182     $   7,766       $   2,316  
Adjustments to noninterest income:                                        
(Loss) gain on sales of investment securities, net     -           (70 )         65         2           98  
Other      (12 )         (48 )         150         37           45  
 Total adjustments to noninterest income       (12 )         (118 )         215         39           143  
Adjustments to noninterest expense:                                        
Loss on mortgage servicing rights held for sale       270           188           -         442           3,617  
Integration and acquisition expenses       9,559           2,019           11,884         2,686           8,303  
 Total adjustments to noninterest expense       9,829           2,207           11,884         3,128           11,920  
Adjusted earnings pre tax     20,774           18,152           14,851         10,855           14,093  
Adjusted earnings tax        5,142           3,683           4,586         6,992           4,920  
Revaluation of net deferred tax assets       -           -           -         (4,540 )         -  
Adjusted earnings - non-GAAP     15,632           14,469           10,265         8,403           9,173  
Preferred stock dividends, net       35           36           36         37           27  
Adjusted earnings available to common shareholders - non-GAAP   $   15,597       $   14,433       $   10,229     $   8,366       $   9,146  
Adjusted diluted earnings per common share   $   0.64       $   0.59       $   0.48     $   0.42       $   0.46  
Adjusted return on average assets       1.09         1.03         0.87 %       0.76         0.82 %
Adjusted return on average shareholders' equity       10.45         9.93         8.34 %       7.34 %         8.03 %
Adjusted return on average tangible common equity       16.02         15.27         11.86 %       9.88 %         10.83 %

 

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (continued)
                                         
                                         
Efficiency Ratio Reconciliation                                        
    For the Quarter Ended  
    September 30,    June 30,    March 31,    December 31,    September 30, 
(dollars in thousands)   2018   2018   2018   2017   2017
Noninterest expense - GAAP   $   50,317       $   46,452       $   49,499       $   36,192       $   48,363    
Loss on mortgage servicing rights held for sale       (270 )         (188 )         -           (442 )         (3,617 )  
Integration and acquisition expenses       (9,559 )         (2,019 )         (11,884 )         (2,686 )         (8,303 )  
Adjusted noninterest expense   $   40,488       $   44,245       $   37,615       $   33,064       $   36,443    
                                         
Net interest income - GAAP   $   45,081       $   48,286       $   38,185       $   36,036       $   36,765    
Effect of tax-exempt income     585           541           394           659           687    
Adjusted net interest income       45,666           48,827           38,579           36,695           37,452    
                                         
Noninterest income - GAAP   $   18,272       $   15,847       $   16,502       $   13,998       $   15,403    
Mortgage servicing rights impairment        297           500           133           494           104    
Loss (gain) on sales of investment securities, net     -           70           (65 )         (2 )         (98 )  
Other      12           48           (150 )         (37 )         (45 )  
Adjusted noninterest income       18,581           16,465           16,420           14,453           15,364    
                                         
Adjusted total revenue   $   64,247       $   65,292       $   54,999       $   51,148       $   52,816    
                                         
Efficiency ratio       63.02 %         67.76 %         68.39 %         64.64         69.00 %  
                                         

 

                                         
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  
    September 30,    June 30,    March 31,    December 31,    September 30, 
(dollars in thousands, except per share data)   2018   2018   2018   2017   2017
Shareholders' Equity to Tangible Common Equity                                        
Total shareholders' equity—GAAP   $   594,146       $   592,535       $   585,385       $   449,545       $   450,689    
Adjustments:                                        
  Preferred stock       (2,829 )         (2,876 )         (2,923 )         (2,970 )         (3,015 )  
  Goodwill       (164,044 )         (164,044 )         (155,674 )         (98,624 )         (97,351 )  
  Other intangibles       (39,228 )         (41,081 )         (46,473 )         (16,932 )         (17,966 )  
Tangible common equity   $   388,045       $   384,534       $   380,315       $   331,019       $   332,357    
                                         
Total Assets to Tangible Assets:                                        
Total assets—GAAP   $   5,724,612       $   5,730,600       $   5,723,372       $   4,412,701       $   4,347,761    
Adjustments:                                        
  Goodwill       (164,044 )         (164,044 )         (155,674 )         (98,624 )         (97,351 )  
  Other intangibles       (39,228 )         (41,081 )         (46,473 )         (16,932 )         (17,966 )  
Tangible assets   $   5,521,340       $   5,525,475       $   5,521,225       $   4,297,145       $   4,232,444    
                                         
Common Shares Outstanding       23,694,637           23,664,596           23,612,430           19,122,049           19,093,153    
                                         
Tangible Common Equity to Tangible Assets       7.03         6.96 %         6.89 %
        7.70         7.85 %  
Tangible Book Value Per Share   $   16.38       $   16.25       $   16.11       $   17.31       $   17.41    
                                         
Return on Average Tangible Common Equity (ROATCE)                                  
                                         
  For the Quarter Ended
    September 30,    June 30,    March 31,    December 31,    September 30, 
(dollars in thousands)   2018   2018   2018   2017   2017
Net income available to common shareholders   $   8,462       $   12,746       $   1,770       $   1,954       $   2,009    
                                         
Average total shareholders' equity—GAAP   $   593,457       $   584,653       $   498,941       $   453,968       $   453,317    
Adjustments:                                        
  Preferred stock        (2,859 )         (2,905 )         (2,952 )         (2,997 )         (3,126 )  
  Goodwill       (164,044 )         (158,461 )         (118,996 )         (97,406 )         (97,129 )  
  Other intangibles       (40,228 )         (44,098 )         (27,156 )         (17,495 )         (18,153 )  
Average tangible common equity   $   386,326       $   379,189       $   349,837       $   336,070       $   334,909    
ROATCE       8.69 %         13.48 %         2.05 %         2.31 %         2.38 %  
                                         

 

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Midland States Bancorp, Inc.
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