Press Release

Midland States Bancorp, Inc. Announces 2016 Fourth Quarter Results

Highlights

  • Net income of $11.6 million, or $0.72 diluted earnings per share

  • Average loans increased $118 million, or 20.7% annualized

  • Return on average assets of 1.44%; Return on average equity of 14.05%

  • Acquisition of Sterling Trust added $400 million in assets under administration

  • Operational Excellence initiative adopted to drive increased efficiencies

  • Definitive agreement signed to acquire Centrue Financial Corporation

EFFINGHAM, Ill., Jan. 26, 2017 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the “Company”) today reported net income of $11.6 million, or $0.72 diluted earnings per share, for the fourth quarter of 2016, compared with net income of $8.1 million, or $0.51 diluted earnings per share, for the third quarter of 2016, and net income of $7.7 million, or $0.63 diluted earnings per share, for the fourth quarter of 2015. 

“We continued to see strong loan demand during the fourth quarter, resulting in a 21% annualized increase in average loans,” said Leon J. Holschbach, President and Chief Executive Officer of the Company.  “With the exception of commercial loans, which were impacted by fluctuations in warehouse lines of credit, we generated significant growth across all of our major lending areas, with the largest increases coming in our residential mortgage, consumer and construction portfolios.

“During the fourth quarter, we also executed a number of strategic actions designed to strengthen the Company over the longer-term.  These actions included expanding our Wealth Management business with the acquisition of Sterling Trust, repositioning our investment securities portfolio to enhance our credit quality and capital ratios, and launching our Operational Excellence initiative to increase efficiencies across the organization. 

“Looking ahead to 2017, we are seeing healthy economic conditions across our markets and we are expecting continued growth across all of our major business lines.  The pending acquisition of Centrue Financial Corporation will add another catalyst for increasing our earnings power.  Combined with the improved efficiencies that we expect to generate from the implementation of our Operational Excellence strategic initiative, we anticipate delivering another year of strong earnings growth and further value creation for our shareholders,” said Mr. Holschbach.

Adjusted Earnings

Financial results for the fourth quarter of 2016 included a $14.3 million gain on sale of a portfolio of private label collateralized mortgage obligations (“CMOs”), $2.1 million in charges related to the Company’s branch network optimization actions, and $1.6 million in other integration and acquisition-related expenses.  Excluding these items, adjusted earnings were $6.3 million, or $0.39 diluted earnings per share, for the fourth quarter of 2016, compared with adjusted earnings of $8.3 million, or $0.52 diluted earnings per share, for the third quarter of 2016.  The decline in adjusted earnings is primarily attributable to lower interest income from investment securities of $1.7 million following the sale of the portfolio of CMOs, as well as a higher provision for loan losses.  A reconciliation of adjusted earnings to net income according to generally accepted accounting principles (“GAAP”) is provided in the financial tables at the end of this press release.

The cost savings resulting from the Operational Excellence initiative are expected to fully offset the reduction in interest income from investment securities in 2017 resulting from the sale of the CMO portfolio.  Following the completion of the branch network optimization efforts in the first quarter of 2017, the Company expects non-interest expense to range between $29 million and $30 million per quarter, excluding integration and acquisition-related expenses and prior to the completion of the acquisition of Centrue Financial Corporation.

Net Interest Income

Net interest income for the fourth quarter of 2016 was $26.0 million, a decrease of 4.8% from $27.3 million for the third quarter of 2016.  The decrease in net interest income was primarily attributable to lower interest income on investment securities following the sale of the portfolio of private label CMOs.  The decrease in interest income on investment securities was partially offset by a $1.0 million increase in interest income on loans (excluding accretion income) due to 20.7% annualized growth in the average balance of loans.

The Company’s net interest income benefits from accretion income associated with purchased loan portfolios.  Accretion income totaled $2.2 million for the fourth quarter of 2016, compared with $2.6 million for the third quarter of 2016. 

Relative to the fourth quarter of 2015, net interest income decreased $0.5 million.  Excluding the impact of a $2.2 million decrease in accretion income, net interest income increased $1.8 million.  This increase resulted from a $3.4 million increase in interest income on loans (excluding the effect of accretion income) due to 17.8% growth in the average balance of loans, partially offset by a $1.7 million decline in interest income on investment securities following the sale of the portfolio of CMOs.

Net Interest Margin

Net interest margin for the fourth quarter of 2016 was 3.70%, compared to 4.00% for the third quarter of 2016.  The Company’s net interest margin benefits from accretion income on purchased loan portfolios.  Excluding accretion income, net interest margin was 3.44% for the fourth quarter of 2016, compared with 3.66% for the third quarter of 2016.  The decrease in net interest margin excluding accretion income was primarily attributable to the sale of the CMO portfolio.

Relative to the fourth quarter of 2015, the net interest margin declined from 4.19%, primarily due to a decline in accretion income.  Excluding accretion income, the net interest margin declined from 3.56%, which was primarily attributable to lower average yields on investment securities following the sale of the portfolio of CMOs.

Noninterest Income

Noninterest income for the fourth quarter of 2016 was $30.5 million, an increase of 104% from $14.9 million for the third quarter of 2016.  The increase was primarily attributable to a $14.3 million gain on the sale of the CMO portfolio.  Excluding the gain on sale of the CMOs, non-interest income for the fourth quarter of 2016 was $16.2 million, an increase of 8.4% over the third quarter of 2016.  The increase was due to higher commercial FHA, residential mortgage banking, and wealth management revenue, partially offset by lower other income.

Commercial FHA revenue for the fourth quarter of 2016 was $3.7 million, an increase of 13.6% from $3.3 million in the third quarter of 2016.  The Company originated $159.0 million in rate lock commitments during the fourth quarter of 2016, compared to $73.4 million in the prior quarter.  The Company also recorded mortgage servicing rights impairment of $0.7 million in the fourth quarter of 2016, which negatively impacted the reported commercial FHA revenue.

Residential mortgage banking revenue for the fourth quarter of 2016 was $6.2 million, an increase of 25.1% from $5.0 million in the third quarter of 2016.  Residential mortgage banking revenue was positively impacted in the fourth quarter of 2016 by the recapture of previously recorded mortgage servicing rights impairment totaling $3.6 million.

Relative to the fourth quarter of 2015, noninterest income increased 138% from $12.8 million.  The increase was due to the gain on sale of the CMOs, as well as increases in all of the Company’s major fee generating businesses.

Noninterest Expense

Noninterest expense for the fourth quarter of 2016 was $34.1 million, which included $2.1 million in charges related to the Company’s branch network optimization actions and $1.6 million in other integration and acquisition-related expenses.  Excluding these expenses, noninterest expense for the fourth quarter of 2016 was $30.4 million, an increase of 6.2% from $28.7 million for the third quarter of 2016.  The increase was primarily driven by higher salaries and benefits expense resulting from higher bonus accruals and the addition of employees from the Sterling Trust acquisition, as well as an increase in professional fees.

Relative to the fourth quarter of 2015, noninterest expense excluding the charges related to the Company’s branch network optimization actions and other integration and acquisition-related expenses increased 9.9% from $27.7 million.  The increase was primarily due to higher salaries and benefits expense resulting from an increase in FTEs over the past 12 months, as well as higher professional fees. 

Income Tax Expense

Income tax expense was $8.3 million for the fourth quarter of 2016, compared to $4.1 million for the third quarter of 2016.  The effective tax rate for the fourth quarter of 2016 was 41.8%, compared to 33.8% in the prior quarter.  The increase in the effective tax rate for the fourth quarter of 2016 was primarily attributable to the write-off of state tax refunds and tax credits obtained through the Heartland acquisition. 

For the full year 2017, the Company expects its effective tax rate to return to a level approximate to the effective tax rate in the third quarter of 2016.

Loan Portfolio

Total loans outstanding were $2.32 billion at December 31, 2016, compared with $2.31 billion at September 30, 2016, and $2.00 billion at December 31, 2015.  The $7.2 million increase in the loan portfolio from September 30, 2016 was primarily driven by a $13.3 million increase in commercial real estate loans, a $36.8 million increase in residential real estate loans, a $21.9 million increase in consumer loans, a $9.1 million increase in equipment lease financing loans, and a $13.4 million increase in construction loans.  These increases were partially offset by an $87.2 million decrease in commercial loans.

Approximately $65 million of the decline in commercial loans was attributable to a decrease in advances on a warehouse line of credit to a customer that originates government-guaranteed commercial FHA loans.  The advances on this warehouse line of credit are short-term in nature.

Deposits

Total deposits were $2.40 billion at December 31, 2016, compared with $2.42 billion at September 30, 2016, and $2.37 billion at December 31, 2015.  Total deposits at December 31, 2016 were impacted by $73 million of deposit outflow related to fluctuations in the deposit balances of the warehouse line of credit customer referenced above, as part of their ordinary course of business.  This temporary deposit outflow was partially offset by increases in non-interest bearing, money market, and savings deposits from other customers.

Asset Quality

Non-performing loans totaled $31.6 million, or 1.36% of total loans, at December 31, 2016, compared with $29.9 million, or 1.29% of total loans, at September 30, 2016, and $24.9 million, or 1.26% of total loans, at December 31, 2015.  The increase in non-performing loans from September 30, 2016 is primarily due to one commercial loan relationship. 

Net charge-offs for the fourth quarter of 2016 were $3.1 million, or 0.54% of average loans on an annualized basis.  Net charge-offs consisted of $1.6 million in commercial loans, $0.7 million in commercial real estate loans, $0.5 million in residential loans and $0.4 million in lease financing loans.  Approximately $1.5 million of the commercial loan charge-offs related to one commercial credit that was fully reserved for in prior quarters.

The Company recorded a provision for loan losses of $2.4 million for the fourth quarter of 2016, primarily reflecting the higher level of net charge-offs in the quarter.

The Company’s allowance for loan losses was 0.64% of total loans and 47.0% of non-performing loans at December 31, 2016, compared with 0.67% and 52.0%, respectively, at September 30, 2016.  Including the fair market value discounts recorded in connection with acquired loan portfolios, the allowance for loan losses to total loans ratio was 1.02% at December 31, 2016, compared with 1.06% at September 30, 2016.

Capital

At December 31, 2016, 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,
2016
Well Capitalized
Regulatory Requirements
Total capital to risk-weighted assets 13.85 % 10.00 %
Tier 1 capital to risk-weighted assets 11.27 % 8.00 %
Tier 1 leverage ratio 9.76 % 5.00 %
Tier 1 common capital to risk-weighted assets 9.35 % 6.50 %
Tangible common equity to tangible assets 8.36 % 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, January 27, 2017.  During the call, management will review the fourth quarter results, operational highlights and the Centrue transaction. The call can be accessed via telephone at (877) 516-3531 (passcode: 47777304).  A recorded replay can be accessed through February 3, 2017 by dialing (855) 859-2056; passcode: 47777304.

A slide presentation relating to the fourth quarter results and the Centrue transaction 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. Midland had assets of approximately $3.2 billion, and its Midland Wealth Management Group had assets under administration of approximately $1.7 billion as of December 31, 2016.  Midland provides a full range of commercial and consumer banking products and services, merchant credit card services, trust and investment management, and insurance and financial planning services. In addition, commercial equipment leasing services are provided through Heartland Business Credit, and multi-family and healthcare facility FHA financing is provided through Love Funding, Midland's non-bank subsidiaries. Midland has more than 80 locations across the United States. 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 accounting principles generally accepted in the United States (“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,” “Yield on Loans Excluding Accretion Income, ” “Net Interest Margin Excluding Accretion Income,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes that 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.

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 expected loan production, operating expenses and future earnings levels including with respect to the planned acquisition of Centrue Financial Corporation.  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.

MIDLAND STATES BANCORP, INC.  
CONSOLIDATED FINANCIAL SUMMARY (unaudited)  
                                         
    For the Quarter Ended  
    December 31,    September 30,    June 30,    March 31,    December 31, 
(in thousands, except per share data)   2016   2016   2016   2016   2015
Earnings Summary                                        
Net interest income   $ 25,959       $ 27,265       $ 27,989     $ 24,041       $ 26,452  
Provision for loan losses     2,445         1,392         629       1,125         1,052  
Noninterest income     30,486         14,937         14,016       12,618         12,799  
Noninterest expense     34,093         28,663         30,903       27,639         27,692  
Income before income taxes     19,907         12,147         10,473       7,895         10,507  
Income taxes     8,327         4,102         3,683       2,777         2,811  
Net income     11,580         8,045         6,790       5,118         7,696  
Net income (loss) attributable to noncontrolling interest in subsidiaries     (3 )       (6 )       1       (1 )       1  
Net income attributable to Midland States Bancorp, Inc.   $ 11,583       $ 8,051       $ 6,789     $ 5,119       $ 7,695  
                                         
Diluted earnings per common share   $ 0.72       $ 0.51       $ 0.50     $ 0.42       $ 0.63  
Weighted average shares outstanding - diluted     16,032,016         15,858,273         13,635,074       12,229,293         12,181,664  
Return on average assets     1.44   %     1.03   %     0.89 %     0.70   %     1.06 %
Return on average shareholders' equity     14.05   %     10.04   %     10.18 %     8.69   %     13.19 %
Return on average tangible common shareholders' equity     16.84   %     12.01   %     12.67 %     11.22   %     17.26 %
Net interest margin     3.70   %     4.00   %     4.20 %     3.80   %     4.19 %
Efficiency ratio     76.64   %     64.56   %     66.46 %     67.73   %     68.83 %
                                         
Adjusted Earnings Performance Summary                                        
Adjusted earnings   $ 6,300       $ 8,269       $ 7,107     $ 5,767       $ 7,525  
Adjusted diluted earnings per common share   $ 0.39       $ 0.52       $ 0.52     $ 0.47       $ 0.61  
Adjusted return on average assets     0.78   %     1.06   %     0.93 %     0.79   %     1.04 %
Adjusted return on average shareholders' equity     7.64   %     10.32   %     10.66 %     9.79   %     12.90 %
Adjusted return on average tangible common shareholders' equity     9.16   %     12.34   %     13.27 %     12.64   %     16.88 %
Net interest margin excluding accretion income     3.44   %     3.66   %     3.52 %     3.55   %     3.56 %
                                         

 

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)   2016   2016   2016   2016   2015
Net interest income:                                        
Total interest income   $ 29,981       $ 31,186       $ 32,115       $ 27,967       $ 30,300    
Total interest expense     4,022         3,921         4,126         3,926         3,848    
Net interest income     25,959         27,265         27,989         24,041         26,452    
Provision for loan losses     2,445         1,392         629         1,125         1,052    
Net interest income after provision for loan losses     23,514         25,873         27,360         22,916         25,400    
Noninterest income:                                        
Commercial FHA revenue     3,704         3,260         8,538         6,562         3,045    
Residential mortgage banking revenue     6,241         4,990         1,037         1,121         3,328    
Wealth management revenue     2,495         1,941         1,870         1,785         1,831    
Service charges on deposit accounts     988         1,044         965         907         979    
Interchange revenue     921         920         945         964         858    
FDIC loss sharing expense     -         -         (1,608 )       (53 )       (212 )  
Gain on sales of investment securities, net     14,387         39         72         204         33    
Other-than-temporary impairment on investment securities     -         -         -         (824 )       -    
Other income     1,750         2,743         2,197         1,952         2,937    
Total noninterest income     30,486         14,937         14,016         12,618         12,799    
Noninterest expense:                                        
Salaries and employee benefits     17,326         16,568         17,012         15,387         13,725    
Occupancy and equipment     3,266         3,271         3,233         3,310         3,424    
Data processing     2,828         2,586         2,624         2,620         2,546    
Professional     2,898         1,877         1,573         1,701         2,079    
Amortization of intangible assets     534         514         519         580         598    
Other     7,241         3,847         5,942         4,041         5,320    
Total noninterest expense     34,093         28,663         30,903         27,639         27,692    
Income before income taxes     19,907         12,147         10,473         7,895         10,507    
Income taxes     8,327         4,102         3,683         2,777         2,811    
Net income     11,580         8,045         6,790         5,118         7,696    
Net (loss) income attributable to noncontrolling interest in subsidiaries     (3 )       (6 )       1         (1 )       1    
Net income attributable to Midland States Bancorp, Inc.   $ 11,583       $ 8,051       $ 6,789       $ 5,119       $ 7,695    
                                         
Basic earnings per common share   $ 0.74       $ 0.51       $ 0.51       $ 0.43       $ 0.64    
Diluted earnings per common share   $ 0.72       $ 0.51       $ 0.50       $ 0.42       $ 0.63    
                                         

 

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                                         
    As of  
    December 31,    September 30,    June 30,    March 31,    December 31, 
(in thousands)   2016   2016   2016   2016   2015
Assets                                        
Cash and cash equivalents   $ 190,716       $ 228,030       $ 123,366       $ 162,416       $ 212,475    
Investment securities available-for-sale at fair value     246,339         252,212         238,781         232,074         236,627    
Investment securities held to maturity at amortized cost     78,672         82,941         84,756         88,085         87,521    
Loans     2,319,976         2,312,778         2,161,041         2,016,034         1,995,589    
Allowance for loan losses     (14,862 )       (15,559 )       (14,752 )       (14,571 )       (15,988 )  
Total loans, net     2,305,114         2,297,219         2,146,289         2,001,463         1,979,601    
Loans held for sale at fair value     70,565         61,363         101,782         103,365         54,413    
Premises and equipment, net     66,692         70,727         72,147         72,421         73,133    
Other real estate owned     3,560         4,828         3,540         4,740         5,472    
Mortgage servicing rights at lower of cost or market     68,008         64,689         62,808         65,486         66,651    
Intangible assets     7,187         5,391         5,905         6,424         7,004    
Goodwill     48,836         46,519         46,519         46,519         46,519    
Cash surrender value of life insurance policies     74,226         74,276         73,665         53,173         52,729    
Other assets     73,808         59,532         62,226         61,914         62,679    
Total assets   $ 3,233,723       $ 3,247,727       $ 3,021,784       $ 2,898,080       $ 2,884,824    
                                         
Liabilities and Shareholders' Equity                                        
Noninterest bearing deposits   $ 562,333       $ 629,113       $ 528,966       $ 546,664       $ 543,401    
Interest bearing deposits     1,842,033         1,790,919         1,825,586         1,843,046         1,824,247    
Total deposits     2,404,366         2,420,032         2,354,552         2,389,710         2,367,648    
Short-term borrowings     131,557         138,289         125,014         101,649         107,538    
FHLB advances and other borrowings     237,518         237,543         97,588         40,133         40,178    
Subordinated debt     54,508         54,484         54,459         61,903         61,859    
Trust preferred debentures     37,405         37,316         37,229         37,142         37,057    
Other liabilities     46,561         38,273         36,627         28,982         37,488    
Total liabilities     2,911,915         2,925,937         2,705,469         2,659,519         2,651,768    
Midland States Bancorp, Inc. shareholders’ equity     321,770         321,749         316,268         238,386         232,880    
Noncontrolling interest in subsidiaries     38         41         47         175         176    
Total shareholders’ equity     321,808         321,790         316,315         238,561         233,056    
Total liabilities and shareholders’ equity   $ 3,233,723       $ 3,247,727       $ 3,021,784       $ 2,898,080       $ 2,884,824    
                                         

 

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                                         
    As of  
    December 31,    September 30,    June 30,    March 31,    December 31, 
(in thousands)   2016   2016   2016   2016   2015
Loan Portfolio                                        
Commercial loans   $ 457,827     $ 545,069     $ 489,228     $ 484,618     $ 499,573  
Commercial real estate loans     969,615       956,298       929,399       897,099       876,784  
Construction and land development loans     177,325       163,900       181,667       159,507       150,266  
Residential real estate loans     253,713       216,935       179,184       158,221       163,224  
Consumer loans     270,017       248,131       205,060       158,938       161,512  
Lease financing loans     191,479       182,445       176,503       157,651       144,230  
Total loans   $ 2,319,976     $ 2,312,778     $ 2,161,041     $ 2,016,034     $ 1,995,589  
                                         
                                         
Deposit Portfolio                                        
Noninterest-bearing demand deposits   $ 562,333     $ 629,113     $ 528,966     $ 546,664     $ 543,401  
NOW accounts     656,248       658,021       627,003       612,475       621,925  
Money market accounts     399,851       366,193       374,537       415,130       377,654  
Savings accounts     166,910       162,742       164,792       163,163       155,778  
Time deposits     400,304       420,779       431,173       433,386       446,621  
Brokered deposits     218,720       183,184       228,081       218,892       222,269  
Total deposits   $ 2,404,366     $ 2,420,032     $ 2,354,552     $ 2,389,710     $ 2,367,648  
                                         

 

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)   2016   2016   2016   2016   2015  
Average Balance Sheets                                          
Cash and cash equivalents   $ 140,439     $ 154,764     $ 232,362     $ 223,951     $ 184,072    
Investment securities     334,438       348,265       338,224       327,267       345,114    
Loans     2,385,780       2,268,178       2,171,814       2,063,568       2,039,046    
Total interest-earning assets     2,860,657       2,771,207       2,742,400       2,614,786       2,568,232    
Non-earning assets     337,694       329,504       324,880       317,648       312,154    
Total assets   $ 3,198,351     $ 3,100,711     $ 3,067,280     $ 2,932,434     $ 2,880,386    
Interest-bearing deposits   $ 1,838,760     $ 1,803,189     $ 1,844,493     $ 1,832,599     $ 1,813,974    
Short-term borrowings     151,191       134,052       114,651       120,753       118,118    
FHLB advances and other borrowings     183,614       165,774       185,195       99,499       48,583    
Subordinated debt     54,495       54,470       61,677       61,878       61,835    
Trust preferred debentures     37,357       37,266       37,182       37,094       37,013    
Total interest-bearing liabilities     2,265,417       2,194,751       2,243,198       2,151,823       2,079,523    
Noninterest-bearing deposits     562,958       550,816       522,632       511,019       529,196    
Other noninterest-bearing liabilities     42,050       36,235       33,188       32,671       40,247    
Shareholders' equity     327,926       318,909       268,262       236,921       231,420    
Total liabilities and shareholders' equity   $ 3,198,351     $ 3,100,711     $ 3,067,280     $ 2,932,434     $ 2,880,386    
                                           
Yields                                          
Cash and cash equivalents     0.53 %     0.50 %     0.50 %     0.50 %     0.27 %  
Investment securities     3.13 %     4.93 %     5.12 %     5.31 %     5.02 %  
Loans     4.63 %     4.79 %     5.22 %     4.68 %     5.15 %  
Total interest-earning assets     4.26 %     4.57 %     4.81 %     4.40 %     4.79 %  
Interest-bearing deposits     0.48 %     0.48 %     0.50 %     0.49 %     0.48 %  
Short-term borrowings     0.22 %     0.24 %     0.24 %     0.23 %     0.20 %  
FHLB advances and other borrowings     0.78 %     0.73 %     0.56 %     0.55 %     0.87 %  
Subordinated debt     6.37 %     6.38 %     6.87 %     6.87 %     6.79 %  
Trust preferred debentures     4.99 %     5.03 %     4.95 %     4.80 %     4.60 %  
Total interest-bearing liabilities     0.71 %     0.71 %     0.74 %     0.73 %     0.73 %  
Net interest margin     3.70 %     4.00 %     4.20 %     3.80 %     4.19 %  
                                           

 

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, 
(in thousands, except per share data)   2016   2016   2016   2016   2015
Asset Quality                                        
Loans 30-89 days past due   $ 10,767     $ 10,318     $ 10,453     $ 6,616     $ 10,120  
Nonperforming loans     31,603       29,926       18,430       18,787       24,891  
Nonperforming assets     34,550       34,304       21,469       22,312       29,206  
Net charge-offs     3,142       585       448       2,542       220  
Loans 30-89 days past due to total loans     0.46 %     0.45 %     0.48 %     0.33 %     0.51 %
Nonperforming loans to total loans     1.36 %     1.29 %     0.85 %     0.93 %     1.25 %
Nonperforming assets to total assets     1.07 %     1.06 %     0.71 %     0.77 %     1.01 %
Allowance for loan losses to total loans     0.64 %     0.67 %     0.68 %     0.72 %     0.80 %
Allowance for loan losses to nonperforming loans     47.03 %     51.99 %     80.04 %     77.56 %     64.23 %
Net charge-offs to average loans     0.54 %     0.11 %     0.09 %     0.51 %     0.04 %
                                         
Wealth Management                                        
Trust assets under administration   $ 1,658,235     $ 1,235,132     $ 1,198,044     $ 1,189,693     $ 1,181,128  
                                         
Market Data                                        
Book value per share at period end   $ 20.78     $ 20.89     $ 20.53     $ 20.19     $ 19.74  
Tangible book value per share at period end   $ 17.16     $ 17.52     $ 17.13     $ 15.71     $ 15.20  
Market price at period end   $ 36.18     $ 25.34     $ 21.69     $ N/A     $ N/A  
Shares outstanding at period end     15,483,499       15,404,423       15,402,946       11,804,779       11,797,404  
                                         
Capital                                        
Total capital to risk-weighted assets     13.85 %     13.53 %     13.91 %     11.67 %     11.82 %
Tier 1 capital to risk-weighted assets     11.27 %     10.94 %     11.23 %     8.48 %     8.62 %
Tier 1 leverage ratio     9.76 %     9.82 %     9.77 %     7.25 %     7.49 %
Tier 1 common capital to risk-weighted assets     9.35 %     9.03 %     9.24 %     6.40 %     6.50 %
Tangible common equity to tangible assets     8.36 %     8.44 %     8.89 %     6.52 %     6.33 %
                                         

 

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
                                           
      For the Quarter Ended  
      December 31,    September 30,    June 30,    March 31,    December 31, 
(in thousands, except per share data)     2016   2016   2016   2016   2015
Adjusted Earnings Reconciliation                                          
Income before income taxes - GAAP     $ 19,907       $ 12,147       $ 10,473       $ 7,895       $ 10,507    
Adjustments to other income:                                          
Gain on sales of investment securities, net     14,387         39         72         204         33    
Other than-temporary-impairment on investment securities     -         -         -         (824 )       -    
FDIC loss-sharing expense     -         -         -         -         (212 )  
Amortization of FDIC indemnification asset, net     -         -         -         -         (39 )  
Reversal of contingent consideration accrual     -         -         350         -         -    
Total adjusted other income       14,387         39         422         (620 )       (218 )  
Adjustments to other expense:                                          
Expenses associated with payoff of subordinated debt     -         -         511         -         -    
Net expense from loss share termination agreement     351         -         -         -         -    
Branch network optimization plan charges     2,099         -         -         -         -    
Integration and acquisition expenses       1,200         352         406         385         214    
Total adjusted other expense       3,650         352         917         385         214    
Adjusted earnings pre tax     9,170         12,460         10,968         8,900         10,939    
Adjusted earnings tax     2,870         4,191         3,861         3,133         3,414    
Adjusted earnings - non-GAAP     $ 6,300       $ 8,269       $ 7,107       $ 5,767       $ 7,525    
Adjusted diluted EPS     $ 0.39       $ 0.52       $ 0.52       $ 0.47       $ 0.61    
Adjusted return on average assets       0.78   %     1.06   %     0.93   %     0.79   %     1.04   %
Adjusted return on average shareholders' equity       7.64   %     10.32   %     10.66   %     9.79   %     12.90   %
Adjusted return on average tangible common equity       9.16   %     12.34   %     13.27   %     12.64   %     16.88   %
                                           
                                           
Yield on Loans                                          
Reported yield on loans       4.63   %     4.79   %     5.22   %     4.68   %     5.15   %
Effect of accretion income on acquired loans       (0.30 ) %     (0.41 ) %     (0.85 ) %     (0.30 ) %     (0.78 ) %
Yield on loans excluding accretion income       4.33   %     4.38   %     4.37   %     4.38   %     4.37   %
                                           
Net Interest Margin                                          
Reported net interest margin       3.70   %     4.00   %     4.20   %     3.80   %     4.19   %
Effect of accretion income on acquired loans       (0.26 ) %     (0.34 ) %     (0.68 ) %     (0.25 ) %     (0.63 ) %
Net interest margin excluding accretion income       3.44   %     3.66   %     3.52   %     3.55   %     3.56   %
                                           

 

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     
    December 31,    September 30,    June 30,    March 31,    December 31,   
(in thousands, except per share data)   2016   2016   2016   2016   2015  
                                           
Shareholders' Equity to Tangible Common Equity                                          
Total shareholders' equity—GAAP   $ 321,808       $ 321,790       $ 316,315       $ 238,561       $ 233,056      
Adjustments:                                          
Noncontrolling interest in subsidiaries     (38 )       (41 )       (47 )       (175 )       (176 )    
Goodwill     (48,836 )       (46,519 )       (46,519 )       (46,519 )       (46,519 )    
Other intangibles     (7,187 )       (5,391 )       (5,905 )       (6,424 )       (7,004 )    
Tangible common equity   $ 265,747       $ 269,839       $ 263,844       $ 185,443       $ 179,357      
                                           
Total Assets to Tangible Assets:                                          
Total assets—GAAP     3,233,723         3,247,727         3,021,784         2,898,080         2,884,824      
Adjustments:                                          
Goodwill     (48,836 )       (46,519 )       (46,519 )       (46,519 )       (46,519 )    
Other intangibles     (7,187 )       (5,391 )       (5,905 )       (6,424 )       (7,004 )    
Tangible assets   $ 3,177,700       $ 3,195,817       $ 2,969,360       $ 2,845,137       $ 2,831,301      
                                           
Common Shares Outstanding     15,483,499         15,404,423         15,402,946         11,804,779         11,797,404      
                                           
Tangible Common Equity to Tangible Assets     8.36   %     8.44   %     8.89   %     6.52   %     6.33   %  
Tangible Book Value Per Share   $ 17.16       $ 17.52       $ 17.13       $ 15.71       $ 15.20      
                                           
                                           
Return on Average Tangible Common Equity (ROATCE)                                    
    As of     
    December 31,    September 30,    June 30,    March 31,    December 31,   
(in thousands)   2016   2016   2016   2016   2015  
                                           
Net Income   $ 11,583       $ 8,051       $ 6,789       $ 5,119       $ 7,695      
                                           
Average total shareholders' equity—GAAP   $ 327,926       $ 318,909       $ 268,262       $ 236,921       $ 231,420      
Adjustments:                                          
Noncontrolling interest in subsidiaries     (40 )       (49 )       (121 )       (184 )       (204 )    
Goodwill     (46,594 )       (46,519 )       (46,519 )       (46,519 )       (46,997 )    
Other intangibles     (7,718 )       (5,656 )       (6,184 )       (6,740 )       (7,324 )    
Average tangible common equity   $ 273,574       $ 266,685       $ 215,438       $ 183,478       $ 176,895      
ROATCE     16.84   %     12.01   %     12.67   %     11.22   %     17.26   %  
                                           
CONTACTS:
Jeffrey G. Ludwig, Exec. V.P., at jludwig@midlandsb.com or (217) 342-7321
Kevin L. Thompson, Chief Financial Officer, at kthompson@midlandsb.com or (217) 342-7321
Douglas J. Tucker, Sr. V.P., Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321

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