UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
Form 8-K
_____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): April 25, 2019
Midland States Bancorp, Inc.
(Exact Name of Registrant as Specified in Charter)
| Illinois | 001-35272 | 37-1233196 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| 1201 Network Centre Drive, Effingham, Illinois 62401 |
| (Address of Principal Executive Offices) (Zip Code) |
(217) 342-7321
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition.
On April 25, 2019, Midland States Bancorp, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter of 2019. The press release is attached as Exhibit 99.1.
Item 7.01. Regulation FD Disclosure.
On April 25, 2019, the Company made available on its website a slide presentation regarding the Company's first quarter 2019 financial results, which will be used as part of a publicly accessible conference call on April 26, 2019. The slide presentation is attached as Exhibit 99.2. The information in this Form 8-K and the attached exhibits shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.Exhibit No. Description 99.1 Press Release of Midland States Bancorp, Inc., dated April 25, 2019 99.2 Slide Presentation of Midland States Bancorp, Inc. regarding first quarter 2019 financial results
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Midland States Bancorp, Inc. | ||
| Date: April 25, 2019 | By: | /s/ Douglas J. Tucker |
| Douglas J. Tucker | ||
| Senior Vice President and Corporate Counsel | ||
EXHIBIT 99.1
Midland States Bancorp, Inc. Announces 2019 First Quarter Results
Highlights
- Net income of $14.0 million, or $0.57 diluted earnings per share
- Book value per share increased 2.3% to $26.08
- Tangible book value per share increased 4.0% to $17.68
- Definitive agreement to acquire HomeStar Financial Group, Inc. announced on April 2, 2019
EFFINGHAM, Ill., April 25, 2019 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $14.0 million, or $0.57 diluted earnings per share, for the first quarter of 2019. This compares to net income of $16.3 million, or $0.67 diluted earnings per share, for the fourth quarter of 2018, and net income of $1.8 million, or $0.08 diluted earnings per share, for the first quarter of 2018, which included $11.9 million in integration and acquisition expenses.
Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “Our first quarter performance reflects our focus on prudently managing our balance sheet to protect our net interest margin, growing our equipment financing business, and improving efficiencies through disciplined expense management. We also continue to add value to our franchise through our acquisition strategy. Our pending acquisition of HomeStar Financial Group, Inc. will enable us to add a community bank that shares our strong commitment to customer service and provides a leadership position in the Kankakee market. HomeStar’s attractive deposit base will also provide liquidity to support our organic loan growth. While being a relatively small transaction, we expect the acquisition of HomeStar to be highly accretive to earnings and create strong value for shareholders.”
Factors Affecting Comparability
The Company acquired Alpine Bancorporation, Inc. (“Alpine”) in February 2018. The financial position and results of operations of Alpine prior to its acquisition date are not included in the Company’s financial results.
Net Interest Income
Net interest income for the first quarter of 2019 was $45.6 million, a decrease of 6.0% from $48.5 million for the fourth quarter of 2018. Excluding accretion income, net interest income decreased $1.2 million from the prior quarter. Accretion income associated with purchased loan portfolios totaled $2.5 million for the first quarter of 2019, compared with $4.3 million for the fourth quarter of 2018.
Relative to the first quarter of 2018, net interest income increased $7.4 million, or 19.4%. Accretion income for the first quarter of 2018 was $2.0 million. The increase in net interest income resulted from a $12.9 million increase in interest income on interest-earning assets, offset in part by a $5.5 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 first quarter of 2019 was 3.73%, compared to 3.85% for the fourth quarter of 2018. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 17 and 31 basis points to net interest margin in the first quarter of 2019 and fourth quarter of 2018, respectively. Excluding the impact of accretion income, net interest margin increased two basis points from the fourth quarter of 2018, primarily due to the impact of higher average loan yields.
Relative to the first quarter of 2018, net interest margin increased from 3.69%. Accretion income on purchased loan portfolios contributed 16 basis points to net interest margin in the first quarter of 2018. Excluding the impact of accretion income, net interest margin increased three basis points from the first quarter of 2018, primarily due to the impact of higher average loan yields.
Noninterest Income
Noninterest income for the first quarter of 2019 was $17.1 million, a decrease of 19.3% from $21.2 million for the fourth quarter of 2018. The decrease was attributable to declines in most major noninterest income items.
Relative to the first quarter of 2018, noninterest income increased 3.5% from $16.5 million. The increase was attributable to growth in wealth management and community banking fees, partially due to the impact of the acquisition of Alpine.
Wealth management revenue for the first quarter of 2019 was $5.0 million, a decrease of 12.4% from $5.7 million in the fourth quarter of 2018, primarily due to lower estate fees and other one-time revenue items recorded in the prior quarter. Compared to the first quarter of 2018, wealth management revenue increased 21.4%, which was primarily attributable to the addition of Alpine’s wealth management business.
Commercial FHA revenue for the first quarter of 2019 was $3.3 million, compared to $4.2 million in the fourth quarter of 2018. Commercial FHA revenue in the fourth quarter of 2018 included a $1.4 million recapture of mortgage servicing rights impairment. The Company originated $64.5 million in rate lock commitments during the first quarter of 2019, compared to $62.3 million in the prior quarter. Compared to the first quarter of 2018, commercial FHA revenue declined 1.8%.
Other income for the first quarter of 2019 was $2.8 million, compared to $3.9 million in the fourth quarter of 2018. The decrease was primarily attributable to a gain on proceeds from the Company’s bank-owned life insurance program recorded in the fourth quarter of 2018. Compared to the first quarter of 2018, other income decreased 21.7%.
Noninterest Expense
Noninterest expense for the first quarter of 2019 was $41.1 million, which included $0.2 million in integration and acquisition expenses, compared with $45.4 million for the fourth quarter of 2018, which included $0.6 million in integration and acquisition expenses. The decrease was attributable to declines in most of the major noninterest expense items, as management has focused on controlling expenses.
Relative to the first quarter of 2018, noninterest expense decreased 17.0% from $49.5 million. Excluding integration and acquisition expenses, noninterest expense increased 8.8% from $37.6 million. The increase was primarily due to the addition of personnel and facilities from Alpine.
Loan Portfolio
Total loans outstanding were $4.09 billion at March 31, 2019, compared with $4.14 billion at December 31, 2018 and $4.03 billion at March 31, 2018. The decrease in total loans from December 31, 2018 was primarily attributable to a decline in the commercial real estate portfolio, which was partially offset by organic growth in commercial loans and leases. Equipment financing balances increased $57.5 million from December 31, 2018, which are booked within the commercial loans and leases portfolio, reflecting management’s efforts to grow the equipment financing business. The increase in total loans from March 31, 2018 was primarily attributable to organic growth in commercial loans and leases and consumer loans.
Deposits
Total deposits were $4.04 billion at March 31, 2019, compared with $4.07 billion at December 31, 2018, and $4.23 billion at March 31, 2018. The decrease in total deposits from December 31, 2018 was primarily related to outflows of commercial deposits and a decrease in public funds.
Asset Quality
Nonperforming loans totaled $49.3 million, or 1.20% of total loans, at March 31, 2019, compared with $42.9 million, or 1.04% of total loans, at December 31, 2018, and $26.5 million, or 0.66% of total loans, at March 31, 2018. The increase in nonperforming loans from the end of the prior quarter was primarily attributable to the downgrade of one commercial real estate loan and one residential real estate loan during the first quarter of 2019.
Net charge-offs for the first quarter of 2019 were $1.1 million, or 0.10% of average loans on an annualized basis.
The Company recorded a provision for loan losses of $3.2 million for the first quarter of 2019. The Company’s allowance for loan losses was 0.56% of total loans and 46.9% of nonperforming loans at March 31, 2019, compared with 0.51% of total loans and 48.7% of nonperforming loans at December 31, 2018. Fair market value discounts recorded in connection with acquired loan portfolios represented 0.47% of total loans at March 31, 2019, compared with 0.53% of total loans at December 31, 2018.
Capital
At March 31, 2019, 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, 2019 | Well Capitalized Regulatory Requirements | |
| Total capital to risk-weighted assets | 13.25% | 10.00% |
| Tier 1 capital to risk-weighted assets | 10.65% | 8.00% |
| Tier 1 leverage ratio | 8.92% | 5.00% |
| Common equity Tier 1 capital | 9.16% | 6.50% |
| Tangible common equity to tangible assets (1) | 7.74% | 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, April 26, 2019 to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 2075024. A recorded replay can be accessed through May 3, 2019 by dialing (855) 859-2056; conference ID: 2075024.
A slide presentation relating to the first quarter 2019 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 March 31, 2019, the Company had total assets of approximately $5.64 billion and its Wealth Management Group had assets under administration of approximately $3.10 billion. Midland provides a full range of commercial and consumer banking products and services, business equipment financing, merchant credit card services, trust and investment management, and insurance and financial planning services. In addition, multi-family and healthcare facility FHA financing is provided through Love Funding, Midland’s non-bank subsidiary. For additional information, visit https://www.midlandsb.com/ or follow Midland on LinkedIn at https://www.linkedin.com/company/midland-states-bank.
Non-GAAP Financial Measures
Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP. These non-GAAP financial measures include “Adjusted Earnings,” “Adjusted Diluted Earnings Per Common Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.
Forward-Looking Statements
Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company’s plans, objectives, future performance, goals and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; risks relating to pending acquisitions; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe" or "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
CONTACTS:
Jeffrey G. Ludwig, President and CEO, at 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) | 2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||
| Earnings Summary | ||||||||||||||||||||
| Net interest income | $ | 45,601 | $ | 48,535 | $ | 45,081 | $ | 48,286 | $ | 38,185 | ||||||||||
| Provision for loan losses | 3,243 | 3,467 | 2,103 | 1,854 | 2,006 | |||||||||||||||
| Noninterest income | 17,075 | 21,170 | 18,272 | 15,847 | 16,502 | |||||||||||||||
| Noninterest expense | 41,097 | 45,375 | 50,317 | 46,452 | 49,499 | |||||||||||||||
| Income before income taxes | 18,336 | 20,863 | 10,933 | 15,827 | 3,182 | |||||||||||||||
| Income taxes | 4,354 | 4,527 | 2,436 | 3,045 | 1,376 | |||||||||||||||
| Net income | 13,982 | 16,336 | 8,497 | 12,782 | 1,806 | |||||||||||||||
| Preferred stock dividends, net | 34 | 34 | 35 | 36 | 36 | |||||||||||||||
| Net income available to common shareholders | $ | 13,948 | $ | 16,302 | $ | 8,462 | $ | 12,746 | $ | 1,770 | ||||||||||
| Diluted earnings per common share | $ | 0.57 | $ | 0.67 | $ | 0.35 | $ | 0.52 | $ | 0.08 | ||||||||||
| Weighted average shares outstanding - diluted | 24,204,661 | 24,200,346 | 24,325,743 | 24,268,111 | 21,351,511 | |||||||||||||||
| Return on average assets | 1.01 | % | 1.14 | % | 0.59 | % | 0.91 | % | 0.15 | % | ||||||||||
| Return on average shareholders' equity | 9.23 | % | 10.81 | % | 5.68 | % | 8.77 | % | 1.47 | % | ||||||||||
| Return on average tangible common equity (1) | 13.79 | % | 16.40 | % | 8.69 | % | 13.48 | % | 2.05 | % | ||||||||||
| Net interest margin | 3.73 | % | 3.85 | % | 3.59 | % | 3.91 | % | 3.69 | % | ||||||||||
| Efficiency ratio (1) | 64.73 | % | 65.50 | % | 63.02 | % | 67.76 | % | 68.39 | % | ||||||||||
| Adjusted Earnings Performance Summary | ||||||||||||||||||||
| Adjusted earnings (1) | $ | 14,098 | $ | 16,397 | $ | 15,632 | $ | 14,469 | $ | 10,265 | ||||||||||
| Adjusted diluted earnings per common share (1) | $ | 0.58 | $ | 0.67 | $ | 0.64 | $ | 0.59 | $ | 0.48 | ||||||||||
| Adjusted return on average assets (1) | 1.02 | % | 1.14 | % | 1.09 | % | 1.03 | % | 0.87 | % | ||||||||||
| Adjusted return on average shareholders' equity (1) | 9.31 | % | 10.85 | % | 10.45 | % | 9.93 | % | 8.34 | % | ||||||||||
| Adjusted return on average tangible common equity (1) | 13.90 | % | 16.46 | % | 16.02 | % | 15.27 | % | 11.86 | % | ||||||||||
| (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) | 2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||
| Net interest income: | ||||||||||||||||||||
| Total interest income | $ | 59,432 | $ | 61,592 | $ | 56,987 | $ | 58,283 | $ | 46,505 | ||||||||||
| Total interest expense | 13,831 | 13,057 | 11,906 | 9,997 | 8,320 | |||||||||||||||
| Net interest income | 45,601 | 48,535 | 45,081 | 48,286 | 38,185 | |||||||||||||||
| Provision for loan losses | 3,243 | 3,467 | 2,103 | 1,854 | 2,006 | |||||||||||||||
| Net interest income after provision for loan losses | 42,358 | 45,068 | 42,978 | 46,432 | 36,179 | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Wealth management revenue | 4,953 | 5,651 | 5,467 | 5,316 | 4,079 | |||||||||||||||
| Commercial FHA revenue | 3,270 | 4,194 | 3,130 | 326 | 3,330 | |||||||||||||||
| Residential mortgage banking revenue | 834 | 1,041 | 1,154 | 2,116 | 1,418 | |||||||||||||||
| Service charges on deposit accounts | 2,520 | 2,976 | 2,804 | 2,693 | 1,967 | |||||||||||||||
| Interchange revenue | 2,680 | 2,941 | 2,759 | 2,929 | 2,045 | |||||||||||||||
| Gain (loss) on sales of investment securities, net | - | 469 | - | (70 | ) | 65 | ||||||||||||||
| Other income | 2,818 | 3,898 | 2,958 | 2,537 | 3,598 | |||||||||||||||
| Total noninterest income | 17,075 | 21,170 | 18,272 | 15,847 | 16,502 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Salaries and employee benefits | 22,039 | 23,020 | 22,528 | 23,467 | 28,395 | |||||||||||||||
| Occupancy and equipment | 4,832 | 4,914 | 5,040 | 4,708 | 4,252 | |||||||||||||||
| Data processing | 4,891 | 5,660 | 10,817 | 5,106 | 4,479 | |||||||||||||||
| Professional | 2,073 | 2,752 | 3,087 | 3,185 | 3,758 | |||||||||||||||
| Amortization of intangible assets | 1,810 | 1,852 | 1,853 | 1,576 | 1,675 | |||||||||||||||
| Loss on mortgage servicing rights held for sale | - | - | 270 | 188 | - | |||||||||||||||
| Other expense | 5,452 | 7,177 | 6,722 | 8,222 | 6,940 | |||||||||||||||
| Total noninterest expense | 41,097 | 45,375 | 50,317 | 46,452 | 49,499 | |||||||||||||||
| Income before income taxes | 18,336 | 20,863 | 10,933 | 15,827 | 3,182 | |||||||||||||||
| Income taxes | 4,354 | 4,527 | 2,436 | 3,045 | 1,376 | |||||||||||||||
| Net income | 13,982 | 16,336 | 8,497 | 12,782 | 1,806 | |||||||||||||||
| Preferred stock dividends, net | 34 | 34 | 35 | 36 | 36 | |||||||||||||||
| Net income available to common shareholders | $ | 13,948 | $ | 16,302 | $ | 8,462 | $ | 12,746 | $ | 1,770 | ||||||||||
| Basic earnings per common share | $ | 0.58 | $ | 0.68 | $ | 0.35 | $ | 0.53 | $ | 0.08 | ||||||||||
| Diluted earnings per common share | $ | 0.57 | $ | 0.67 | $ | 0.35 | $ | 0.52 | $ | 0.08 | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| (in thousands) | 2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 276,480 | $ | 213,700 | $ | 242,433 | $ | 276,331 | $ | 331,183 | ||||||||||
| Investment securities | 656,152 | 660,785 | 685,753 | 708,001 | 738,172 | |||||||||||||||
| Loans | 4,092,106 | 4,137,551 | 4,156,282 | 4,095,811 | 4,029,150 | |||||||||||||||
| Allowance for loan losses | (23,091 | ) | (20,903 | ) | (19,631 | ) | (18,246 | ) | (17,704 | ) | ||||||||||
| Total loans, net | 4,069,015 | 4,116,648 | 4,136,651 | 4,077,565 | 4,011,446 | |||||||||||||||
| Loans held for sale, at fair value | 16,851 | 30,401 | 35,246 | 41,449 | 25,267 | |||||||||||||||
| Premises and equipment, net | 94,514 | 94,840 | 95,062 | 94,783 | 95,332 | |||||||||||||||
| Other real estate owned | 2,020 | 3,483 | 3,684 | 3,911 | 5,059 | |||||||||||||||
| Mortgage servicing rights, at lower of cost or fair value | 52,957 | 53,447 | 51,626 | 52,381 | 56,427 | |||||||||||||||
| Mortgage servicing rights held for sale | 257 | 3,545 | 4,419 | 4,806 | 3,962 | |||||||||||||||
| Intangible assets | 35,566 | 37,376 | 39,228 | 41,081 | 46,473 | |||||||||||||||
| Goodwill | 164,673 | 164,673 | 164,044 | 164,044 | 155,674 | |||||||||||||||
| Cash surrender value of life insurance policies | 139,686 | 138,783 | 138,600 | 137,681 | 136,766 | |||||||||||||||
| Other assets | 133,609 | 119,992 | 127,866 | 128,567 | 117,611 | |||||||||||||||
| Total assets | $ | 5,641,780 | $ | 5,637,673 | $ | 5,724,612 | $ | 5,730,600 | $ | 5,723,372 | ||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||
| Noninterest-bearing deposits | $ | 941,344 | $ | 972,164 | $ | 991,311 | $ | 1,001,802 | $ | 1,037,710 | ||||||||||
| Interest-bearing deposits | 3,094,944 | 3,102,006 | 3,151,895 | 3,158,055 | 3,196,105 | |||||||||||||||
| Total deposits | 4,036,288 | 4,074,170 | 4,143,206 | 4,159,857 | 4,233,815 | |||||||||||||||
| Short-term borrowings | 115,832 | 124,235 | 145,450 | 114,536 | 130,693 | |||||||||||||||
| FHLB advances and other borrowings | 669,009 | 640,631 | 652,253 | 678,873 | 587,493 | |||||||||||||||
| Subordinated debt | 94,174 | 94,134 | 94,093 | 94,053 | 94,013 | |||||||||||||||
| Trust preferred debentures | 47,918 | 47,794 | 47,676 | 47,559 | 47,443 | |||||||||||||||
| Other liabilities | 54,391 | 48,184 | 47,788 | 43,187 | 44,530 | |||||||||||||||
| Total liabilities | 5,017,612 | 5,029,148 | 5,130,466 | 5,138,065 | 5,137,987 | |||||||||||||||
| Total shareholders’ equity | 624,168 | 608,525 | 594,146 | 592,535 | 585,385 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 5,641,780 | $ | 5,637,673 | $ | 5,724,612 | $ | 5,730,600 | $ | 5,723,372 | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| (in thousands) | 2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||
| Loan Portfolio | ||||||||||||||||||||
| Commercial loans and leases | $ | 1,122,621 | $ | 1,074,935 | $ | 1,034,546 | $ | 991,164 | $ | 1,026,253 | ||||||||||
| Commercial real estate loans | 1,560,427 | 1,639,155 | 1,711,926 | 1,711,296 | 1,773,510 | |||||||||||||||
| Construction and land development loans | 239,376 | 232,229 | 239,480 | 247,889 | 234,837 | |||||||||||||||
| Residential real estate loans | 569,051 | 578,048 | 586,134 | 601,808 | 570,321 | |||||||||||||||
| Consumer loans | 600,631 | 613,184 | 584,196 | 543,654 | 424,229 | |||||||||||||||
| Total loans | $ | 4,092,106 | $ | 4,137,551 | $ | 4,156,282 | $ | 4,095,811 | $ | 4,029,150 | ||||||||||
| Deposit Portfolio | ||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 941,344 | $ | 972,164 | $ | 991,311 | $ | 1,001,802 | $ | 1,037,710 | ||||||||||
| Interest-bearing: | ||||||||||||||||||||
| Checking accounts | 968,844 | 1,002,275 | 1,047,914 | 1,024,506 | 993,253 | |||||||||||||||
| Money market accounts | 802,036 | 862,171 | 836,151 | 843,984 | 840,415 | |||||||||||||||
| Savings accounts | 457,176 | 442,132 | 445,640 | 460,560 | 466,887 | |||||||||||||||
| Time deposits | 685,700 | 633,787 | 633,654 | 638,215 | 672,034 | |||||||||||||||
| Brokered deposits | 181,188 | 161,641 | 188,536 | 190,790 | 223,516 | |||||||||||||||
| Total deposits | $ | 4,036,288 | $ | 4,074,170 | $ | 4,143,206 | $ | 4,159,857 | $ | 4,233,815 | ||||||||||
| 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) | 2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||
| Average Balance Sheets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 152,078 | $ | 155,280 | $ | 154,526 | $ | 227,499 | $ | 138,275 | ||||||||||
| Investment securities | 654,764 | 676,483 | 700,018 | 731,017 | 548,168 | |||||||||||||||
| Loans | 4,128,893 | 4,139,831 | 4,106,367 | 3,982,958 | 3,477,917 | |||||||||||||||
| Loans held for sale | 30,793 | 51,981 | 48,715 | 31,220 | 40,841 | |||||||||||||||
| Nonmarketable equity securities | 44,279 | 42,708 | 42,770 | 38,872 | 34,890 | |||||||||||||||
| Total interest-earning assets | 5,010,807 | 5,066,283 | 5,052,396 | 5,011,566 | 4,240,091 | |||||||||||||||
| Non-earning assets | 618,996 | 624,378 | 639,323 | 639,864 | 536,750 | |||||||||||||||
| Total assets | $ | 5,629,803 | $ | 5,690,661 | $ | 5,691,719 | $ | 5,651,430 | $ | 4,776,841 | ||||||||||
| Interest-bearing deposits | $ | 3,093,979 | $ | 3,123,134 | $ | 3,172,422 | $ | 3,158,816 | $ | 2,675,339 | ||||||||||
| Short-term borrowings | 135,337 | 143,869 | 139,215 | 120,794 | 148,703 | |||||||||||||||
| FHLB advances and other borrowings | 673,250 | 645,642 | 608,153 | 573,107 | 489,567 | |||||||||||||||
| Subordinated debt | 94,156 | 94,115 | 94,075 | 94,035 | 93,993 | |||||||||||||||
| Trust preferred debentures | 47,848 | 47,737 | 47,601 | 47,488 | 47,373 | |||||||||||||||
| Total interest-bearing liabilities | 4,044,570 | 4,054,497 | 4,061,466 | 3,994,240 | 3,454,975 | |||||||||||||||
| Noninterest-bearing deposits | 919,185 | 989,954 | 989,142 | 1,025,308 | 782,164 | |||||||||||||||
| Other noninterest-bearing liabilities | 51,838 | 46,487 | 47,654 | 47,229 | 40,761 | |||||||||||||||
| Shareholders' equity | 614,210 | 599,723 | 593,457 | 584,653 | 498,941 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 5,629,803 | $ | 5,690,661 | $ | 5,691,719 | $ | 5,651,430 | $ | 4,776,841 | ||||||||||
| Yields | ||||||||||||||||||||
| Cash and cash equivalents | 2.42 | % | 2.24 | % | 1.96 | % | 1.79 | % | 1.53 | % | ||||||||||
| Investment securities | 3.07 | % | 3.04 | % | 3.01 | % | 2.91 | % | 2.87 | % | ||||||||||
| Loans | 5.22 | % | 5.28 | % | 4.88 | % | 5.21 | % | 4.85 | % | ||||||||||
| Loans held for sale | 3.94 | % | 3.92 | % | 4.17 | % | 3.79 | % | 4.25 | % | ||||||||||
| Nonmarketable equity securities | 5.69 | % | 5.20 | % | 5.01 | % | 4.97 | % | 4.64 | % | ||||||||||
| Total interest-earning assets | 4.85 | % | 4.87 | % | 4.52 | % | 4.71 | % | 4.49 | % | ||||||||||
| Interest-bearing deposits | 0.97 | % | 0.86 | % | 0.77 | % | 0.64 | % | 0.62 | % | ||||||||||
| Short-term borrowings | 0.71 | % | 0.67 | % | 0.61 | % | 0.38 | % | 0.34 | % | ||||||||||
| FHLB advances and other borrowings | 2.32 | % | 2.26 | % | 2.09 | % | 1.81 | % | 1.55 | % | ||||||||||
| Subordinated debt | 6.43 | % | 6.43 | % | 6.44 | % | 6.44 | % | 6.44 | % | ||||||||||
| Trust preferred debentures | 7.38 | % | 6.93 | % | 6.81 | % | 6.59 | % | 5.94 | % | ||||||||||
| Total interest-bearing liabilities | 1.39 | % | 1.28 | % | 1.16 | % | 1.00 | % | 0.98 | % | ||||||||||
| Net interest margin | 3.73 | % | 3.85 | % | 3.59 | % | 3.91 | % | 3.69 | % | ||||||||||
| 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) | 2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||
| Asset Quality | ||||||||||||||||||||
| Loans 30-89 days past due | $ | 23,999 | $ | 25,213 | $ | 22,678 | $ | 19,362 | $ | 20,138 | ||||||||||
| Nonperforming loans | 49,262 | 42,899 | 38,561 | 28,342 | 26,499 | |||||||||||||||
| Nonperforming assets | 51,282 | 45,899 | 41,638 | 31,542 | 29,938 | |||||||||||||||
| Net charge-offs | 1,055 | 2,195 | 718 | 1,312 | 733 | |||||||||||||||
| Loans 30-89 days past due to total loans | 0.59 | % | 0.61 | % | 0.55 | % | 0.47 | % | 0.50 | % | ||||||||||
| Nonperforming loans to total loans | 1.20 | % | 1.04 | % | 0.93 | % | 0.69 | % | 0.66 | % | ||||||||||
| Nonperforming assets to total assets | 0.91 | % | 0.81 | % | 0.73 | % | 0.55 | % | 0.52 | % | ||||||||||
| Allowance for loan losses to total loans | 0.56 | % | 0.51 | % | 0.47 | % | 0.45 | % | 0.44 | % | ||||||||||
| Allowance for loan losses to nonperforming loans | 46.87 | % | 48.73 | % | 50.91 | % | 64.38 | % | 66.81 | % | ||||||||||
| Net charge-offs to average loans | 0.10 | % | 0.21 | % | 0.07 | % | 0.13 | % | 0.09 | % | ||||||||||
| Wealth Management | ||||||||||||||||||||
| Trust assets under administration | $ | 3,097,091 | $ | 2,945,084 | $ | 3,218,013 | $ | 3,188,909 | $ | 3,125,051 | ||||||||||
| Market Data | ||||||||||||||||||||
| Book value per share at period end | $ | 26.08 | $ | 25.50 | $ | 24.96 | $ | 24.92 | $ | 24.67 | ||||||||||
| Tangible book value per share at period end (1) | $ | 17.68 | $ | 17.00 | $ | 16.38 | $ | 16.25 | $ | 16.11 | ||||||||||
| Market price at period end | $ | 24.06 | $ | 22.34 | $ | 32.10 | $ | 34.26 | $ | 31.56 | ||||||||||
| Shares outstanding at period end | 23,827,438 | 23,751,798 | 23,694,637 | 23,664,596 | 23,612,430 | |||||||||||||||
| Capital | ||||||||||||||||||||
| Total capital to risk-weighted assets | 13.25 | % | 12.79 | % | 12.35 | % | 12.27 | % | 12.37 | % | ||||||||||
| Tier 1 capital to risk-weighted assets | 10.65 | % | 10.25 | % | 9.85 | % | 9.78 | % | 9.84 | % | ||||||||||
| Tier 1 leverage ratio | 8.92 | % | 8.53 | % | 8.24 | % | 8.16 | % | 9.55 | % | ||||||||||
| Tier 1 common capital to risk-weighted assets | 9.16 | % | 8.76 | % | 8.37 | % | 8.28 | % | 8.30 | % | ||||||||||
| Tangible common equity to tangible assets (1) | 7.74 | % | 7.43 | % | 7.03 | % | 6.96 | % | 6.89 | % | ||||||||||
| (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) | 2019 | 2018 | 2018 | 2018 | 2018 | ||||||||||||||||||
| Income before income taxes - GAAP | $ | 18,336 | $ | 20,863 | $ | 10,933 | $ | 15,827 | $ | 3,182 | |||||||||||||
| Adjustments to noninterest income: | |||||||||||||||||||||||
| Gain (loss) on sales of investment securities, net | - | 469 | - | (70 | ) | 65 | |||||||||||||||||
| Other | - | (1 | ) | (12 | ) | (48 | ) | 150 | |||||||||||||||
| Total adjustments to noninterest income | - | 468 | (12 | ) | (118 | ) | 215 | ||||||||||||||||
| Adjustments to noninterest expense: | |||||||||||||||||||||||
| Loss on mortgage servicing rights held for sale | - | - | 270 | 188 | - | ||||||||||||||||||
| Integration and acquisition expenses | 160 | 553 | 9,559 | 2,019 | 11,884 | ||||||||||||||||||
| Total adjustments to noninterest expense | 160 | 553 | 9,829 | 2,207 | 11,884 | ||||||||||||||||||
| Adjusted earnings pre tax | 18,496 | 20,948 | 20,774 | 18,152 | 14,851 | ||||||||||||||||||
| Adjusted earnings tax | 4,398 | 4,551 | 5,142 | 3,683 | 4,586 | ||||||||||||||||||
| Adjusted earnings - non-GAAP | 14,098 | 16,397 | 15,632 | 14,469 | 10,265 | ||||||||||||||||||
| Preferred stock dividends, net | 34 | 34 | 35 | 36 | 36 | ||||||||||||||||||
| Adjusted earnings available to common shareholders - non-GAAP | $ | 14,064 | $ | 16,363 | $ | 15,597 | $ | 14,433 | $ | 10,229 | |||||||||||||
| Adjusted diluted earnings per common share | $ | 0.58 | $ | 0.67 | $ | 0.64 | $ | 0.59 | $ | 0.48 | |||||||||||||
| Adjusted return on average assets | 1.02 | % | 1.14 | % | 1.09 | % | 1.03 | % | 0.87 | % | |||||||||||||
| Adjusted return on average shareholders' equity | 9.31 | % | 10.85 | % | 10.45 | % | 9.93 | % | 8.34 | % | |||||||||||||
| Adjusted return on average tangible common equity | 13.90 | % | 16.46 | % | 16.02 | % | 15.27 | % | 11.86 | % | |||||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (continued) | |||||||||||||||||||||||||
| Efficiency Ratio Reconciliation | |||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||||
| (dollars in thousands) | 2019 | 2018 | 2018 | 2018 | 2018 | ||||||||||||||||||||
| Noninterest expense - GAAP | $ | 41,097 | $ | 45,375 | $ | 50,317 | $ | 46,452 | $ | 49,499 | |||||||||||||||
| Loss on mortgage servicing rights held for sale | - | - | (270 | ) | (188 | ) | - | ||||||||||||||||||
| Integration and acquisition expenses | (160 | ) | (553 | ) | (9,559 | ) | (2,019 | ) | (11,884 | ) | |||||||||||||||
| Adjusted noninterest expense | $ | 40,937 | $ | 44,822 | $ | 40,488 | $ | 44,245 | $ | 37,615 | |||||||||||||||
| Net interest income - GAAP | $ | 45,601 | $ | 48,535 | $ | 45,081 | $ | 48,286 | $ | 38,185 | |||||||||||||||
| Effect of tax-exempt income | 543 | 574 | 585 | 541 | 394 | ||||||||||||||||||||
| Adjusted net interest income | 46,144 | 49,109 | 45,666 | 48,827 | 38,579 | ||||||||||||||||||||
| Noninterest income - GAAP | $ | 17,075 | $ | 21,170 | $ | 18,272 | $ | 15,847 | $ | 16,502 | |||||||||||||||
| Mortgage servicing rights impairment (recapture) | 25 | (1,380 | ) | 297 | 500 | 133 | |||||||||||||||||||
| (Gain) loss on sales of investment securities, net | - | (469 | ) | - | 70 | (65 | ) | ||||||||||||||||||
| Other | - | 1 | 12 | 48 | (150 | ) | |||||||||||||||||||
| Adjusted noninterest income | 17,100 | 19,322 | 18,581 | 16,465 | 16,420 | ||||||||||||||||||||
| Adjusted total revenue | $ | 63,244 | $ | 68,431 | $ | 64,247 | $ | 65,292 | $ | 54,999 | |||||||||||||||
| Efficiency ratio | 64.73 | % | 65.50 | % | 63.02 | % | 67.76 | % | 68.39 | % | |||||||||||||||
| 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 | |||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||||
| (dollars in thousands, except per share data) | 2019 | 2018 | 2018 | 2018 | 2018 | ||||||||||||||||||||
| Shareholders' Equity to Tangible Common Equity | |||||||||||||||||||||||||
| Total shareholders' equity—GAAP | $ | 624,168 | $ | 608,525 | $ | 594,146 | $ | 592,535 | $ | 585,385 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||||
| Preferred stock | (2,733 | ) | (2,781 | ) | (2,829 | ) | (2,876 | ) | (2,923 | ) | |||||||||||||||
| Goodwill | (164,673 | ) | (164,673 | ) | (164,044 | ) | (164,044 | ) | (155,674 | ) | |||||||||||||||
| Other intangibles | (35,566 | ) | (37,376 | ) | (39,228 | ) | (41,081 | ) | (46,473 | ) | |||||||||||||||
| Tangible common equity | $ | 421,196 | $ | 403,695 | $ | 388,045 | $ | 384,534 | $ | 380,315 | |||||||||||||||
| Total Assets to Tangible Assets: | |||||||||||||||||||||||||
| Total assets—GAAP | $ | 5,641,780 | $ | 5,637,673 | $ | 5,724,612 | $ | 5,730,600 | $ | 5,723,372 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||||
| Goodwill | (164,673 | ) | (164,673 | ) | (164,044 | ) | (164,044 | ) | (155,674 | ) | |||||||||||||||
| Other intangibles | (35,566 | ) | (37,376 | ) | (39,228 | ) | (41,081 | ) | (46,473 | ) | |||||||||||||||
| Tangible assets | $ | 5,441,541 | $ | 5,435,624 | $ | 5,521,340 | $ | 5,525,475 | $ | 5,521,225 | |||||||||||||||
| Common Shares Outstanding | 23,827,438 | 23,751,798 | 23,694,637 | 23,664,596 | 23,612,430 | ||||||||||||||||||||
| Tangible Common Equity to Tangible Assets | 7.74 | % | 7.43 | % | 7.03 | % | 6.96 | % | 6.89 | % | |||||||||||||||
| Tangible Book Value Per Share | $ | 17.68 | $ | 17.00 | $ | 16.38 | $ | 16.25 | $ | 16.11 | |||||||||||||||
| Return on Average Tangible Common Equity (ROATCE) | |||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||||
| (dollars in thousands) | 2019 | 2018 | 2018 | 2018 | 2018 | ||||||||||||||||||||
| Net income available to common shareholders | $ | 13,948 | $ | 16,302 | $ | 8,462 | $ | 12,746 | $ | 1,770 | |||||||||||||||
| Average total shareholders' equity—GAAP | $ | 614,210 | $ | 599,723 | $ | 593,457 | $ | 584,653 | $ | 498,941 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||||
| Preferred stock | (2,759 | ) | (2,812 | ) | (2,859 | ) | (2,905 | ) | (2,952 | ) | |||||||||||||||
| Goodwill | (164,673 | ) | (164,051 | ) | (164,044 | ) | (158,461 | ) | (118,996 | ) | |||||||||||||||
| Other intangibles | (36,438 | ) | (38,394 | ) | (40,228 | ) | (44,098 | ) | (27,156 | ) | |||||||||||||||
| Average tangible common equity | $ | 410,340 | $ | 394,466 | $ | 386,326 | $ | 379,189 | $ | 349,837 | |||||||||||||||
| ROATCE | 13.79 | % | 16.40 | % | 8.69 | % | 13.48 | % | 2.05 | % | |||||||||||||||
EXHIBIT 99.2
1 Midland States Bancorp, Inc. NASDAQ: MSBI First Quarter 2019 Earnings Call
2 Forward - Looking Statements. This presentation may contain forward - looking statements within the meaning of the federal securities laws. Forward - looking statements express management’s current expectations, forecasts of future events or long - term goals, including with respect to pending acquisitions, and may be based upon beliefs, expectations and assumptions of Midland’s management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “esti mat e,” “may,” “will,” “would,” “could,” “should” or other similar expressions. All statements in this presentation speak only as of th e date they are made, and Midland undertakes no obligation to update any statement. A number of factors, many of which are beyond th e ability of Midland to control or predict, could cause actual results to differ materially from those in its forward - looking statements. These risks and uncertainties should be considered in evaluating forward - looking statements and undue reliance shou ld not be placed on such statements. Additional information concerning Midland and its respective businesses, including addition al factors that could materially affect Midland’s financial results, are included in Midland’s filings with the Securities and E xch ange Commission. Use of Non - GAAP Financial Measures. This presentation may contain certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States (“GAAP”). These non - GAAP financial measure s 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 Equ ity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes tha t 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 m ay not be comparable to other similarly titled measures as presented by other companies. Reconciliations of these non - GAAP measures are provided in the Appendix section of this presentation.
3 Overview of 1Q19 3 Solid Execution on Strategic Priorities 1Q19 Earnings HomeStar Acquisition • Prudent balance sheet management keeping NIM stable • Loan production focused on areas with attractive risk - adjusted yields • Disciplined expense management • Fill - in acquisition in our existing Kankakee, Illinois market with strong synergies • Adds attractive low - cost deposit base with excess liquidity • Expected to be ~9% accretive to EPS in 2020 Strong Capital Generation • Book value per share increased 2.3% to $26.08 • Tangible book value per share (1) increased 4.0% to $17.68 • Significant increases in all capital ratios • Net income of $14.0 million • Diluted EPS of $0.57 Notes: (1) Represents a non - GAAP financial measure. See “Non - GAAP Reconciliation” in the appendix.
4 1Q 2019 4Q 2018 1Q 2018 Commercial loans and leases $ 1,123 $ 1,075 $ 1,026 Commercial real estate 1,560 1,639 1,774 Construction and land development 239 232 235 Residential real estate 569 578 570 Consumer 601 613 424 Total Loans $ 4,092 $ 4,138 $ 4,029 $4,029 $4,096 $4,156 $4,138 $4,092 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 Loan Portfolio Total Loans 4 • Total loans declined $45.4 million, or 1.1%, to $4.09 billion • Decline in commercial real estate partially offset by continued growth in commercial loans and leases • Equipment loan and lease financings increased $57.5 million, or 15.3%, from December 31, 2018 Loan Portfolio Mix (in millions, as of quarter - end) (in millions, as of quarter - end)
5 1Q 2019 4Q 2018 1Q 2018 Noninterest - bearing demand $ 941 $ 972 $ 1,038 Interest - bearing: Checking 969 1,002 993 Money market 802 862 840 Savings 457 442 467 Time 686 634 672 Brokered 181 162 224 Total Deposits $ 4,036 $ 4,074 $ 4,234 $4,234 $4,160 $4,143 $4,074 $4,036 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 Total Deposits Total Deposits 5 • Total deposits decreased $37.9 million, or 0.9%, to $4.04 billion • Decline in deposits primarily attributable to: » Outflows of commercial deposits » Decrease in public funds Deposit Mix (in millions, as of quarter - end) (in millions, as of quarter - end)
6 $4.08 $5.32 $5.47 $5.65 $4.95 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 $3,125 $3,189 $3,218 $2,945 $3,097 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 • Total Wealth Management revenue declined 12.4% from the prior quarter • Decline attributable to higher estate fees and other one - time revenue items recorded in 4Q18 • During 1Q19, assets under administration increased $152.0 million, primarily due to market performance Wealth Management Wealth Management Revenue 6 Assets Under Administration (in millions) (in millions )
7 $2.0 $5.5 $1.7 $4.3 $2.5 $45.6 $38.2 $48.3 $45.1 $48.5 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 NII Accretion Income 0.16% 0.40% 0.10% 0.31% 0.17% 3.73% 3.69% 3.91% 3.59% 3.85% 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 NIM Accretion Income • Net interest income and margin declined due to lower accretion income • Excluding the impact of accretion income, net interest margin increased 2 bps • Average rate on new and renewed loans was 5.70% • Expected scheduled accretion income: $2.1 million in 2Q19; $8.1 million in FY 2019 (excluding impact of pending HomeStar acquisition) Net Interest Income/Margin Net Interest Margin 7 Net Interest Income (in millions) $5.9
8 Noninterest Income 8 • Noninterest income decreased 19.3% from prior quarter • Wealth management remains largest single contributor to noninterest income • Commercial FHA revenue of $3.3 million remained within projected range despite impact of government shutdown in 1Q19 Noninterest Income (in millions) $17.1 $16.5 $15.8 $18.3 $21.2 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 All Other Community Banking Revenue Residential Mortgage Commercial FHA Wealth Management Notes: (1) Represents service charges, interchange revenue, net gain (loss) on sale of investment securities, and other income (1)
9 Noninterest Expense and Operating Efficiency 9 • Efficiency Ratio (1) was 64.7% in 1Q19 vs. 65.5% in 4Q18 • Integration and acquisition related expenses » $0.2 million in 1Q19 » $0.6 million in 4Q18 • Excluding these expenses, noninterest expense decreased 8.7% on a linked - quarter basis • Decrease in noninterest expense attributable to declines in most major expense items, reflecting our focus on disciplined expense management • Quarterly run - rate for noninterest expense projected to be approximately $42 - $43 million Noninterest Expense and Efficiency Ratio (1) (Noninterest expense in millions) $45.4 $41.1 $49.5 $46.5 $50.3 $11.9 $2.2 $9.8 $0.6 $0.2 68.4% 67.8% 63.0% 65.5% 64.7% 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 Total Noninterest Expense Adjustments to Noninterest Expense Efficiency Ratio Notes: (1) Represents a non - GAAP financial measure. See “Non - GAAP Reconciliation” in the appendix.
10 Asset Quality NCO / Average Loans 10 • Increase in nonperforming loans primarily attributable to the downgrade of one commercial real estate loan and one residential real estate loan • Net charge - offs for 1Q19 was 0.10% of average loans on an annualized basis • Provision for loan losses of $3.2 million in 1Q19 • ALLL/total loans of 0.56% and credit marks/total loans of 0.47% at March 31, 2019 Nonperforming Loans / Total Loans (Total Loans as of quarter - end) 0.66% 0.69% 0.93% 1.04% 1.20% 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 0.09% 0.13% 0.07% 0.21% 0.10% 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019
11 Outlook • Continued execution on protecting margin and controlling expenses resulting in solid financial performance • Low - single - digit organic loan growth expected in 2019 • Organic loan growth closely linked to core deposit growth • HomeStar acquisition will provide additional liquidity that can be utilized to profitably fund our organic loan growth 11
12 APPENDIX
13 13 Adjusted Earnings Reconciliation (dollars in thousands, except per share data) Income before income taxes - GAAP $ 18,336 $ 20,863 $ 10,933 $ 15,827 $ 3,182 Adjustments to noninterest income: Gain (loss) on sales of investment securities, net - 469 - (70) 65 Other - (1) (12) (48) 150 Total adjustments to noninterest income - 468 (12) (118) 215 Adjustments to noninterest expense: Loss on mortgage servicing rights held for sale - - 270 188 - Integration and acquisition expenses 160 553 9,559 2,019 11,884 Total adjustments to noninterest expense 160 553 9,829 2,207 11,884 Adjusted earnings pre tax 18,496 20,948 20,774 18,152 14,851 Adjusted earnings tax 4,398 4,551 5,142 3,683 4,586 Adjusted earnings - non-GAAP 14,098 16,397 15,632 14,469 10,265 Preferred stock dividends, net 34 34 35 36 36 Adjusted earnings available to common shareholders - non-GAAP $ 14,064 $ 16,363 $ 15,597 $ 14,433 $ 10,229 Adjusted diluted earnings per common share $ 0.58 $ 0.67 $ 0.64 $ 0.59 $ 0.48 Adjusted return on average assets 1.02 % 1.14 % 1.09 % 1.03 % 0.87 % Adjusted return on average shareholders' equity 9.31 % 10.85 % 10.45 % 9.93 % 8.34 % Adjusted return on average tangible common equity 13.90 % 16.46 % 16.02 % 15.27 % 11.86 % 2019 2018 2018 2018 2018 March 31, December 31, September 30, June 30, March 31, MIDLAND STATES BANCORP, INC.RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES For the Quarter Ended
14 14 Efficiency Ratio Reconciliation (dollars in thousands) Noninterest expense - GAAP $ 41,097 $ 45,375 $ 50,317 $ 46,452 $ 49,499 Loss on mortgage servicing rights held for sale - - (270) (188) - Integration and acquisition expenses (160) (553) (9,559) (2,019) (11,884) Adjusted noninterest expense $ 40,937 $ 44,822 $ 40,488 $ 44,245 $ 37,615 Net interest income - GAAP $ 45,601 $ 48,535 $ 45,081 $ 48,286 $ 38,185 Effect of tax-exempt income 543 574 585 541 394 Adjusted net interest income 46,144 49,109 45,666 48,827 38,579 Noninterest income - GAAP $ 17,075 $ 21,170 $ 18,272 $ 15,847 $ 16,502 Mortgage servicing rights impairment (recapture) 25 (1,380) 297 500 133 (Gain) loss on sales of investment securities, net - (469) - 70 (65) Other - 1 12 48 (150) Adjusted noninterest income 17,100 19,322 18,581 16,465 16,420 Adjusted total revenue $ 63,244 $ 68,431 $ 64,247 $ 65,292 $ 54,999 Efficiency ratio 64.73 % 65.50 % 63.02 % 67.76 % 68.39 % 2019 2018 2018 2018 2018 March 31, December 31, September 30, June 30, March 31, MIDLAND STATES BANCORP, INC.RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (continued) For the Quarter Ended
15 15 Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share (dollars in thousands, except per share data) Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 624,168 $ 608,525 $ 594,146 $ 592,535 $ 585,385 Adjustments: Preferred stock (2,733) (2,781) (2,829) (2,876) (2,923) Goodwill (164,673) (164,673) (164,044) (164,044) (155,674) Other intangibles (35,566) (37,376) (39,228) (41,081) (46,473) Tangible common equity $ 421,196 $ 403,695 $ 388,045 $ 384,534 $ 380,315 Total Assets to Tangible Assets: Total assets—GAAP $ 5,641,780 $ 5,637,673 $ 5,724,612 $ 5,730,600 $ 5,723,372 Adjustments: Goodwill (164,673) (164,673) (164,044) (164,044) (155,674) Other intangibles (35,566) (37,376) (39,228) (41,081) (46,473) Tangible assets $ 5,441,541 $ 5,435,624 $ 5,521,340 $ 5,525,475 $ 5,521,225 Common Shares Outstanding 23,827,438 23,751,798 23,694,637 23,664,596 23,612,430 Tangible Common Equity to Tangible Assets 7.74 % 7.43 % 7.03 % 6.96 % 6.89 % Tangible Book Value Per Share $ 17.68 $ 17.00 $ 16.38 $ 16.25 $ 16.11 Return on Average Tangible Common Equity (ROATCE) (dollars in thousands) Net income available to common shareholders $ 13,948 $ 16,302 $ 8,462 $ 12,746 $ 1,770 Average total shareholders' equity—GAAP $ 614,210 $ 599,723 $ 593,457 $ 584,653 $ 498,941 Adjustments: Preferred stock (2,759) (2,812) (2,859) (2,905) (2,952) Goodwill (164,673) (164,051) (164,044) (158,461) (118,996) Other intangibles (36,438) (38,394) (40,228) (44,098) (27,156) Average tangible common equity $ 410,340 $ 394,466 $ 386,326 $ 379,189 $ 349,837 ROATCE 13.79 % 16.40 % 8.69 % 13.48 % 2.05 % For the Quarter Ended 2019 2018 2018 2018 2018 March 31, December 31, September 30, June 30, March 31, 2019 2018 2018 2018 2018 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (continued) As of March 31, December 31, September 30, June 30, March 31,