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): January 28, 2021
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 January 28, 2021, Midland States Bancorp, Inc. (the "Company") issued a press release announcing its financial results for the fourth quarter of 2020. The press release is attached as Exhibit 99.1.
Item 7.01. Regulation FD Disclosure.
On January 28, 2021, the Company made available on its website a slide presentation regarding the Company's fourth quarter 2020 financial results, which will be used as part of a publicly accessible conference call on January 29, 2021. 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.
Exhibit No. Description 99.1 Press Release of Midland States Bancorp, Inc., dated January 28, 2021 99.2 Slide Presentation of Midland States Bancorp, Inc. regarding fourth quarter 2020 financial results 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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: January 28, 2021 | By: | /s/ Douglas J. Tucker |
Douglas J. Tucker | ||
Senior Vice President and Corporate Counsel | ||
EXHIBIT 99.1
Midland States Bancorp, Inc. Announces 2020 Fourth Quarter Results
Summary
EFFINGHAM, Ill., Jan. 28, 2021 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $8.3 million, or $0.36 diluted earnings per share, for the fourth quarter of 2020, which included $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on mortgage servicing rights (“MSRs”) held-for-sale, and $0.2 million in integration and acquisition expenses. This compares to net income of $86 thousand, or $0.00 diluted earnings per share, for the third quarter of 2020, which included $13.9 million of charges primarily related to the Company’s branch and facilities optimization plan, and net income of $12.8 million, or $0.51 diluted earnings per share, for the fourth quarter of 2019, which included $3.3 million in integration and acquisition expenses and a $1.8 million loss on the repurchase of subordinated debt.
Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We delivered another strong quarter driven by significant growth in net interest income resulting from continued loan growth and a higher net interest margin. We saw good demand for commercial real estate loans, equipment financing, and warehouse lines to commercial FHA lenders, which drove a 13% annualized increase in our total loan balances. The strong loan growth enabled us to redeploy some of our excess liquidity into higher yielding earning assets. Combined with the continued reduction in our cost of deposits, the favorable shift in earning assets resulted in an increase in our net interest margin.
“Although economic conditions remain challenging, we saw notable improvement in our asset quality during the fourth quarter. Our nonperforming loans declined by nearly 20% as we successfully resolved a number of longer-term problem loans, while more borrowers who received loan deferrals related to COVID-19 were able to resume making full or partial scheduled payments. While we are encouraged by the improvement in asset quality, we further increased our level of reserves to reflect the continued uncertainty around the timing of a stronger economic recovery.
“Despite the challenges of the pandemic, we believe we had an incredibly productive year in making progress on our strategies to better position the Company for profitable growth in the future. We eliminated expenses through our branch consolidations and sale of the commercial FHA origination platform, restructured our FHLB advances to reduce interest expense, and continued building a robust digital platform that will enhance efficiencies and improve our loan production and deposit gathering capabilities. As we begin 2021, we believe we are in a much stronger position to realize more operating leverage, continue to grow our balance sheet, and deliver higher earnings and improved returns for our shareholders in the future,” said Mr. Ludwig.
Factors Affecting Comparability
Effective January 1, 2020, the Company adopted the new current expected credit loss (“CECL”) accounting standard, which replaced the incurred loss methodology with an estimated life of loan credit loss methodology.
Adjusted Earnings and Prepayments of FHLB Advances
Financial results for the fourth quarter of 2020 were impacted by $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on residential MSRs held-for sale, and $0.2 million in integration and acquisition expenses. Excluding these amounts and certain income, adjusted earnings were $12.5 million, or $0.54 diluted earnings per share, for the fourth quarter of 2020.
During the fourth quarter of 2020, the Company prepaid $114.2 million of longer-term FHLB advances with a weighted average interest rate of 2.10%. The prepayment of the FHLB advances is expected to reduce the Company’s interest expense by $2.3 million in 2021 and positively impact its net interest margin by 2-3 basis points.
Financial results for the third quarter of 2020 were impacted by $13.9 million in charges primarily related to the branch and facilities optimization plan (integration and acquisition expenses), $1.7 million in gains on sales of investment securities, and a $0.2 million loss on residential MSRs held-for-sale. Excluding these amounts and certain income, adjusted earnings were $12.0 million, or $0.52 diluted earnings per share, for the third quarter of 2020.
Financial results for the fourth quarter of 2019 included $3.3 million in integration and acquisition expenses, a $1.8 million loss on the repurchase of subordinated debt, and a $0.6 million gain on the sale of investment securities. Excluding these amounts and certain other income and expenses, adjusted earnings were $16.1 million, or $0.64 diluted earnings per share, for the fourth quarter of 2019.
A reconciliation of adjusted earnings to net income according to accounting principles generally accepted in the United States (“GAAP”) is provided in the financial tables at the end of this press release.
Net Interest Margin
Net interest margin for the fourth quarter of 2020 was 3.47%, compared to 3.33% for the third quarter of 2020. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 10 and 14 basis points to net interest margin in the fourth quarter of 2020 and third quarter of 2020, respectively. Excluding the impact of accretion income, net interest margin increased 18 basis points from the third quarter of 2020, primarily due to the accelerated recognition of Paycheck Protection Program (“PPP”) loan income upon forgiveness, a shift in cash balances to higher yielding earnings assets, a reduction in the average cost of deposits, and a decrease in the average rate of FHLB borrowings following the prepayment of longer-term advances.
Relative to the fourth quarter of 2019, net interest margin decreased from 3.56%. Accretion income on purchased loan portfolios contributed 23 basis points to net interest margin in the fourth quarter of 2019. Excluding the impact of accretion income, net interest margin increased 4 basis points compared to the fourth quarter of 2019, primarily due to the accelerated recognition of PPP loan income upon forgiveness and a reduction in the average cost of deposits.
Net Interest Income
Net interest income for the fourth quarter of 2020 was $53.5 million, an increase of 7.1% from $50.0 million for the third quarter of 2020. Excluding accretion income, net interest income increased $4.1 million from the prior quarter. Accretion income associated with purchased loan portfolios totaled $1.6 million for the fourth quarter of 2020, compared with $2.1 million for the third quarter of 2020. PPP loan income totaled $3.7 million in the fourth quarter of 2020, compared to $1.9 million in the third quarter of 2020.
Relative to the fourth quarter of 2019, net interest income increased $4.8 million, or 9.9%. Accretion income for the fourth quarter of 2019 was $3.6 million. Excluding the impact of accretion income, net interest income increased primarily due to organic loan growth and a significant decline in the cost of funds.
Noninterest Income
Noninterest income for the fourth quarter of 2020 was $14.3 million, a decrease of 24.2% from $18.9 million for the third quarter of 2020. Impairment on commercial MSRs impacted noninterest income by $2.3 million and $1.4 million in the fourth quarter of 2020 and third quarter of 2020, respectively. Noninterest income for the third quarter of 2020 also included a $1.7 million gain on sale of investment securities, with no similar income being recorded in the fourth quarter of 2020. Excluding the impairment and the gain on sale of investment securities, noninterest income decreased 10.4% due to lower levels of residential mortgage banking revenue and other income, as well as lower commercial FHA revenue following the sale of the FHA origination platform during the third quarter of 2020.
Relative to the fourth quarter of 2019, noninterest income decreased 24.6% from $19.0 million. The decrease was primarily attributable to lower commercial FHA revenue following the sale of the FHA origination platform during the third quarter of 2020 and lower other income, partially offset by higher residential mortgage banking revenue.
Wealth management revenue for the fourth quarter of 2020 was $5.9 million, an increase of 5.6% from the third quarter of 2020. Compared to the fourth quarter of 2019, wealth management revenue increased 9.1%.
Noninterest Expense
Noninterest expense for the fourth quarter of 2020 was $47.0 million, which included $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on residential MSRs held-for sale, and $0.2 million in integration and acquisition expenses, compared with $53.9 million in the third quarter of 2020, which included $13.9 million in charges primarily related to the branch and facilities optimization plan (integration and acquisition expenses), and a $0.2 million loss on residential MSRs held-for-sale. Excluding the FHLB prepayment charges, losses on MSRs held-for sale, and integration and acquisition expenses, noninterest expense increased primarily due to an accrual for a one-time rollover of vacation time in light of the COVID-19 pandemic, higher incentive compensation, and an increase in charitable contributions.
Relative to the fourth quarter of 2019, noninterest expense increased 1.6% from $46.3 million, which included $3.3 million in integration and acquisition expenses, a $1.8 million loss on the repurchase of subordinated debt, and a $0.1 million loss on MSR held for sale. Excluding the FHLB prepayment charges, losses on MSRs held-for sale, integration and acquisition expenses, and the loss on the repurchase of subordinated debt, noninterest expense was essentially unchanged from the fourth quarter of 2019.
Loan Portfolio
Total loans outstanding were $5.10 billion at December 31, 2020, compared with $4.94 billion at September 30, 2020 and $4.40 billion at December 31, 2019. The increase in total loans from September 30, 2020 was primarily attributable to an increase in equipment finance loans and leases, commercial FHA warehouse lines of credit, and commercial real estate loans.
Equipment finance balances increased $46.0 million from September 30, 2020 to $861.5 million, which are booked within the commercial loans and leases portfolio, reflecting management’s efforts to grow the equipment finance business.
The increase in total loans from December 31, 2019 was primarily attributable to the growth in equipment finance balances, consumer loans, and PPP loans.
Deposits
Total deposits were $5.10 billion at December 31, 2020, compared with $5.03 billion at September 30, 2020, and $4.54 billion at December 31, 2019. The increase in total deposits from the end of the prior quarter was primarily attributable to an increase in retail and commercial FHA servicing deposits, offset by declines in commercial customer and money market accounts.
Asset Quality
Nonperforming loans totaled $54.1 million, or 1.06% of total loans, at December 31, 2020, compared with $67.4 million, or 1.36% of total loans, at September 30, 2020. The decrease in nonperforming loans was primarily attributable to the resolution of long-term problem loans, loans transferred to other real estate owned, and a reduction in the inflow of new loans to nonperforming status. At December 31, 2019, nonperforming loans totaled $42.1 million, or 0.96% of total loans.
Net charge-offs for the fourth quarter of 2020 were $2.3 million, or 0.19% of average loans on an annualized basis.
The Company recorded a provision for credit losses on loans of $10.0 million for the fourth quarter of 2020, which was primarily driven by loan growth and additional reserves allocated to the equipment finance and commercial real estate portfolios.
The Company’s allowance for credit losses on loans was 1.18% of total loans and 111.8% of nonperforming loans at December 31, 2020, compared with 1.07% of total loans and 78.3% of nonperforming loans at September 30, 2020. Approximately 95.5% of the allowance for credit losses on loans at December 31, 2020 was allocated to general reserves.
Capital
At December 31, 2020, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:
Bank Level Ratios as of December 31, 2020 | Consolidated Ratios as of December 31, 2020 | Minimum Regulatory Requirements (2) | |
Total capital to risk-weighted assets | 11.77% | 13.24% | 10.50% |
Tier 1 capital to risk-weighted assets | 10.78% | 9.20% | 8.50% |
Tier 1 leverage ratio | 8.78% | 7.50% | 4.00% |
Common equity Tier 1 capital | 10.78% | 7.99% | 7.00% |
Tangible common equity to tangible assets (1) | NA | 6.46% | NA |
(1) A non-GAAP financial measure. Refer to page 15 for a reconciliation to the comparable GAAP financial measure.
(2) Includes the capital conservation buffer of 2.5%.
Stock Repurchase Program
During the fourth quarter of 2020, the Company repurchased 430,185 shares of its common stock at a weighted average price of $16.01 under its stock repurchase program, which authorized the repurchase of up to $50 million of its common stock. As of December 31, 2020, the Company had $6.4 million remaining under the current stock repurchase authorization.
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 29, 2021, to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 3179613. A recorded replay can be accessed through February 5, 2021, by dialing (855) 859-2056; conference ID: 3179613.
A slide presentation relating to the fourth quarter 2020 results will be accessible prior to the scheduled conference call. This earnings release should be read together with the slide presentation, which contains important information related to the impact of COVID-19. 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 at investors.midlandsb.com under the “News and Events” tab.
About Midland States Bancorp, Inc.
Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of December 31, 2020, the Company had total assets of approximately $6.87 billion, and its Wealth Management Group had assets under administration of approximately $3.48 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, insurance and financial planning services. For additional information, visit https://www.midlandsb.com/ or 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 Pre-Tax, Pre-Provision Earnings,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Adjusted Pre-Tax, Pre-Provision Return on Average Assets,” “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 the effects of the COVID-19 pandemic and its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to 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," "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
Eric T. Lemke, Chief Financial Officer, at elemke@midlandsb.com or (217) 342-7321
Douglas J. Tucker, SVP and Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321
MIDLAND STATES BANCORP, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) | |||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
(dollars in thousands, except per share data) | 2020 | 2020 | 2020 | 2020 | 2019 | ||||||||||||||
Earnings Summary | |||||||||||||||||||
Net interest income | $ | 53,516 | $ | 49,980 | $ | 48,989 | $ | 46,651 | $ | 48,687 | |||||||||
Provision for credit losses | 10,058 | 11,728 | 10,997 | 11,578 | 5,305 | ||||||||||||||
Noninterest income | 14,336 | 18,919 | 19,396 | 8,598 | 19,014 | ||||||||||||||
Noninterest expense | 47,048 | 53,901 | 41,395 | 41,666 | 46,325 | ||||||||||||||
Income before income taxes | 10,746 | 3,270 | 15,993 | 2,005 | 16,071 | ||||||||||||||
Income taxes | 2,413 | 3,184 | 3,424 | 456 | 3,279 | ||||||||||||||
Net income | $ | 8,333 | $ | 86 | $ | 12,569 | $ | 1,549 | $ | 12,792 | |||||||||
Diluted earnings per common share | $ | 0.36 | $ | - | $ | 0.53 | $ | 0.06 | $ | 0.51 | |||||||||
Weighted average shares outstanding - diluted | 22,656,343 | 22,937,837 | 23,339,964 | 24,538,002 | 24,761,960 | ||||||||||||||
Return on average assets | 0.49 | % | 0.01 | % | 0.77 | % | 0.10 | % | 0.83 | % | |||||||||
Return on average shareholders' equity | 5.32 | % | 0.05 | % | 8.00 | % | 0.96 | % | 7.71 | % | |||||||||
Return on average tangible common equity (1) | 7.68 | % | 0.08 | % | 11.84 | % | 1.39 | % | 11.24 | % | |||||||||
Net interest margin | 3.47 | % | 3.33 | % | 3.32 | % | 3.48 | % | 3.56 | % | |||||||||
Efficiency ratio (1) | 58.55 | % | 57.74 | % | 59.42 | % | 62.21 | % | 59.46 | % | |||||||||
Adjusted Earnings Performance Summary (1) | |||||||||||||||||||
Adjusted earnings | $ | 12,471 | $ | 12,023 | $ | 12,884 | $ | 2,806 | $ | 16,110 | |||||||||
Adjusted diluted earnings per common share | $ | 0.54 | $ | 0.52 | $ | 0.55 | $ | 0.11 | $ | 0.64 | |||||||||
Adjusted return on average assets | 0.73 | % | 0.72 | % | 0.78 | % | 0.19 | % | 1.04 | % | |||||||||
Adjusted return on average shareholders' equity | 7.97 | % | 7.56 | % | 8.20 | % | 1.73 | % | 9.71 | % | |||||||||
Adjusted return on average tangible common equity | 11.50 | % | 11.04 | % | 12.14 | % | 2.53 | % | 14.15 | % | |||||||||
Adjusted pre-tax, pre-provision earnings | $ | 28,855 | $ | 28,751 | $ | 27,531 | $ | 23,785 | $ | 27,566 | |||||||||
Adjusted pre-tax, pre-provision return on average assets | 1.69 | % | 1.72 | % | 1.68 | % | 1.58 | % | 1.79 | % | |||||||||
(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures. | |||||||||||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||||||
(in thousands, except per share data) | 2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||||||||||
Net interest income: | ||||||||||||||||||||||||
Interest income | $ | 62,712 | $ | 60,314 | $ | 60,548 | $ | 61,314 | $ | 64,444 | ||||||||||||||
Interest expense | 9,196 | 10,334 | 11,559 | 14,663 | 15,757 | |||||||||||||||||||
Net interest income | 53,516 | 49,980 | 48,989 | 46,651 | 48,687 | |||||||||||||||||||
Provision for credit losses: | ||||||||||||||||||||||||
Provision for credit losses on loans | 10,000 | 10,970 | 11,610 | 10,569 | 5,305 | |||||||||||||||||||
Provision for credit losses on unfunded commitments | - | 577 | (665 | ) | 934 | - | ||||||||||||||||||
Provision for other credit losses | 58 | 181 | 52 | 75 | - | |||||||||||||||||||
Total provision for credit losses | 10,058 | 11,728 | 10,997 | 11,578 | 5,305 | |||||||||||||||||||
Net interest income after provision for credit losses | 43,458 | 38,252 | 37,992 | 35,073 | 43,382 | |||||||||||||||||||
Noninterest income: | ||||||||||||||||||||||||
Wealth management revenue | 5,868 | 5,559 | 5,698 | 5,677 | 5,377 | |||||||||||||||||||
Commercial FHA revenue | 400 | 926 | 3,414 | 1,267 | 3,702 | |||||||||||||||||||
Residential mortgage banking revenue | 2,285 | 3,049 | 2,723 | 1,755 | 763 | |||||||||||||||||||
Service charges on deposit accounts | 2,149 | 2,092 | 1,706 | 2,656 | 2,860 | |||||||||||||||||||
Interchange revenue | 3,137 | 3,283 | 3,013 | 2,833 | 3,053 | |||||||||||||||||||
Gain on sales of investment securities, net | - | 1,721 | - | - | 635 | |||||||||||||||||||
Impairment on commercial mortgage servicing rights | (2,344 | ) | (1,418 | ) | (107 | ) | (8,468 | ) | (1,613 | ) | ||||||||||||||
Bank owned life insurance | 893 | 897 | 892 | 900 | 913 | |||||||||||||||||||
Other income | 1,948 | 2,810 | 2,057 | 1,978 | 3,324 | |||||||||||||||||||
Total noninterest income | 14,336 | 18,919 | 19,396 | 8,598 | 19,014 | |||||||||||||||||||
Noninterest expense: | ||||||||||||||||||||||||
Salaries and employee benefits | 22,636 | 21,118 | 20,740 | 21,063 | 23,650 | |||||||||||||||||||
Occupancy and equipment | 3,531 | 4,866 | 4,286 | 4,869 | 4,654 | |||||||||||||||||||
Data processing | 5,987 | 5,721 | 5,458 | 5,477 | 6,217 | |||||||||||||||||||
Professional | 1,912 | 1,861 | 1,606 | 1,855 | 1,952 | |||||||||||||||||||
Amortization of intangible assets | 1,556 | 1,557 | 1,629 | 1,762 | 1,804 | |||||||||||||||||||
Loss on mortgage servicing rights held for sale | 617 | 188 | 391 | 496 | 95 | |||||||||||||||||||
Impairment related to facilities optimization | (10 | ) | 12,651 | 60 | 146 | - | ||||||||||||||||||
FHLB advances prepayment fees | 4,872 | - | - | - | - | |||||||||||||||||||
Other expense | 5,947 | 5,939 | 7,225 | 5,998 | 7,953 | |||||||||||||||||||
Total noninterest expense | 47,048 | 53,901 | 41,395 | 41,666 | 46,325 | |||||||||||||||||||
Income before income taxes | 10,746 | 3,270 | 15,993 | 2,005 | 16,071 | |||||||||||||||||||
Income taxes | 2,413 | 3,184 | 3,424 | 456 | 3,279 | |||||||||||||||||||
Net income | $ | 8,333 | $ | 86 | $ | 12,569 | $ | 1,549 | $ | 12,792 | ||||||||||||||
Basic earnings per common share | $ | 0.36 | $ | 0.00 | $ | 0.53 | $ | 0.06 | $ | 0.52 | ||||||||||||||
Diluted earnings per common share | $ | 0.36 | $ | 0.00 | $ | 0.53 | $ | 0.06 | $ | 0.51 | ||||||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||||||
As of | ||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||||||
(in thousands) | 2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 341,640 | $ | 461,196 | $ | 519,868 | $ | 449,396 | $ | 394,505 | ||||||||||||||
Investment securities | 686,135 | 618,974 | 639,693 | 661,894 | 655,054 | |||||||||||||||||||
Loans | 5,103,331 | 4,941,466 | 4,839,423 | 4,376,204 | 4,401,410 | |||||||||||||||||||
Allowance for credit losses on loans | (60,443 | ) | (52,771 | ) | (47,093 | ) | (38,545 | ) | (28,028 | ) | ||||||||||||||
Total loans, net | 5,042,888 | 4,888,695 | 4,792,330 | 4,337,659 | 4,373,382 | |||||||||||||||||||
Loans held for sale, at fair value | 138,090 | 62,500 | 32,403 | 113,852 | 16,431 | |||||||||||||||||||
Premises and equipment, net | 74,124 | 74,967 | 89,046 | 90,118 | 91,055 | |||||||||||||||||||
Other real estate owned | 20,247 | 15,961 | 12,728 | 7,892 | 6,745 | |||||||||||||||||||
Loan servicing rights, at lower of cost or fair value | 39,276 | 42,465 | 44,239 | 44,566 | 53,824 | |||||||||||||||||||
Goodwill | 161,904 | 161,904 | 172,796 | 172,796 | 171,758 | |||||||||||||||||||
Other intangible assets, net | 28,382 | 29,938 | 31,495 | 33,124 | 34,886 | |||||||||||||||||||
Cash surrender value of life insurance policies | 146,004 | 145,112 | 144,215 | 143,323 | 142,423 | |||||||||||||||||||
Other assets | 189,850 | 198,333 | 165,685 | 153,610 | 146,954 | |||||||||||||||||||
Total assets | $ | 6,868,540 | $ | 6,700,045 | $ | 6,644,498 | $ | 6,208,230 | $ | 6,087,017 | ||||||||||||||
Liabilities and Shareholders' Equity | ||||||||||||||||||||||||
Noninterest-bearing deposits | $ | 1,469,579 | $ | 1,355,188 | $ | 1,273,267 | $ | 1,052,726 | $ | 1,019,472 | ||||||||||||||
Interest-bearing deposits | 3,631,437 | 3,673,548 | 3,669,840 | 3,597,914 | 3,524,782 | |||||||||||||||||||
Total deposits | 5,101,016 | 5,028,736 | 4,943,107 | 4,650,640 | 4,544,254 | |||||||||||||||||||
Short-term borrowings | 68,957 | 58,625 | 77,136 | 43,578 | 82,029 | |||||||||||||||||||
FHLB advances and other borrowings | 779,171 | 693,640 | 693,865 | 593,089 | 493,311 | |||||||||||||||||||
Subordinated debt | 169,795 | 169,702 | 169,610 | 169,505 | 176,653 | |||||||||||||||||||
Trust preferred debentures | 48,814 | 48,682 | 48,551 | 48,420 | 48,288 | |||||||||||||||||||
Other liabilities | 79,396 | 78,780 | 78,640 | 71,838 | 80,571 | |||||||||||||||||||
Total liabilities | 6,247,149 | 6,078,165 | 6,010,909 | 5,577,070 | 5,425,106 | |||||||||||||||||||
Total shareholders’ equity | 621,391 | 621,880 | 633,589 | 631,160 | 661,911 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 6,868,540 | $ | 6,700,045 | $ | 6,644,498 | $ | 6,208,230 | $ | 6,087,017 | ||||||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
As of | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(in thousands) | 2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||||||
Loan Portfolio | ||||||||||||||||||||
Commercial loans and leases | $ | 2,095,639 | $ | 1,938,691 | $ | 1,856,435 | $ | 1,439,145 | $ | 1,387,766 | ||||||||||
Commercial real estate | 1,525,973 | 1,496,758 | 1,495,183 | 1,507,280 | 1,526,504 | |||||||||||||||
Construction and land development | 172,737 | 177,894 | 207,593 | 208,361 | 208,733 | |||||||||||||||
Residential real estate | 442,880 | 470,829 | 509,453 | 548,014 | 568,291 | |||||||||||||||
Consumer | 866,102 | 857,294 | 770,759 | 673,404 | 710,116 | |||||||||||||||
Total loans | $ | 5,103,331 | $ | 4,941,466 | $ | 4,839,423 | $ | 4,376,204 | $ | 4,401,410 | ||||||||||
Deposit Portfolio | ||||||||||||||||||||
Noninterest-bearing demand | $ | 1,469,579 | $ | 1,355,188 | $ | 1,273,267 | $ | 1,052,726 | $ | 1,019,472 | ||||||||||
Interest-bearing: | ||||||||||||||||||||
Checking | 1,568,888 | 1,581,216 | 1,484,728 | 1,425,022 | 1,342,788 | |||||||||||||||
Money market | 785,871 | 826,454 | 877,675 | 849,642 | 787,662 | |||||||||||||||
Savings | 597,966 | 580,748 | 594,685 | 534,457 | 522,456 | |||||||||||||||
Time | 655,620 | 661,872 | 689,841 | 765,870 | 822,160 | |||||||||||||||
Brokered time | 23,092 | 23,258 | 22,911 | 22,923 | 49,716 | |||||||||||||||
Total deposits | $ | 5,101,016 | $ | 5,028,736 | $ | 4,943,107 | $ | 4,650,640 | $ | 4,544,254 |
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(dollars in thousands) | 2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||||||
Average Balance Sheets | ||||||||||||||||||||
Cash and cash equivalents | $ | 415,686 | $ | 491,728 | $ | 489,941 | $ | 337,851 | $ | 406,526 | ||||||||||
Investment securities | 672,937 | 628,705 | 650,356 | 662,450 | 631,294 | |||||||||||||||
Loans | 4,998,912 | 4,803,940 | 4,696,288 | 4,384,206 | 4,359,144 | |||||||||||||||
Loans held for sale | 45,196 | 44,880 | 99,169 | 19,844 | 36,974 | |||||||||||||||
Nonmarketable equity securities | 51,906 | 50,765 | 50,661 | 45,124 | 43,745 | |||||||||||||||
Total interest-earning assets | 6,184,637 | 6,020,018 | 5,986,415 | 5,449,475 | 5,477,683 | |||||||||||||||
Non-earning assets | 602,716 | 625,522 | 619,411 | 624,594 | 649,169 | |||||||||||||||
Total assets | $ | 6,787,353 | $ | 6,645,540 | $ | 6,605,826 | $ | 6,074,069 | $ | 6,126,852 | ||||||||||
Interest-bearing deposits | $ | 3,680,645 | $ | 3,656,833 | $ | 3,651,406 | $ | 3,549,515 | $ | 3,490,165 | ||||||||||
Short-term borrowings | 62,432 | 64,010 | 59,103 | 55,616 | 104,598 | |||||||||||||||
FHLB advances and other borrowings | 682,981 | 693,721 | 692,470 | 532,733 | 531,419 | |||||||||||||||
Subordinated debt | 169,751 | 169,657 | 169,560 | 170,026 | 182,149 | |||||||||||||||
Trust preferred debentures | 48,751 | 48,618 | 48,487 | 48,357 | 48,229 | |||||||||||||||
Total interest-bearing liabilities | 4,644,560 | 4,632,839 | 4,621,026 | 4,356,247 | 4,356,560 | |||||||||||||||
Noninterest-bearing deposits | 1,446,359 | 1,303,963 | 1,280,983 | 986,178 | 1,028,670 | |||||||||||||||
Other noninterest-bearing liabilities | 73,840 | 75,859 | 71,853 | 78,943 | 83,125 | |||||||||||||||
Shareholders' equity | 622,594 | 632,879 | 631,964 | 652,701 | 658,497 | |||||||||||||||
Total liabilities and shareholders' equity | $ | 6,787,353 | $ | 6,645,540 | $ | 6,605,826 | $ | 6,074,069 | $ | 6,126,852 | ||||||||||
Yields | ||||||||||||||||||||
Earning Assets | ||||||||||||||||||||
Cash and cash equivalents | 0.12 | % | 0.10 | % | 0.14 | % | 1.26 | % | 1.62 | % | ||||||||||
Investment securities | 2.65 | % | 2.86 | % | 3.05 | % | 3.23 | % | 3.10 | % | ||||||||||
Loans | 4.58 | % | 4.57 | % | 4.64 | % | 5.01 | % | 5.22 | % | ||||||||||
Loans held for sale | 3.14 | % | 2.92 | % | 4.07 | % | 3.87 | % | 4.12 | % | ||||||||||
Nonmarketable equity securities | 5.22 | % | 5.26 | % | 5.40 | % | 5.39 | % | 5.31 | % | ||||||||||
Total interest-earning assets | 4.06 | % | 4.01 | % | 4.10 | % | 4.56 | % | 4.70 | % | ||||||||||
Interest-Bearing Liabilities | ||||||||||||||||||||
Interest-bearing deposits | 0.36 | % | 0.46 | % | 0.61 | % | 0.95 | % | 1.03 | % | ||||||||||
Short-term borrowings | 0.14 | % | 0.17 | % | 0.19 | % | 0.73 | % | 0.67 | % | ||||||||||
FHLB advances and other borrowings | 1.71 | % | 1.85 | % | 1.69 | % | 2.24 | % | 2.26 | % | ||||||||||
Subordinated debt | 5.60 | % | 5.58 | % | 5.85 | % | 5.90 | % | 5.94 | % | ||||||||||
Trust preferred debentures | 4.03 | % | 4.16 | % | 4.86 | % | 6.02 | % | 6.41 | % | ||||||||||
Total interest-bearing liabilities | 0.79 | % | 0.89 | % | 1.01 | % | 1.35 | % | 1.43 | % | ||||||||||
Cost of Deposits | 0.26 | % | 0.34 | % | 0.45 | % | 0.74 | % | 0.80 | % | ||||||||||
Net Interest Margin | 3.47 | % | 3.33 | % | 3.32 | % | 3.48 | % | 3.56 | % | ||||||||||
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
As of and for the Quarter Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(dollars in thousands, except per share data) | 2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||||||
Asset Quality | ||||||||||||||||||||
Loans 30-89 days past due | $ | 31,460 | $ | 28,188 | $ | 36,551 | $ | 40,392 | $ | 29,876 | ||||||||||
Nonperforming loans | 54,070 | 67,443 | 60,513 | 58,166 | 42,082 | |||||||||||||||
Nonperforming assets | 75,432 | 84,795 | 74,707 | 67,158 | 50,027 | |||||||||||||||
Net charge-offs | 2,328 | 5,292 | 3,062 | 12,835 | 2,194 | |||||||||||||||
Loans 30-89 days past due to total loans | 0.62 | % | 0.57 | % | 0.76 | % | 0.92 | % | 0.68 | % | ||||||||||
Nonperforming loans to total loans | 1.06 | % | 1.36 | % | 1.25 | % | 1.33 | % | 0.96 | % | ||||||||||
Nonperforming assets to total assets | 1.10 | % | 1.27 | % | 1.12 | % | 1.08 | % | 0.82 | % | ||||||||||
Allowance for credit losses to total loans | 1.18 | % | 1.07 | % | 0.97 | % | 0.88 | % | 0.64 | % | ||||||||||
Allowance for credit losses to nonperforming loans | 111.79 | % | 78.25 | % | 77.82 | % | 66.27 | % | 66.60 | % | ||||||||||
Net charge-offs to average loans | 0.19 | % | 0.44 | % | 0.26 | % | 1.18 | % | 0.20 | % | ||||||||||
Wealth Management | ||||||||||||||||||||
Trust assets under administration | $ | 3,480,759 | $ | 3,260,893 | $ | 3,253,784 | $ | 2,967,536 | $ | 3,409,959 | ||||||||||
Market Data | ||||||||||||||||||||
Book value per share at period end | $ | 27.83 | $ | 27.51 | $ | 27.62 | $ | 26.99 | $ | 27.10 | ||||||||||
Tangible book value per share at period end (1) | $ | 19.31 | $ | 19.03 | $ | 18.72 | $ | 18.19 | $ | 18.64 | ||||||||||
Market price at period end | $ | 17.87 | $ | 12.85 | $ | 14.95 | $ | 17.49 | $ | 28.96 | ||||||||||
Shares outstanding at period end | 22,325,471 | 22,602,844 | 22,937,296 | 23,381,496 | 24,420,345 | |||||||||||||||
Capital | ||||||||||||||||||||
Total capital to risk-weighted assets | 13.24 | % | 13.34 | % | 13.67 | % | 13.73 | % | 14.72 | % | ||||||||||
Tier 1 capital to risk-weighted assets | 9.20 | % | 9.40 | % | 9.71 | % | 9.76 | % | 10.52 | % | ||||||||||
Tier 1 leverage ratio | 7.50 | % | 7.72 | % | 7.75 | % | 8.39 | % | 8.74 | % | ||||||||||
Tier 1 common capital to risk-weighted assets | 7.99 | % | 8.18 | % | 8.44 | % | 8.47 | % | 9.20 | % | ||||||||||
Tangible common equity to tangible assets (1) | 6.46 | % | 6.61 | % | 6.67 | % | 7.08 | % | 7.74 | % | ||||||||||
(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures. | ||||||||||||||||||||
MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) | |||||||||||||||||||||||||
Adjusted Earnings Reconciliation | |||||||||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
(dollars in thousands, except per share data) | 2020 | 2020 | 2020 | 2020 | 2019 | ||||||||||||||||||||
Income before income taxes - GAAP | $ | 10,746 | $ | 3,270 | $ | 15,993 | $ | 2,005 | $ | 16,071 | |||||||||||||||
Adjustments to noninterest income: | |||||||||||||||||||||||||
Gain on sales of investment securities, net | - | 1,721 | - | - | 635 | ||||||||||||||||||||
Other | 3 | (17 | ) | 11 | (13 | ) | (6 | ) | |||||||||||||||||
Total adjustments to noninterest income | 3 | 1,704 | 11 | (13 | ) | 629 | |||||||||||||||||||
Adjustments to noninterest expense: | |||||||||||||||||||||||||
Loss on mortgage servicing rights held for sale | 617 | 188 | 391 | 496 | 95 | ||||||||||||||||||||
Loss on repurchase of subordinated debt | - | - | - | 193 | 1,778 | ||||||||||||||||||||
Impairment related to facilities optimization | (10 | ) | 12,651 | 60 | 146 | - | |||||||||||||||||||
FHLB advances prepayment fees | 4,872 | - | - | - | - | ||||||||||||||||||||
Integration and acquisition expenses | 231 | 1,200 | (6 | ) | 886 | 3,333 | |||||||||||||||||||
Total adjustments to noninterest expense | 5,710 | 14,039 | 445 | 1,721 | 5,206 | ||||||||||||||||||||
Adjusted earnings pre tax | 16,453 | 15,605 | 16,427 | 3,739 | 20,648 | ||||||||||||||||||||
Adjusted earnings tax | 3,982 | 3,582 | 3,543 | 933 | 4,538 | ||||||||||||||||||||
Adjusted earnings - non-GAAP | $ | 12,471 | $ | 12,023 | $ | 12,884 | $ | 2,806 | $ | 16,110 | |||||||||||||||
Adjusted diluted earnings per common share | $ | 0.54 | $ | 0.52 | $ | 0.55 | $ | 0.11 | $ | 0.64 | |||||||||||||||
Adjusted return on average assets | 0.73 | % | 0.72 | % | 0.78 | % | 0.19 | % | 1.04 | % | |||||||||||||||
Adjusted return on average shareholders' equity | 7.97 | % | 7.56 | % | 8.20 | % | 1.73 | % | 9.71 | % | |||||||||||||||
Adjusted return on average tangible common equity | 11.50 | % | 11.04 | % | 12.14 | % | 2.53 | % | 14.15 | % | |||||||||||||||
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation | |||||||||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
(dollars in thousands) | 2020 | 2020 | 2020 | 2020 | 2019 | ||||||||||||||||||||
Adjusted earnings pre tax - non- GAAP | $ | 16,453 | $ | 15,605 | $ | 16,427 | $ | 3,739 | $ | 20,648 | |||||||||||||||
Provision for credit losses | 10,058 | 11,728 | 10,997 | 11,578 | 5,305 | ||||||||||||||||||||
Impairment on commercial mortgage servicing rights | 2,344 | 1,418 | 107 | 8,468 | 1,613 | ||||||||||||||||||||
Adjusted pre-tax, pre-provision earnings - non-GAAP | $ | 28,855 | $ | 28,751 | $ | 27,531 | $ | 23,785 | $ | 27,566 | |||||||||||||||
Adjusted pre-tax, pre-provision return on average assets | 1.69 | % | 1.72 | % | 1.68 | % | 1.58 | % | 1.79 | % | |||||||||||||||
MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) | |||||||||||||||||||||||||
Efficiency Ratio Reconciliation | |||||||||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
(dollars in thousands) | 2020 | 2020 | 2020 | 2020 | 2019 | ||||||||||||||||||||
Noninterest expense - GAAP | $ | 47,048 | $ | 53,901 | $ | 41,395 | $ | 41,666 | $ | 46,325 | |||||||||||||||
Loss on mortgage servicing rights held for sale | (617 | ) | (188 | ) | (391 | ) | (496 | ) | (95 | ) | |||||||||||||||
Loss on repurchase of subordinated debt | - | - | - | (193 | ) | (1,778 | ) | ||||||||||||||||||
Impairment related to facilities optimization | 10 | (12,651 | ) | (60 | ) | (146 | ) | - | |||||||||||||||||
FHLB advances prepayment fees | (4,872 | ) | - | - | - | - | |||||||||||||||||||
Integration and acquisition expenses | (231 | ) | (1,199 | ) | 6 | (885 | ) | (3,332 | ) | ||||||||||||||||
Adjusted noninterest expense | $ | 41,338 | $ | 39,863 | $ | 40,950 | $ | 39,946 | $ | 41,120 | |||||||||||||||
Net interest income - GAAP | $ | 53,516 | $ | 49,980 | $ | 48,989 | $ | 46,651 | $ | 48,687 | |||||||||||||||
Effect of tax-exempt income | 413 | 430 | 438 | 485 | 474 | ||||||||||||||||||||
Adjusted net interest income | 53,929 | 50,410 | 49,427 | 47,136 | 49,161 | ||||||||||||||||||||
Noninterest income - GAAP | 14,336 | 18,919 | 19,396 | 8,598 | 19,014 | ||||||||||||||||||||
Impairment on commercial mortgage servicing rights | 2,344 | 1,418 | 107 | 8,468 | 1,613 | ||||||||||||||||||||
Gain on sales of investment securities, net | - | (1,721 | ) | - | - | (635 | ) | ||||||||||||||||||
Other | (3 | ) | 17 | (11 | ) | 13 | 6 | ||||||||||||||||||
Adjusted noninterest income | 16,677 | 18,633 | 19,492 | 17,079 | 19,998 | ||||||||||||||||||||
Adjusted total revenue | $ | 70,606 | $ | 69,043 | $ | 68,919 | $ | 64,215 | $ | 69,159 | |||||||||||||||
Efficiency ratio | 58.55 | % | 57.74 | % | 59.42 | % | 62.21 | % | 59.46 | % | |||||||||||||||
MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) | |||||||||||||||||||||||||
Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share | |||||||||||||||||||||||||
As of | |||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
(dollars in thousands, except per share data) | 2020 | 2020 | 2020 | 2020 | 2019 | ||||||||||||||||||||
Shareholders' Equity to Tangible Common Equity | |||||||||||||||||||||||||
Total shareholders' equity—GAAP | $ | 621,391 | $ | 621,880 | $ | 633,589 | $ | 631,160 | $ | 661,911 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||||
Goodwill | (161,904 | ) | (161,904 | ) | (172,796 | ) | (172,796 | ) | (171,758 | ) | |||||||||||||||
Other intangibles, net | (28,382 | ) | (29,938 | ) | (31,495 | ) | (33,124 | ) | (34,886 | ) | |||||||||||||||
Tangible common equity | $ | 431,105 | $ | 430,038 | $ | 429,298 | $ | 425,240 | $ | 455,267 | |||||||||||||||
Total Assets to Tangible Assets: | |||||||||||||||||||||||||
Total assets—GAAP | $ | 6,868,540 | $ | 6,700,045 | $ | 6,644,498 | $ | 6,208,230 | $ | 6,087,017 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||||
Goodwill | (161,904 | ) | (161,904 | ) | (172,796 | ) | (172,796 | ) | (171,758 | ) | |||||||||||||||
Other intangibles, net | (28,382 | ) | (29,938 | ) | (31,495 | ) | (33,124 | ) | (34,886 | ) | |||||||||||||||
Tangible assets | $ | 6,678,254 | $ | 6,508,203 | $ | 6,440,207 | $ | 6,002,310 | $ | 5,880,373 | |||||||||||||||
Common Shares Outstanding | 22,325,471 | 22,602,844 | 22,937,296 | 23,381,496 | 24,420,345 | ||||||||||||||||||||
Tangible Common Equity to Tangible Assets | 6.46 | % | 6.61 | % | 6.67 | % | 7.08 | % | 7.74 | % | |||||||||||||||
Tangible Book Value Per Share | $ | 19.31 | $ | 19.03 | $ | 18.72 | $ | 18.19 | $ | 18.64 | |||||||||||||||
Return on Average Tangible Common Equity (ROATCE) | |||||||||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
(dollars in thousands) | 2020 | 2020 | 2020 | 2020 | 2019 | ||||||||||||||||||||
Net income available to common shareholders | $ | 8,333 | $ | 86 | $ | 12,569 | $ | 1,549 | $ | 12,792 | |||||||||||||||
Average total shareholders' equity—GAAP | $ | 622,594 | $ | 632,879 | $ | 631,964 | $ | 652,701 | $ | 658,497 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||||
Goodwill | (161,904 | ) | (168,771 | ) | (172,796 | ) | (171,890 | ) | (171,082 | ) | |||||||||||||||
Other intangibles, net | (29,123 | ) | (30,690 | ) | (32,275 | ) | (33,951 | ) | (35,745 | ) | |||||||||||||||
Average tangible common equity | $ | 431,567 | $ | 433,418 | $ | 426,893 | $ | 446,860 | $ | 451,670 | |||||||||||||||
ROATCE | 7.68 | % | 0.08 | % | 11.84 | % | 1.39 | % | 11.24 | % | |||||||||||||||
Exhibit 99.2
1 Midland States Bancorp, Inc. NASDAQ: MSBI Fourth Quarter 2020 Earnings Call
2 Forward - Looking Statements. This presentation may contain forward - looking statements within the meaning of the federal securities laws. Forward - looking statements expressing management’s current expectations, forecasts of future events or long - te rm goals may be based upon beliefs, expectations and assumptions of Midland’s management, and are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” o r o ther similar expressions. All statements in this presentation speak only as of the date they are made, and Midland undertakes no obligation to update any statement. A number of factors, many of which are beyond the ability of Midland to control or predic t, could cause actual results to differ materially from those in its forward - looking statements including the effects of the Corona virus Disease 2019 (COVID - 19) pandemic, including its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic. These risks and uncertainties should be considered in evaluating forward - looking statements, and undue reliance should not be placed o n such statements. Additional information concerning Midland and its businesses, including additional factors that could materi all y affect Midland’s financial results, are included in Midland’s filings with the Securities and Exchange 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,” “Pre - Tax, Pre - Provision Income,” “Adjusted Diluted Earnings Per Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Adjusted P re - Tax, Provision Return on Average Assets,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Val ue 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. Not all compa nie s use the same calculation of these measures; therefore this presentation may not be comparable to other similarly titled measu res as presented by other companies. Reconciliations of these non - GAAP measures are provided in the Appendix section of this presentation.
3 Overview of 4Q20 3 Stable Net Interest Margin 4Q20 Earnings Improved Asset Quality • NIM, excluding PPP income, was unchanged from 3Q20 • Excess liquidity redeployed into higher earning assets and continued decline in cost of deposits supported the margin in 4Q20 • NPLs declined 19.8% from 3Q20 due to resolution of longer - term problem loans and minimal new inflow • More borrowers with deferred loans resuming full or partial scheduled payments • Allowance for credit losses strengthened to 1.18% of total loans and 112% of NPLs Strong Balance Sheet Growth • Annualized loan growth of 13.2%, driven by growth in equipment finance, commercial, commercial real estate, and warehouse lines to commercial FHA lenders • Annualized deposit growth of 5.6%, driven by continued increases in core deposits • Net income of $8.3 million, or $0.36 diluted EPS, includes $4.9 million in charges related to prepayment of FHLB advances • Adjusted earnings (1) of $12.5 million, or $0.54 diluted EPS, excluding charges primarily related to prepayments of FHLB advances • Adjusted Pre - Tax, Pre - Provision (PTPP) Income (1) of $28.9 million; PTPP ROAA (1) of 1.69%, excluding impairment of commercial MSRs of $2.3 million Notes: (1) Represents a non - GAAP financial measure. See “Non - GAAP Reconciliation” in the appendix. Restructuring of FHLB Advances • Prepaid $114.2 million of FHLB advances with weighted average rate of 2.10% • One - time prepayment charge of $4.9 million with expected payback of ~3 years • Expected to reduce interest expense by $2.3 million in 2021 and positively impact NIM by 2 - 3 bps • Added $200 million in short - term FHLB advances to fund expansion of commercial FHA warehouse credit lines
4 Paycheck Protection Program Overview Paycheck Protection Program (as of 12/31/20) Loans Outstanding $184.4 million Number of Loans 1,541 Average Loan Size $119,663 Total Fees Earned $9.8 million Fees Recognized in 4Q20 $3.1 million Remaining Fees to be Recognized $4.3 million Impact on 4Q20 Financials At or for the Three Months Ended 12/31/20 Metrics Excluding PPP Impact Total Loans $5.10 billion $4.92 billion Average Loans $5.00 billion $4.76 billion Net Interest Income FTE (1) $53.9 million $50.2 million Net Interest Margin (1) 3.47% 3.36% ACL/Total Loans 1.18% 1.22% 1. Loan fees and deferred loan origination costs being amortized over an estimated 24 - month life of PPP loans Paycheck Protection Program Loan Forgiveness As of 12/31/20 As of 1/25/21 Loans Submitted to SBA $155.6 million $171.2 million Loans Forgiven by SBA $93.2 million $115.9 million Percentage of Total PPP Loans Forgiven 33.6% 41.8%
5 Loan Deferral Overview Total Loan Deferrals As of September 30, 2020 As of December 31, 2020 Percentage Change Total Loans Deferred $279.3 million $209.1 million (25.1%) % of Total Loans 5.7% 4.1% (28.1%) Deferrals by Industry (as of December 31, 2020) Hotels/Motels $82.6 40% Transit & Ground Passenger $44.1 21% RE Rental & Leasing $34.5 16% Construction $12.7 6% All Others <4% $35.2 17% ($ in millions) Deferral Type (as of December 31, 2020) Full Payment Deferral $106.1 million Deferred Loans Making I/O or Other Payments $103.0 million
6 4Q 2020 3Q 2020 4Q 2019 Commercial loans and leases $ 2,096 $ 1,938 $ 1,388 Commercial real estate 1,526 1,497 1,527 Construction and land development 173 178 209 Residential real estate 443 471 568 Consumer 866 857 710 Total Loans $5,103 $4,941 $4,401 Loan Portfolio Total Loans and Average Loan Yield • Total loans increased $161.9 million, or 3.3% from prior quarter, to $5.10 billion • Increase primarily attributable to growth in commercial and commercial real estate portfolios, partially offset by decrease in residential real estate loans • Commercial loans increased due to an expansion of two existing relationships totaling approximately $59.0 million • PPP loans were $184.4 million at Dec. 31, 2020, a decrease of $93.2 million from Sep. 30, 2020 • Equipment finance balances increased $46.0 million, or 5.6%, from Sep. 30, 2020 • $136.5 million increase in warehouse credit line utilization by commercial FHA loan originators Loan Portfolio Mix (in millions, as of quarter - end) (in millions, as of quarter - end) $4,401 $4,376 $4,839 $4,941 $5,103 5.22% 5.01% 4.64% 4.57% 4.58% 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 Total Loans Average Loan Yield
7 Midland Equipment Finance Portfolio Overview ($ in millions) Portfolio Characteristics (as of 12/31/20) Nationwide portfolio providing financing solutions to equipment vendors and end - users Total Outstanding Loans and Leases $861.5 million (16.9% of total loans) Number of Loans and Leases 6,669 Average Loan/Lease Size $129,180 Largest Loan/Lease $1.5 million Weighted Average Rate 4.89% Avg. FICO Score 604 Transit and Ground Passenger $43.9 87.6% All Others <4% of Total $6.2 12.4% Total Deferred Loans and Leases As of 6/30/20 As of 9/30/20 As of 12/31/20 Total Deferrals $233.0 million $75.2 million $50.1 million Percentage of Portfolio 31.5% 9.2% 5.8% Deferred Loans Making I/O or Other Payments - - $28.2 million Equipment Finance Deferrals by Industry (as of December 31, 2020)
8 Hotel/Motel Portfolio Overview Deferrals by Chain Scale ($ in millions) Upper Midscale Chain $65.9 80% Upscale Chain $10.3 12% Midscale Chain $5.4 7% Other $1.1 1% Portfolio Characteristics (CRE & C&I) (as of 12/31/20) Total Outstanding $180.2 million (3.5% of total loans) Number of Loans 53 Average Loan Size $2.4 million Largest Loan $11.3 million Average LTV 52% Total Deferred Loans as of 9/30/20 $105.6 million (56.3% of portfolio) Total Deferred Loans as of 12/31/20 $82.6 million (45.8% of portfolio) Average LTV of Deferred Loans as of 12/31/20 56% Deferred Loans Making I/O or Other Payments $27.7 million (33.5% of deferrals) Portfolio by State IL $90.6 51% MO $43.4 24% MI $12.9 7% CO $11.3 6% WI $11.0 6% Other $11.0 6%
9 GreenSky Consumer Loan Portfolio Overview Delinquency Rate (greater than 60 days) Portfolio Characteristics (as of 12/31/20) Total Outstanding $767.2 million (15.0% of total loans) Number of Loans 335,449 Average Loan Size $2,287 Average FICO Score 770 Total Deferred Loans (as of September 30, 2020) $8.1 million (1.1% of portfolio) Total Deferred Loans (as of December 31, 2020) $3.1 million (0.4% of portfolio) ▪ Average FICO score of 770 ▪ No losses to MSBI in 9 year history of the portfolio ▪ Portfolio can be sold to provide liquidity; Loan sales were executed at par in Oct and Dec 2020 Prime Credit 0.61% 0.34% 0.42% 0.36% Mar 2020 Jun 2020 Sep 2020 Dec 2020 ▪ Cash flow waterfall structure » Cash flow from portfolio covers servicing fee, credit losses and our target margin » Excess cash flow is an incentive fee to GreenSky that is available to cover additional losses » GreenSky received incentive fees in 23 of past 24 months including every month in 2020 ▪ Escrow deposits » Escrow deposits absorb losses in excess of cash flow waterfall » Escrow account totaled $29.8 million at 12/31/20 or 3.9% of the portfolio Credit Enhancement
10 4Q 2020 3Q 2020 4Q 2019 Noninterest - bearing demand $ 1,470 $ 1,355 $ 1,019 Interest - bearing: Checking 1,569 1,581 1,343 Money market 786 827 788 Savings 598 581 522 Time 656 662 822 Brokered time 23 23 50 Total Deposits $5,101 $5,029 $4,544 Total Deposits Total Deposits and Cost of Deposits • Total deposits increased $72.3 million, or 1.4% from prior quarter, to $5.10 billion • Growth in deposits attributable to increase in retail and commercial FHA servicing deposits, offset by declines in commercial customer and money market accounts • Noninterest - bearing demand deposits increased to 28.8% of total deposits from 26.9% at end of prior quarter • $100.6 million of CDs maturing in 1Q21 with a weighted average rate of 1.19% Deposit Mix (in millions, as of quarter - end) (in millions, as of quarter - end) $4,544 $4,651 $4,943 $5,029 $5,101 0.80% 0.74% 0.45% 0.34% 0.26% 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 Total Deposits Cost of Deposits
11 $3.6 $2.2 $1.8 $2.1 $1.6 $48.7 $46.7 $49.0 $50.0 $53.5 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 NII Accretion Income 0.23% 0.16% 0.12% 0.14% 0.10% 3.56% 3.48% 3.32% 3.33% 3.47% 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 NIM Accretion Income • Net interest income increased 7.1% from the prior quarter due to higher average loan balances and increased net interest margin • Net interest margin, excluding PPP income, was unchanged from prior quarter as lower earning asset yields were offset by favorable shift in mix of earning assets and decline in cost of deposits • 8 basis point decline in cost of deposits • Full quarter impact of lower FHLB advances expense expected to positively impact NIM in 1Q21 Net Interest Income/Margin Net Interest Margin Net Interest Income (in millions)
12 $5.38 $5.68 $5.70 $5.56 $5.87 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 $3,410 $2,968 $3,254 $3,261 $3,481 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 • During 4Q20, assets under administration increased $219.9 million, primarily due to market performance • Wealth Management revenue increased 5.6% from prior quarter, primarily due to higher assets under administration Wealth Management Wealth Management Revenue Assets Under Administration (in millions) (in millions )
13 Noninterest Income • Noninterest income reduced 24.2% from prior quarter, partially due to a $2.3 million impairment of commercial mortgage servicing rights (“MSRs”) and gains on sales of securities recorded in the prior quarter • Excluding the impact of the impairment of commercial MSRs and gains on sales of securities, noninterest income decreased due to lower levels of residential mortgage banking revenue, commercial FHA revenue, and other income Noninterest Income (in millions) $19.0 $17.1 $19.4 $18.9 $14.3 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 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 (2) Excludes $8.5 million impairment of commercial mortgage servicing rights (1) (2)
14 Noninterest Expense and Operating Efficiency • Efficiency Ratio (1) was 58.6% in 4Q20 vs. 57.7% in 3Q20 • Adjustments to non - interest expense: • Excluding these adjustments, noninterest expense increased primarily due to: » Accrual for one - time rollover of vacation time due to COVID - 19 » Higher incentive compensation » Increase in charitable contributions • Noninterest expense expected to range from $39 million to $40 million per quarter to start 2021 Noninterest Expense and Efficiency Ratio (1) (Noninterest expense in millions) $5.2 $1.7 $0.4 $14.0 $5.7 $46.3 $41.7 $41.4 $53.9 $47.0 59.5% 62.2% 59.4% 57.7% 58.6% 56.0% 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 Total Noninterest Expense Adjustments to Noninterest Expense Efficiency Ratio Notes: (1) Represents a non - GAAP financial measure. See “Non - GAAP Reconciliation” in the appendix. ($ in millions) 4 Q20 3Q20 Integration and acquisition related expenses ($0.2) ($13.9) Loss on MSRs held for sale ($0.6) ($0.2) FHLB advances prepayment fees ($4.9) -
15 Asset Quality NCO / Average Loans • Nonperforming loans/total loans decreased to 1.06% from 1.36% at the end of the prior quarter, due to the resolution of long - term problem loans, the transfer of loans to Other Real Estate Owned, and minimal new inflow • Net charge - offs of $2.3 million, or 0.19% of average loans • Provision for credit losses of $10.0 million in 4Q20 primarily driven by growth in total loans and additional reserves allocated to equipment finance and commercial real estate portfolios • At 12/31/20, approximately 96% of ACL was allocated to general reserves Nonperforming Loans / Total Loans (Total Loans as of quarter - end) 0.96% 1.33% 1.25% 1.36% 1.06% 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 0.20% 1.18% 0.26% 0.44% 0.19% 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020
16 Changes in Allowance for Credit Losses ACL 9/30/20 ACL 12/31/20 ($ in thousands) Specific Reserves Portfolio Changes Economic Factors ▪ Changes to specific reserves ▪ New loans ▪ Changes in credit quality including risk downgrades and deferrals ▪ Changes in allocations to COVID - 19 impacted segments ▪ Aging of existing portfolio ▪ Other charge - offs and recoveries ▪ Changes to macro - economic variables and forecasts ▪ Changes to other economic qualitative factors
17 ACL by Portfolio Portfolio Total Loans at 12/31/20 ACL % of Total Loans Total Loans at 9/30/20 ACL % of Total Loans Commercial $ 937,382 $ 8,537 0.90% $ 729,745 $ 7,846 1.08% Warehouse Lines 273,298 - 0.00% 136,761 - 0.00% Commercial Other 748,193 11,314 1.51% 813,412 10,014 1.23% Equipment Finance 451,437 10,727 2.38% 420,003 9,285 2.21% Paycheck Protection Program 184,401 277 0.15% 277,553 416 0.15% Lease Financing 410,064 7,427 1.81% 395,534 4,814 1.22% CRE non - owner occupied 871,451 16,604 1.91% 824,311 12,533 1.52% CRE owner occupied 423,257 4,936 1.17% 442,692 4,927 1.11% Multi - family 151,534 3,413 2.25% 149,290 3,475 2.33% Farmland 79,731 512 0.64% 80,465 454 0.56% Construction and Land Development 172,737 1,433 0.83% 177,894 1,802 1.01% Residential RE First Lien 358,329 3,212 0.90% 380,402 3,702 0.97% Other Residential 84,551 717 0.85% 90,427 877 0.97% Consumer 80,642 374 0.46% 82,912 388 0.47% Consumer Other (1) 785,460 1,964 0.25% 774,382 1,939 0.25% Total Loans 5,103,331 60,443 1.18% 4,941,466 52,771 1.07% Loans (excluding GreenSky, PPP and warehouse lines) 3,811,624 58,060 1.52% 3,698,097 50,299 1.36% ($ in thousands) Notes: (1) Primarily consists of loans originated through GreenSky relationship
18 2021 Outlook and Priorities • Maintain strong capital and liquidity positions to continue supporting clients and communities through the duration of the COVID - 19 pandemic • Targeting low - to mid - single - digit loan growth (excluding PPP loans) resulting from continued growth in equipment finance, commercial FHA warehouse and commercial real estate portfolios • Expand commercial banking team with expertise in SBA, agribusiness lending, and specialty finance • Maintain lower cost structure following actions taken in 2020 to increase operating leverage as balance sheet grows • Focus technology investments on opportunities to capture wallet share from existing clients and enhance revenue generation • M&A focused primarily on expanding Wealth Management business • Employ balanced approach to capital deployment that increases return of capital to shareholders while also building capital ratios 18
19 APPENDIX
20 Commercial Loans and Leases by Industry 20 RE / Rental & Leasing 20.3% All Others 11.7% Finance and Insurance 11.2% Manufacturing 7.2% Construction - General 7.2% Assisted Living 7.0% Accommodation & Food Svcs 6.4% Retail Trade 6.1% Ag., Forestry, & Fishing 5.1% General Freight Trucking 4.6% Health Care 3.9% Trans. / Ground Passenger 3.7% Other Services 3.3% Wholesale Trade 2.3% Industries as a percentage of Commercial, CRE and Equipment Finance Loans and Leases as of 12/31/20
21 Commercial Real Estate Portfolio by Collateral Type 21 Retail 15.3% Assisted Living 13.1% Multi - Family 10.5% All Others 9.3% Industrial / Warehouse 9.2% Hotel/Motel 9.1% Office 7.0% Residential 1 - 4 Family 6.0% Farmland 4.3% C - Store / Gas Station 3.7% Medical Building 3.1% Mixed Use / Other 2.8% Car Dealerships 2.3% Developed Land 2.3% Raw Land 1.5% Church 0.5% Collateral type as a percentage of the Commercial Real Estate and Construction Portfolio as of 12/31/20 CRE Concentration (as of 12/31/20) CRE as a % of Total Loans 29.9% CRE as a % of Total Risk - Based Capital (1) 198.3% Notes: (1) Represents non - owner occupied CRE loans only
22 Capital and Liquidity Overview Capital Ratios (as of 12/31/20) Liquidity Sources (as of 12/31/20) 6.46% 7.99% 7.50% 9.20% 13.24% 10.78% 8.78% 10.78% 11.77% 0.00% 5.00% 10.00% 15.00% TCE/TA Tier 1 Common Tier 1 Leverage Tier 1 RBC Total RBC Consolidated Bank Level ($ in millions) Cash and Cash Equivalents $ 341.6 Unpledged Securities 261.7 FHLB Committed Liquidity 334.0 FRB Discount Window Availability 54.4 Primary Liquidity 991.7 FRB – PPP Liquidity Facility (1) 184.4 Secondary Liquidity 184.4 Total Estimated Liquidity $ 1,176.1 Conditional Funding Based on Market Conditions Additional Credit Facility $ 250.0 Brokered CDs (additional capacity) $ 500.0 (1) Enrolled in PPP facility – loans available to submit Other Liquidity Holding Company Cash Position of $58.9 Million
23 Adjusted Earnings Reconciliation (dollars in thousands, except per share data) Income before income taxes - GAAP $ 10,746 $ 3,270 $ 15,993 $ 2,005 $ 16,071 Adjustments to noninterest income: Gain on sales of investment securities, net - 1,721 - - 635 Other 3 (17) 11 (13) (6) Total adjustments to noninterest income 3 1,704 11 (13) 629 Adjustments to noninterest expense: Loss on mortgage servicing rights held for sale 617 188 391 496 95 Loss on repurchase of subordinated debt - - - 193 1,778 Impairment related to facilities optimization (10) 12,651 60 146 - FHLB advances prepayment fees 4,872 - - - - Integration and acquisition expenses 231 1,200 (6) 886 3,333 Total adjustments to noninterest expense 5,710 14,039 445 1,721 5,206 Adjusted earnings pre tax 16,453 15,605 16,427 3,739 20,648 Adjusted earnings tax 3,982 3,582 3,543 933 4,538 Adjusted earnings - non-GAAP $ 12,471 $ 12,023 $ 12,884 $ 2,806 $ 16,110 Adjusted diluted earnings per common share $ 0.54 $ 0.52 $ 0.55 $ 0.11 $ 0.64 Adjusted return on average assets 0.73 % 0.72 % 0.78 % 0.19 % 1.04 % Adjusted return on average shareholders' equity 7.97 % 7.56 % 8.20 % 1.73 % 9.71 % Adjusted return on average tangible common equity 11.50 % 11.04 % 12.14 % 2.53 % 14.15 % Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation (dollars in thousands) Adjusted earnings pre tax - non- GAAP $ 16,453 $ 15,605 $ 16,427 $ 3,739 $ 20,648 Provision for credit losses 10,058 11,728 10,997 11,578 5,305 Impairment on commercial mortgage servicing rights 2,344 1,418 107 8,468 1,613 Adjusted pre-tax, pre-provision earnings - non-GAAP $ 28,855 $ 28,751 $ 27,531 $ 23,785 $ 27,566 Adjusted pre-tax, pre-provision return on average assets 1.69 % 1.72 % 1.68 % 1.58 % 1.79 % For the Quarter Ended 2020 2020 2020 2020 2019 December 31, September 30, June 30, March 31, December 31, MIDLAND STATES BANCORP, INC.RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) For the Quarter Ended March 31, 2020 December 31, 2019 December 31, 2020 September 30, 2020 June 30, 2020
24 Efficiency Ratio Reconciliation (dollars in thousands) Noninterest expense - GAAP $ 47,048 $ 53,901 $ 41,395 $ 41,666 $ 46,325 Loss on mortgage servicing rights held for sale (617) (188) (391) (496) (95) Loss on repurchase of subordinated debt - - - (193) (1,778) Impairment related to facilities optimization 10 (12,651) (60) (146) - FHLB advances prepayment fees (4,872) - - - - Integration and acquisition expenses (231) (1,199) 6 (885) (3,332) Adjusted noninterest expense $ 41,338 $ 39,863 $ 40,950 $ 39,946 $ 41,120 Net interest income - GAAP $ 53,516 $ 49,980 $ 48,989 $ 46,651 $ 48,687 Effect of tax-exempt income 413 430 438 485 474 Adjusted net interest income 53,929 50,410 49,427 47,136 49,161 Noninterest income - GAAP 14,336 18,919 19,396 8,598 19,014 Impairment on commercial mortgage servicing rights 2,344 1,418 107 8,468 1,613 Gain on sales of investment securities, net - (1,721) - - (635) Other (3) 17 (11) 13 6 Adjusted noninterest income 16,677 18,633 19,492 17,079 19,998 Adjusted total revenue $ 70,606 $ 69,043 $ 68,919 $ 64,215 $ 69,159 Efficiency ratio 58.55 % 57.74 % 59.42 % 62.21 % 59.46 % MIDLAND STATES BANCORP, INC.RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) For the Quarter Ended 2020 2020 2020 2020 2019 December 31, September 30, June 30, March 31, December 31,
25 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 $ 621,391 $ 621,880 $ 633,589 $ 631,160 $ 661,911 Adjustments: Goodwill (161,904) (161,904) (172,796) (172,796) (171,758) Other intangibles, net (28,382) (29,938) (31,495) (33,124) (34,886) Tangible common equity $ 431,105 $ 430,038 $ 429,298 $ 425,240 $ 455,267 Total Assets to Tangible Assets: Total assets—GAAP $ 6,868,540 $ 6,700,045 $ 6,644,498 $ 6,208,230 $ 6,087,017 Adjustments: Goodwill (161,904) (161,904) (172,796) (172,796) (171,758) Other intangibles, net (28,382) (29,938) (31,495) (33,124) (34,886) Tangible assets $ 6,678,254 $ 6,508,203 $ 6,440,207 $ 6,002,310 $ 5,880,373 Common Shares Outstanding 22,325,471 22,602,844 22,937,296 23,381,496 24,420,345 Tangible Common Equity to Tangible Assets 6.46 % 6.61 % 6.67 % 7.08 % 7.74 % Tangible Book Value Per Share $ 19.31 $ 19.03 $ 18.72 $ 18.19 $ 18.64 Return on Average Tangible Common Equity (ROATCE) (dollars in thousands) Net income available to common shareholders $ 8,333 $ 86 $ 12,569 $ 1,549 $ 12,792 Average total shareholders' equity—GAAP $ 622,594 $ 632,879 $ 631,964 $ 652,701 $ 658,497 Adjustments: Goodwill (161,904) (168,771) (172,796) (171,890) (171,082) Other intangibles, net (29,123) (30,690) (32,275) (33,951) (35,745) Average tangible common equity $ 431,567 $ 433,418 $ 426,893 $ 446,860 $ 451,670 ROATCE 7.68 % 0.08 % 11.84 % 1.39 % 11.24 % For the Quarter Ended 2020 2020 2020 2020 2019 December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) As of December 31, September 30, June 30, March 31, December 31,