UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 2024
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (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 (see General Instruction A.2. below):
| 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)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock, $0.01 par value | MSBI | The Nasdaq Market LLC | ||||||
| Depositary Shares, each representing a 1/40th interest in a share of 7.75% fixed rate reset non-cumulative perpetual preferred stock, Series A, $2.00 par value | MSBIP | The Nasdaq Market LLC | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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, 2024 , Midland States Bancorp, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter of 2024. The press release is attached as Exhibit 99.1.
Item 7.01. Regulation FD Disclosure.
On April 25, 2024 , the Company made available on its website a slide presentation regarding the Company's first quarter 2024 financial results. The slide presentation is attached as Exhibit 99.2.
The information set forth under Items 2.02 and 7.01 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, and shall not 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 | ||||||||||
Press Release of Midland States Bancorp, Inc., dated | |||||||||||
Slide Presentation of Midland States Bancorp, Inc. regarding first quarter 2024 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 thereunto duly authorized.
Date: | By: | /s/ Eric T. Lemke | ||||||
| Eric T. Lemke | ||||||||
| Chief Financial Officer | ||||||||
EXHIBIT 99.1
Midland States Bancorp, Inc. Announces 2024 First Quarter Results
First Quarter 2024 Highlights:
•Net income available to common shareholders of $11.7 million, or $0.53 per diluted share
•Pre-tax, pre-provision earnings of $32.2 million
•Tangible book value per share increased 0.4% from prior quarter to $23.44
•Common equity tier 1 capital ratio improved to 8.60% from 8.40%
•Net interest margin of 3.18%, compared to 3.21% in prior quarter
•Efficiency ratio of 58.0%, compared to 55.2% in prior quarter
Effingham, IL, April 25, 2024 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income available to common shareholders of $11.7 million, or $0.53 per diluted share, for the first quarter of 2024, compared to $18.5 million, or $0.84 per diluted share, for the fourth quarter of 2023. This also compares to net income available to common shareholders of $19.5 million, or $0.86 per diluted share, for the first quarter of 2023.
Provision expense was $14.0 million in the first quarter of 2024 compared to $7.0 million and $3.1 million in the fourth and first quarters of 2023, respectively. The increase in provision expense was the result of a specific reserve of $8.0 million on a multi-family construction project.
Financial results for the fourth quarter of 2023 included a $1.1 million gain on the sale of shares of VISA B stock, offset by $2.9 million of losses on the sale of investment securities. Results for the first quarter of 2023 included $0.6 million of losses on the sale of investment securities. There were no adjustments to the financial results for the first quarter of 2024.
Excluding these transactions, adjusted earnings available to common shareholders were $19.8 million and $20.0 million, or $0.89 and $0.88 per diluted share, for the fourth and first quarters of 2023, respectively.
Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “Our first quarter reflects strong pre-tax, pre-provision results and our ongoing ability to deliver increased fee income and strong expense control. While our pre-tax pre-provision results generate solid profitability we did increase our reserves to reflect an increase in nonperforming loans. Our continued success in executing on our balance sheet management strategies resulted in the improvement in our loan-to-deposit ratio, tangible book value per share, and all of our capital ratios improved in the first quarter, even after the additional provision for credit losses.
“We continue to focus on high quality commercial relationships and our conservative approach to new loan production, including through the intentional runoff of equipment finance and consumer loans. We also continue to have success in growing our wealth management business, which contributed to the increase we had in non-interest income in the first quarter.
1
“As always, we continue to operate with a long-term perspective, and while we will maintain disciplined expense control, we will continue to invest in areas such as banking and wealth talent and technology that we believe will further strengthen our franchise and enhance our ability to continue creating long-term value for our shareholders,” said Mr. Ludwig.
Balance Sheet Highlights
Total assets were $7.83 billion at March 31, 2024, compared to $7.87 billion at December 31, 2023, and $7.93 billion at March 31, 2023. At March 31, 2024, portfolio loans were $5.96 billion, compared to $6.13 billion at December 31, 2023, and $6.35 billion at March 31, 2023.
Loans
During the first quarter of 2024, outstanding loans declined by $172.6 million, or 2.8%, from December 31, 2023, as the Company continued to originate loans in a more selective and deliberate approach to balance liquidity and funding costs. Increases in commercial FHA warehouse lines and construction and land development loans of $8.0 million and $21.5 million, respectively, were offset by decreases in all other loan categories. Equipment finance loan and lease balances decreased $54.5 million during the first quarter of 2024 as the Company continued to reduce its concentration of this product within the overall loan portfolio. Consumer loans decreased $98.1 million due to loan payoffs and a cessation in loans originated through GreenSky. Our Greensky-originated loan balances decreased $77.7 million during the first quarter to $606.0 million at March 31, 2024. In addition, as previously disclosed, during the fourth quarter of 2023, the Company ceased originating loans through LendingPoint. As of March 31, 2024, the Company had $112.7 million in loans that were originated through LendingPoint, which will continue to be serviced by LendingPoint.
| As of | ||||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| (in thousands) | 2024 | 2023 | 2023 | 2023 | 2023 | |||||||||||||||||||||||||||
| Loan Portfolio | ||||||||||||||||||||||||||||||||
| Commercial loans | $ | 913,564 | $ | 951,387 | $ | 943,761 | $ | 962,756 | $ | 937,920 | ||||||||||||||||||||||
| Equipment finance loans | 494,068 | 531,143 | 578,931 | 614,633 | 632,205 | |||||||||||||||||||||||||||
| Equipment finance leases | 455,879 | 473,350 | 485,460 | 500,485 | 510,029 | |||||||||||||||||||||||||||
| Commercial FHA warehouse lines | 8,035 | — | 48,547 | 30,522 | 10,275 | |||||||||||||||||||||||||||
| Total commercial loans and leases | 1,871,546 | 1,955,880 | 2,056,699 | 2,108,396 | 2,090,429 | |||||||||||||||||||||||||||
| Commercial real estate | 2,397,113 | 2,406,845 | 2,412,164 | 2,443,995 | 2,448,158 | |||||||||||||||||||||||||||
| Construction and land development | 474,128 | 452,593 | 416,801 | 366,631 | 326,836 | |||||||||||||||||||||||||||
| Residential real estate | 378,583 | 380,583 | 375,211 | 371,486 | 369,910 | |||||||||||||||||||||||||||
| Consumer | 837,092 | 935,178 | 1,020,008 | 1,076,836 | 1,118,938 | |||||||||||||||||||||||||||
| Total loans | $ | 5,958,462 | $ | 6,131,079 | $ | 6,280,883 | $ | 6,367,344 | $ | 6,354,271 | ||||||||||||||||||||||
Loan Quality
Overall, credit quality metrics declined this quarter compared to the fourth quarter of 2023. Non-performing loans increased $48.6 million to $105.0 million at March 31, 2024, compared to $56.4 million as of December 31, 2023. Four loans totaling $47.4 million account for the increase. Of these, three loans totaling $40.8 million are multi-family construction or multi-family projects. Loans 30-89 days past due decreased $23.9 million to $58.9 million as of March 31, 2024, compared to prior quarter end, as loans totaling $25.1 million were transferred to nonperforming status.
2
At March 31, 2023, loans 30-89 days past due totaled $30.9 million, non-performing loans were $50.7 million, and non-performing assets as a percentage of total assets were 0.74%.
| As of and for the Three Months Ended | ||||||||||||||||||||||||||||||||
| (in thousands) | March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||||||||||
| 2024 | 2023 | 2023 | 2023 | 2023 | ||||||||||||||||||||||||||||
| Asset Quality | ||||||||||||||||||||||||||||||||
| Loans 30-89 days past due | $ | 58,854 | $ | 82,778 | $ | 46,608 | $ | 44,161 | $ | 30,895 | ||||||||||||||||||||||
| Nonperforming loans | 104,979 | 56,351 | 55,981 | 54,844 | 50,713 | |||||||||||||||||||||||||||
| Nonperforming assets | 116,721 | 67,701 | 58,677 | 57,688 | 58,806 | |||||||||||||||||||||||||||
| Substandard loans | 149,049 | 184,224 | 143,793 | 130,707 | 99,819 | |||||||||||||||||||||||||||
| Net charge-offs | 4,445 | 5,117 | 3,449 | 2,996 | 2,119 | |||||||||||||||||||||||||||
| Loans 30-89 days past due to total loans | 0.99 | % | 1.35 | % | 0.74 | % | 0.69 | % | 0.49 | % | ||||||||||||||||||||||
| Nonperforming loans to total loans | 1.76 | % | 0.92 | % | 0.89 | % | 0.86 | % | 0.80 | % | ||||||||||||||||||||||
| Nonperforming assets to total assets | 1.49 | % | 0.86 | % | 0.74 | % | 0.72 | % | 0.74 | % | ||||||||||||||||||||||
| Allowance for credit losses to total loans | 1.31 | % | 1.12 | % | 1.06 | % | 1.02 | % | 0.98 | % | ||||||||||||||||||||||
| Allowance for credit losses to nonperforming loans | 74.35 | % | 121.56 | % | 119.09 | % | 118.43 | % | 122.39 | % | ||||||||||||||||||||||
| Net charge-offs to average loans | 0.30 | % | 0.33 | % | 0.22 | % | 0.19 | % | 0.14 | % | ||||||||||||||||||||||
The Company continued to increase its allowance for credit losses on loans during the first quarter of 2024. Notably, the Company recorded a specific reserve of $8.0 million on one large construction and land development loan. The allowance totaled $78.1 million at March 31, 2024, compared to $68.5 million at December 31, 2023, and $62.1 million at March 31, 2023. The allowance as a percentage of portfolio loans was 1.31% at March 31, 2024, compared to 1.12% at December 31, 2023, and 0.98% at March 31, 2023.
Deposits
Total deposits were $6.32 billion at March 31, 2024, compared with $6.31 billion at December 31, 2023, representing an increase of $14.5 million, primarily due to increases in noninterest bearing demand deposits and brokered time deposits, which were partially offset by seasonal outflows of servicing and public fund deposits. Noninterest-bearing deposits increased $67.0 million to $1.21 billion at March 31, 2024, while interest-bearing deposits decreased $52.5 million to $5.11 billion at March 31, 2024. Brokered time deposits increased $93.7 million to offset seasonal outflows of the servicing and public fund deposits.
| As of | ||||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| (in thousands) | 2024 | 2023 | 2023 | 2023 | 2023 | |||||||||||||||||||||||||||
| Deposit Portfolio | ||||||||||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 1,212,382 | $ | 1,145,395 | $ | 1,154,515 | $ | 1,162,909 | $ | 1,215,758 | ||||||||||||||||||||||
| Interest-bearing: | ||||||||||||||||||||||||||||||||
| Checking | 2,394,163 | 2,511,840 | 2,572,224 | 2,499,693 | 2,502,827 | |||||||||||||||||||||||||||
| Money market | 1,128,463 | 1,135,629 | 1,090,962 | 1,226,470 | 1,263,813 | |||||||||||||||||||||||||||
| Savings | 555,552 | 559,267 | 582,359 | 624,005 | 636,832 | |||||||||||||||||||||||||||
| Time | 845,190 | 862,865 | 885,858 | 840,734 | 766,884 | |||||||||||||||||||||||||||
| Brokered time | 188,234 | 94,533 | 119,084 | 72,737 | 39,087 | |||||||||||||||||||||||||||
| Total deposits | $ | 6,323,984 | $ | 6,309,529 | $ | 6,405,002 | $ | 6,426,548 | $ | 6,425,201 | ||||||||||||||||||||||
3
Results of Operations Highlights
Net Interest Income and Margin
During the first quarter of 2024, net interest income, on a tax-equivalent basis, totaled $56.1 million, a decrease of $2.1 million, or 3.6%, compared to $58.3 million for the fourth quarter of 2023. The tax-equivalent net interest margin for the first quarter of 2024 was 3.18%, compared with 3.21% in the fourth quarter of 2023. Net interest income and net interest margin, on a tax-equivalent basis, were $60.7 million and 3.39%, respectively, in the first quarter of 2023. The declines in the net interest income and margin were largely attributable to increased market interest rates resulting in the cost of funding liabilities increasing at a faster rate than the yield on earning assets, as well as the impact of interest reversals on loans placed on non-accrual.
Average interest-earning assets for the first quarter of 2024 were $7.11 billion, compared to $7.20 billion for the fourth quarter of 2023. The yield decreased 2 basis points to 5.76% compared to the fourth quarter of 2023. Interest-earning assets averaged $7.26 billion for the first quarter of 2023.
Average loans were $6.01 billion for the first quarter of 2024, compared to $6.20 billion for the fourth quarter of 2023 and $6.32 billion for the first quarter of 2023. The yield on loans was 5.99% and 6.00% for the first quarter of 2024 and the fourth quarter of 2023, respectively.
Investment securities averaged $988.7 million for the first quarter of 2024, and yielded 4.36%, compared to an average balance and yield of $883.2 million and 4.16%, respectively, for the fourth quarter of 2023. The Company purchased additional higher-yielding investments resulting in the increased average balance and yield. Investment securities averaged $809.8 million for the first quarter of 2023.
Average interest-bearing deposits were $5.20 billion for the first quarter of 2024, compared to $5.30 billion for the fourth quarter of 2023, and $5.05 billion for the first quarter of 2023. Cost of interest-bearing deposits was 3.04% in the first quarter of 2024, which represented an 11 basis point increase from the fourth quarter of 2023. A competitive market, driven by rising interest rates and increased competition, contributed to the increase in deposit costs.
4
| For the Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2024 | 2023 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets | Average Balance | Interest & Fees | Yield/Rate | Average Balance | Interest & Fees | Yield/Rate | Average Balance | Interest & Fees | Yield/Rate | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 69,316 | $ | 951 | 5.52 | % | $ | 77,363 | $ | 1,054 | 5.41 | % | $ | 85,123 | $ | 980 | 4.67 | % | ||||||||||||||||||||||||||||||||||||||
| Investment securities | 988,716 | 10,708 | 4.36 | 883,153 | 9,257 | 4.16 | 809,848 | 5,995 | 3.00 | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans | 6,012,032 | 89,489 | 5.99 | 6,196,362 | 93,757 | 6.00 | 6,320,402 | 87,997 | 5.65 | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans held for sale | 3,405 | 55 | 6.56 | 4,429 | 81 | 7.26 | 1,506 | 16 | 4.41 | |||||||||||||||||||||||||||||||||||||||||||||||
| Nonmarketable equity securities | 35,927 | 687 | 7.69 | 41,192 | 715 | 6.89 | 47,819 | 795 | 6.75 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | $ | 7,109,396 | $ | 101,890 | 5.76 | % | $ | 7,202,499 | $ | 104,864 | 5.78 | % | $ | 7,264,698 | $ | 95,783 | 5.35 | % | ||||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 671,671 | 695,293 | 610,811 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 7,781,067 | $ | 7,897,792 | $ | 7,875,509 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-Bearing Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | $ | 5,195,118 | $ | 39,214 | 3.04 | % | $ | 5,295,296 | $ | 39,156 | 2.93 | % | $ | 5,053,941 | $ | 26,405 | 2.12 | % | ||||||||||||||||||||||||||||||||||||||
| Short-term borrowings | 65,182 | 836 | 5.16 | 13,139 | 15 | 0.47 | 38,655 | 25 | 0.26 | |||||||||||||||||||||||||||||||||||||||||||||||
| FHLB advances & other borrowings | 313,121 | 3,036 | 3.90 | 430,207 | 4,750 | 4.38 | 540,278 | 6,006 | 4.51 | |||||||||||||||||||||||||||||||||||||||||||||||
| Subordinated debt | 93,583 | 1,280 | 5.50 | 93,512 | 1,281 | 5.43 | 99,812 | 1,370 | 5.57 | |||||||||||||||||||||||||||||||||||||||||||||||
| Trust preferred debentures | 50,707 | 1,389 | 11.02 | 50,541 | 1,402 | 11.00 | 50,047 | 1,229 | 9.96 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 5,717,711 | $ | 45,755 | 3.22 | % | $ | 5,882,695 | $ | 46,604 | 3.14 | % | $ | 5,782,733 | $ | 35,035 | 2.46 | % | ||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 1,151,542 | 1,142,062 | 1,250,899 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 121,908 | 108,245 | 74,691 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 789,906 | 764,790 | 767,186 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholder’s equity | $ | 7,781,067 | $ | 7,897,792 | $ | 7,875,509 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Interest Margin | $ | 56,135 | 3.18 | % | $ | 58,260 | 3.21 | % | $ | 60,748 | 3.39 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Cost of Deposits | 2.49 | % | 2.41 | % | 1.70 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Interest income and average rates for tax-exempt loans and investment securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.2 million for each of the three months ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively.
Noninterest Income
Noninterest income was $21.2 million for the first quarter of 2024, compared to $20.5 million for the fourth quarter of 2023. Noninterest income for the first quarter of 2024 included incremental servicing revenues of $3.7 million related to the Greensky portfolio. Noninterest income for the fourth quarter of 2023 included incremental servicing revenues of $2.2 million and $1.6 million related to our commercial FHA servicing portfolio and the Greensky portfolio, respectively. Also included was a $1.1 million one-time gain from the sale of Visa B stock, offset by $2.9 million of losses on the sale of investment securities. The first quarter of 2023 included $0.6 million of losses on the sale of investment securities.
5
Excluding these transactions, noninterest income for the first quarter of 2024, the fourth quarter of 2023, and the first quarter of 2023 was $17.5 million, $18.5 million, and $16.4 million, respectively.
| For the Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| (in thousands) | 2024 | 2023 | 2023 | |||||||||||||||||
| Noninterest income | ||||||||||||||||||||
| Wealth management revenue | $ | 7,132 | $ | 6,604 | $ | 6,411 | ||||||||||||||
| Service charges on deposit accounts | 3,116 | 3,246 | 2,745 | |||||||||||||||||
| Interchange revenue | 3,358 | 3,585 | 3,412 | |||||||||||||||||
| Residential mortgage banking revenue | 527 | 451 | 405 | |||||||||||||||||
| Income on company-owned life insurance | 1,801 | 1,753 | 876 | |||||||||||||||||
| Loss on sales of investment securities, net | — | (2,894) | (648) | |||||||||||||||||
| Other income | 5,253 | 7,768 | 2,578 | |||||||||||||||||
| Total noninterest income | $ | 21,187 | $ | 20,513 | $ | 15,779 | ||||||||||||||
Wealth management revenue totaled $7.1 million in the first quarter of 2024, an increase of $0.5 million, or 8.0%, as compared to the fourth quarter of 2023. Assets under administration increased to $3.89 billion at March 31, 2024 from $3.73 billion at December 31, 2023, primarily due to improved market performance, resulting in an increase in revenue. In addition, the first quarter fees included seasonal tax preparation fees. Assets under administration totaled $3.50 billion at March 31, 2023.
Noninterest Expense
Noninterest expense was $44.9 million in the first quarter of 2024, compared to $44.5 million in both the fourth quarter of 2023, and the first quarter of 2023. The efficiency ratio increased to 58.03% for the quarter ended March 31, 2024, compared to 55.22% for the quarter ended December 31, 2023, and 57.64% for the quarter ended March 31, 2023.
| For the Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| (in thousands) | 2024 | 2023 | 2023 | |||||||||||||||||
| Noninterest expense | ||||||||||||||||||||
| Salaries and employee benefits | $ | 24,102 | $ | 24,031 | $ | 24,243 | ||||||||||||||
| Occupancy and equipment | 4,142 | 3,934 | 4,443 | |||||||||||||||||
| Data processing | 6,722 | 6,963 | 6,311 | |||||||||||||||||
| Professional services | 2,255 | 2,072 | 1,760 | |||||||||||||||||
| Amortization of intangible assets | 1,089 | 1,130 | 1,291 | |||||||||||||||||
| FDIC insurance | 1,274 | 1,147 | 1,329 | |||||||||||||||||
| Other expense | 5,283 | 5,211 | 5,105 | |||||||||||||||||
| Total noninterest expense | $ | 44,867 | $ | 44,488 | $ | 44,482 | ||||||||||||||
Income Tax Expense
Income tax expense was $4.4 million for the first quarter of 2024, as compared to $6.4 million for the fourth quarter of 2023 and $6.9 million for the first quarter of 2023. The resulting effective tax rates were 23.9%, 23.7% and 24.0%, respectively.
6
Capital
At March 31, 2024, 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:
As of March 31, 2024 | |||||||||||||||||
| Midland States Bank | Midland States Bancorp, Inc. | Minimum Regulatory Requirements (2) | |||||||||||||||
| Total capital to risk-weighted assets | 12.77% | 13.68% | 10.50% | ||||||||||||||
| Tier 1 capital to risk-weighted assets | 11.62% | 11.16% | 8.50% | ||||||||||||||
| Tier 1 leverage ratio | 10.33% | 9.92% | 4.00% | ||||||||||||||
| Common equity Tier 1 capital | 11.62% | 8.60% | 7.00% | ||||||||||||||
Tangible common equity to tangible assets (1) | N/A | 6.58% | N/A | ||||||||||||||
(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%.
The impact of rising interest rates on the Company’s investment portfolio and cash flow hedges resulted in an $81.4 million accumulated other comprehensive loss at March 31, 2024, which reduces tangible book value by $3.79 per share.
Stock Repurchase Program
As previously disclosed, on December 5, 2023, the Company’s board of directors authorized a new share repurchase program, pursuant to which the Company is authorized to repurchase up to $25.0 million of common stock through December 31, 2024. During the first quarter of 2024, the Company repurchased 73,781 shares of its common stock at a weighted average price of $26.31 under its stock repurchase program.
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, 2024, the Company had total assets of approximately $7.83 billion, and its Wealth Management Group had assets under administration of approximately $3.89 billion. The Company provides a full range of commercial and consumer banking products and services and 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 Earnings Available to Common Shareholders,” “Adjusted Diluted Earnings Per Common Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Adjusted Pre-Tax, Pre-Provision Earnings,” “Adjusted Pre-Tax, Pre-Provision Return on Average Assets,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share,” “Tangible Book Value Per Share excluding Accumulated Other Comprehensive
7
Income,” 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, the measures in this press release 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, the impact of inflation, continuing effects of the failures of Silicon Valley Bank and Signature Bank, increased deposit volatility and potential regulatory developments; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; changes to U.S. tax laws, regulations and guidance; 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
8
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) | ||||||||||||||||||||
| As of and for the Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| (dollars in thousands, except per share data) | 2024 | 2023 | 2023 | |||||||||||||||||
| Earnings Summary | ||||||||||||||||||||
| Net interest income | $ | 55,920 | $ | 58,077 | $ | 60,504 | ||||||||||||||
| Provision for credit losses | 14,000 | 6,950 | 3,135 | |||||||||||||||||
| Noninterest income | 21,187 | 20,513 | 15,779 | |||||||||||||||||
| Noninterest expense | 44,867 | 44,488 | 44,482 | |||||||||||||||||
| Income before income taxes | 18,240 | 27,152 | 28,666 | |||||||||||||||||
| Income taxes | 4,355 | 6,441 | 6,894 | |||||||||||||||||
| Net income | 13,885 | 20,711 | 21,772 | |||||||||||||||||
| Preferred dividends | 2,228 | 2,228 | 2,228 | |||||||||||||||||
| Net income available to common shareholders | $ | 11,657 | $ | 18,483 | $ | 19,544 | ||||||||||||||
| Diluted earnings per common share | $ | 0.53 | $ | 0.84 | $ | 0.86 | ||||||||||||||
| Weighted average common shares outstanding - diluted | 21,787,691 | 21,822,328 | 22,501,970 | |||||||||||||||||
| Return on average assets | 0.72 | % | 1.04 | % | 1.12 | % | ||||||||||||||
| Return on average shareholders' equity | 7.07 | % | 10.74 | % | 11.51 | % | ||||||||||||||
Return on average tangible common equity (1) | 9.34 | % | 15.41 | % | 16.70 | % | ||||||||||||||
| Net interest margin | 3.18 | % | 3.21 | % | 3.39 | % | ||||||||||||||
Efficiency ratio (1) | 58.03 | % | 55.22 | % | 57.64 | % | ||||||||||||||
Adjusted Earnings Performance Summary (1) | ||||||||||||||||||||
| Adjusted earnings available to common shareholders | $ | 11,657 | $ | 19,793 | $ | 20,017 | ||||||||||||||
| Adjusted diluted earnings per common share | $ | 0.53 | $ | 0.89 | $ | 0.88 | ||||||||||||||
| Adjusted return on average assets | 0.72 | % | 1.11 | % | 1.15 | % | ||||||||||||||
| Adjusted return on average shareholders' equity | 7.07 | % | 11.42 | % | 11.76 | % | ||||||||||||||
| Adjusted return on average tangible common equity | 9.34 | % | 16.51 | % | 17.11 | % | ||||||||||||||
| Adjusted pre-tax, pre-provision earnings | $ | 32,240 | $ | 35,898 | $ | 32,449 | ||||||||||||||
| Adjusted pre-tax, pre-provision return on average assets | 1.67 | % | 1.80 | % | 1.67 | % | ||||||||||||||
| Market Data | ||||||||||||||||||||
| Book value per share at period end | $ | 31.67 | $ | 31.61 | $ | 30.08 | ||||||||||||||
Tangible book value per share at period end (1) | $ | 23.44 | $ | 23.35 | $ | 21.87 | ||||||||||||||
Tangible book value per share excluding accumulated other comprehensive income at period end (1) | $ | 27.23 | $ | 26.91 | $ | 25.39 | ||||||||||||||
| Market price at period end | $ | 25.13 | $ | 27.56 | $ | 21.42 | ||||||||||||||
| Common shares outstanding at period end | 21,485,231 | 21,551,402 | 22,111,454 | |||||||||||||||||
| Capital | ||||||||||||||||||||
| Total capital to risk-weighted assets | 13.68 | % | 13.20 | % | 12.46 | % | ||||||||||||||
| Tier 1 capital to risk-weighted assets | 11.16 | % | 10.91 | % | 10.25 | % | ||||||||||||||
| Tier 1 common capital to risk-weighted assets | 8.60 | % | 8.40 | % | 7.84 | % | ||||||||||||||
| Tier 1 leverage ratio | 9.92 | % | 9.71 | % | 9.54 | % | ||||||||||||||
Tangible common equity to tangible assets (1) | 6.58 | % | 6.55 | % | 6.24 | % | ||||||||||||||
| Wealth Management | ||||||||||||||||||||
| Trust assets under administration | $ | 3,888,219 | $ | 3,733,355 | $ | 3,502,635 | ||||||||||||||
(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures.
9
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||||||||||||||
| As of | ||||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| (in thousands) | 2024 | 2023 | 2023 | 2023 | 2023 | |||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 167,316 | $ | 135,061 | $ | 132,132 | $ | 160,695 | $ | 138,310 | ||||||||||||||||||||||
| Investment securities | 1,044,900 | 920,396 | 839,344 | 887,003 | 821,005 | |||||||||||||||||||||||||||
| Loans | 5,958,462 | 6,131,079 | 6,280,883 | 6,367,344 | 6,354,271 | |||||||||||||||||||||||||||
| Allowance for credit losses on loans | (78,057) | (68,502) | (66,669) | (64,950) | (62,067) | |||||||||||||||||||||||||||
| Total loans, net | 5,880,405 | 6,062,577 | 6,214,214 | 6,302,394 | 6,292,204 | |||||||||||||||||||||||||||
| Loans held for sale | 5,043 | 3,811 | 6,089 | 5,632 | 2,747 | |||||||||||||||||||||||||||
| Premises and equipment, net | 81,831 | 82,814 | 82,741 | 81,006 | 80,582 | |||||||||||||||||||||||||||
| Other real estate owned | 8,920 | 9,112 | 480 | 202 | 6,729 | |||||||||||||||||||||||||||
| Loan servicing rights, at lower of cost or fair value | 19,577 | 20,253 | 20,933 | 21,611 | 1,117 | |||||||||||||||||||||||||||
| Commercial FHA mortgage loan servicing rights held for sale | — | — | — | — | 20,745 | |||||||||||||||||||||||||||
| Goodwill | 161,904 | 161,904 | 161,904 | 161,904 | 161,904 | |||||||||||||||||||||||||||
| Other intangible assets, net | 15,019 | 16,108 | 17,238 | 18,367 | 19,575 | |||||||||||||||||||||||||||
| Company-owned life insurance | 205,286 | 203,485 | 201,750 | 152,210 | 151,319 | |||||||||||||||||||||||||||
| Other assets | 241,608 | 251,347 | 292,460 | 243,697 | 233,937 | |||||||||||||||||||||||||||
| Total assets | $ | 7,831,809 | $ | 7,866,868 | $ | 7,969,285 | $ | 8,034,721 | $ | 7,930,174 | ||||||||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 1,212,382 | $ | 1,145,395 | $ | 1,154,515 | $ | 1,162,909 | $ | 1,215,758 | ||||||||||||||||||||||
| Interest-bearing deposits | 5,111,602 | 5,164,134 | 5,250,487 | 5,263,639 | 5,209,443 | |||||||||||||||||||||||||||
| Total deposits | 6,323,984 | 6,309,529 | 6,405,002 | 6,426,548 | 6,425,201 | |||||||||||||||||||||||||||
| Short-term borrowings | 214,446 | 34,865 | 17,998 | 21,783 | 31,173 | |||||||||||||||||||||||||||
| FHLB advances and other borrowings | 255,000 | 476,000 | 538,000 | 575,000 | 482,000 | |||||||||||||||||||||||||||
| Subordinated debt | 93,617 | 93,546 | 93,475 | 93,404 | 99,849 | |||||||||||||||||||||||||||
| Trust preferred debentures | 50,790 | 50,616 | 50,457 | 50,296 | 50,135 | |||||||||||||||||||||||||||
| Other liabilities | 102,966 | 110,459 | 106,743 | 90,869 | 66,173 | |||||||||||||||||||||||||||
| Total liabilities | 7,040,803 | 7,075,015 | 7,211,675 | 7,257,900 | 7,154,531 | |||||||||||||||||||||||||||
| Total shareholders’ equity | 791,006 | 791,853 | 757,610 | 776,821 | 775,643 | |||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 7,831,809 | $ | 7,866,868 | $ | 7,969,285 | $ | 8,034,721 | $ | 7,930,174 | ||||||||||||||||||||||
10
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| (in thousands, except per share data) | 2024 | 2023 | 2023 | |||||||||||||||||
| Net interest income: | ||||||||||||||||||||
| Interest income | $ | 101,675 | $ | 104,681 | $ | 95,539 | ||||||||||||||
| Interest expense | 45,755 | 46,604 | 35,035 | |||||||||||||||||
| Net interest income | 55,920 | 58,077 | 60,504 | |||||||||||||||||
| Provision for credit losses on loans | 14,000 | 6,950 | 3,135 | |||||||||||||||||
| Net interest income after provision for credit losses | 41,920 | 51,127 | 57,369 | |||||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Wealth management revenue | 7,132 | 6,604 | 6,411 | |||||||||||||||||
| Service charges on deposit accounts | 3,116 | 3,246 | 2,745 | |||||||||||||||||
| Interchange revenue | 3,358 | 3,585 | 3,412 | |||||||||||||||||
| Residential mortgage banking revenue | 527 | 451 | 405 | |||||||||||||||||
| Income on company-owned life insurance | 1,801 | 1,753 | 876 | |||||||||||||||||
| Loss on sales of investment securities, net | — | (2,894) | (648) | |||||||||||||||||
| Other income | 5,253 | 7,768 | 2,578 | |||||||||||||||||
| Total noninterest income | 21,187 | 20,513 | 15,779 | |||||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Salaries and employee benefits | 24,102 | 24,031 | 24,243 | |||||||||||||||||
| Occupancy and equipment | 4,142 | 3,934 | 4,443 | |||||||||||||||||
| Data processing | 6,722 | 6,963 | 6,311 | |||||||||||||||||
| Professional services | 2,255 | 2,072 | 1,760 | |||||||||||||||||
| Amortization of intangible assets | 1,089 | 1,130 | 1,291 | |||||||||||||||||
| FDIC insurance | 1,274 | 1,147 | 1,329 | |||||||||||||||||
| Other expense | 5,283 | 5,211 | 5,105 | |||||||||||||||||
| Total noninterest expense | 44,867 | 44,488 | 44,482 | |||||||||||||||||
| Income before income taxes | 18,240 | 27,152 | 28,666 | |||||||||||||||||
| Income taxes | 4,355 | 6,441 | 6,894 | |||||||||||||||||
| Net income | 13,885 | 20,711 | 21,772 | |||||||||||||||||
| Preferred stock dividends | 2,228 | 2,228 | 2,228 | |||||||||||||||||
| Net income available to common shareholders | $ | 11,657 | $ | 18,483 | $ | 19,544 | ||||||||||||||
| Basic earnings per common share | $ | 0.53 | $ | 0.84 | $ | 0.86 | ||||||||||||||
| Diluted earnings per common share | $ | 0.53 | $ | 0.84 | $ | 0.86 | ||||||||||||||
11
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) | ||||||||||||||||||||
| Adjusted Earnings Reconciliation | ||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| (dollars in thousands, except per share data) | 2024 | 2023 | 2023 | |||||||||||||||||
| Income before income taxes - GAAP | $ | 18,240 | $ | 27,152 | $ | 28,666 | ||||||||||||||
| Adjustments to noninterest income: | ||||||||||||||||||||
| Loss on sales of investment securities, net | — | 2,894 | 648 | |||||||||||||||||
| (Gain) on sale of Visa B shares | — | (1,098) | — | |||||||||||||||||
| Total adjustments to noninterest income | — | 1,796 | 648 | |||||||||||||||||
| Adjusted earnings pre tax - non-GAAP | 18,240 | 28,948 | 29,314 | |||||||||||||||||
| Adjusted earnings tax | 4,355 | 6,927 | 7,069 | |||||||||||||||||
| Adjusted earnings - non-GAAP | 13,885 | 22,021 | 22,245 | |||||||||||||||||
| Preferred stock dividends | 2,228 | 2,228 | 2,228 | |||||||||||||||||
| Adjusted earnings available to common shareholders | $ | 11,657 | $ | 19,793 | $ | 20,017 | ||||||||||||||
| Adjusted diluted earnings per common share | $ | 0.53 | $ | 0.89 | $ | 0.88 | ||||||||||||||
| Adjusted return on average assets | 0.72 | % | 1.11 | % | 1.15 | % | ||||||||||||||
| Adjusted return on average shareholders' equity | 7.07 | % | 11.42 | % | 11.76 | % | ||||||||||||||
| Adjusted return on average tangible common equity | 9.34 | % | 16.51 | % | 17.11 | % | ||||||||||||||
| Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation | ||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| (dollars in thousands) | 2024 | 2023 | 2023 | |||||||||||||||||
| Adjusted earnings pre tax - non-GAAP | $ | 18,240 | $ | 28,948 | $ | 29,314 | ||||||||||||||
| Provision for credit losses | 14,000 | 6,950 | 3,135 | |||||||||||||||||
| Adjusted pre-tax, pre-provision earnings - non-GAAP | $ | 32,240 | $ | 35,898 | $ | 32,449 | ||||||||||||||
| Adjusted pre-tax, pre-provision return on average assets | 1.67 | % | 1.80 | % | 1.67 | % | ||||||||||||||
12
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) | ||||||||||||||||||||
| Efficiency Ratio Reconciliation | ||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| (dollars in thousands) | 2024 | 2023 | 2023 | |||||||||||||||||
| Noninterest expense - GAAP | $ | 44,867 | $ | 44,488 | $ | 44,482 | ||||||||||||||
| Net interest income - GAAP | $ | 55,920 | $ | 58,077 | $ | 60,504 | ||||||||||||||
| Effect of tax-exempt income | 215 | 183 | 244 | |||||||||||||||||
| Adjusted net interest income | 56,135 | 58,260 | 60,748 | |||||||||||||||||
| Noninterest income - GAAP | 21,187 | 20,513 | 15,779 | |||||||||||||||||
| Loss on sales of investment securities, net | — | 2,894 | 648 | |||||||||||||||||
| (Gain) on sale of Visa B shares | — | (1,098) | — | |||||||||||||||||
| Adjusted noninterest income | 21,187 | 22,309 | 16,427 | |||||||||||||||||
| Adjusted total revenue | $ | 77,322 | $ | 80,569 | $ | 77,175 | ||||||||||||||
| Efficiency ratio | 58.03 | % | 55.22 | % | 57.64 | % | ||||||||||||||
| Return on Average Tangible Common Equity (ROATCE) | ||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| (dollars in thousands) | 2024 | 2023 | 2023 | |||||||||||||||||
| Net income available to common shareholders | $ | 11,657 | $ | 18,483 | $ | 19,544 | ||||||||||||||
| Average total shareholders' equity—GAAP | $ | 789,906 | $ | 764,790 | $ | 767,186 | ||||||||||||||
| Adjustments: | ||||||||||||||||||||
| Preferred Stock | (110,548) | (110,548) | (110,548) | |||||||||||||||||
| Goodwill | (161,904) | (161,904) | (161,904) | |||||||||||||||||
| Other intangible assets, net | (15,525) | (16,644) | (20,184) | |||||||||||||||||
| Average tangible common equity | $ | 501,929 | $ | 475,694 | $ | 474,550 | ||||||||||||||
| ROATCE | 9.34 | % | 15.41 | % | 16.70 | % | ||||||||||||||
13
| 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 | ||||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| (dollars in thousands, except per share data) | 2024 | 2023 | 2023 | 2023 | 2023 | |||||||||||||||||||||||||||
| Shareholders' Equity to Tangible Common Equity | ||||||||||||||||||||||||||||||||
| Total shareholders' equity—GAAP | $ | 791,006 | $ | 791,853 | $ | 757,610 | $ | 776,821 | $ | 775,643 | ||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||
| Preferred Stock | (110,548) | (110,548) | (110,548) | (110,548) | (110,548) | |||||||||||||||||||||||||||
| Goodwill | (161,904) | (161,904) | (161,904) | (161,904) | (161,904) | |||||||||||||||||||||||||||
| Other intangible assets, net | (15,019) | (16,108) | (17,238) | (18,367) | (19,575) | |||||||||||||||||||||||||||
| Tangible common equity | 503,535 | 503,293 | 467,920 | 486,002 | 483,616 | |||||||||||||||||||||||||||
| Less: Accumulated other comprehensive loss (AOCI) | (81,419) | (76,753) | (101,181) | (84,719) | (77,797) | |||||||||||||||||||||||||||
| Tangible common equity excluding AOCI | $ | 584,954 | $ | 580,046 | $ | 569,101 | $ | 570,721 | $ | 561,413 | ||||||||||||||||||||||
| Total Assets to Tangible Assets: | ||||||||||||||||||||||||||||||||
| Total assets—GAAP | $ | 7,831,809 | $ | 7,866,868 | $ | 7,969,285 | $ | 8,034,721 | $ | 7,930,174 | ||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||
| Goodwill | (161,904) | (161,904) | (161,904) | (161,904) | (161,904) | |||||||||||||||||||||||||||
| Other intangible assets, net | (15,019) | (16,108) | (17,238) | (18,367) | (19,575) | |||||||||||||||||||||||||||
| Tangible assets | $ | 7,654,886 | $ | 7,688,856 | $ | 7,790,143 | $ | 7,854,450 | $ | 7,748,695 | ||||||||||||||||||||||
| Common Shares Outstanding | 21,485,231 | 21,551,402 | 21,594,546 | 21,854,800 | 22,111,454 | |||||||||||||||||||||||||||
| Tangible Common Equity to Tangible Assets | 6.58 | % | 6.55 | % | 6.01 | % | 6.19 | % | 6.24 | % | ||||||||||||||||||||||
| Tangible Book Value Per Share | $ | 23.44 | $ | 23.35 | $ | 21.67 | $ | 22.24 | $ | 21.87 | ||||||||||||||||||||||
| Tangible Book Value Per Share, excluding AOCI | $ | 27.23 | $ | 26.91 | $ | 26.35 | $ | 26.11 | $ | 25.39 | ||||||||||||||||||||||
14
1 Midland States Bancorp, Inc. NASDAQ: MSBI First Quarter 2024 Earnings Presentation
22 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-term goals may be based upon beliefs, expectations and assumptions of the Company’s management, and are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. All statements in this presentation speak only as of the date they are made, and the Company undertakes no obligation to update any statement. A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements including changes in interest rates and other general economic, business and political conditions, the impact of inflation, continuing effects of the failures of Silicon Valley Bank and Signature Bank, increased deposit volatility and potential regulatory developments. These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. Additional information concerning the Company and its businesses, including additional factors that could materially affect the Company’s financial results, are included in the Company’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 measures include “Adjusted Earnings,” "Adjusted Earnings Available to Common Shareholders," “Adjusted Diluted Earnings Per Common Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Adjusted Pre-Tax, Pre-Provision Earnings,” “Adjusted Pre-Tax, Pre-Provision Return on Average Assets,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share,” “Tangible Book Value Per Share excluding Accumulated Other Comprehensive Income,”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 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. Reconciliations of these non-GAAP measures are provided in the Appendix section of this presentation.
33 Company Snapshot Financial Highlights as of March 31, 2024 $7.8 Billion Total Assets $6.0 Billion Total Loans $6.3 Billion Total Deposits $3.9 Billion Assets Under Administration YTD Adjusted ROAA(1): 0.72% YTD Adjusted Return on TCE(1): 9.34% TCE/TA: 6.58% YTD PTPP(1) ROAA: 1.67% Dividend Yield: 4.93 % Price/Tangible Book: 1.07x Price/LTM EPS: 9.5x Notes: (1) Represents a non-GAAP financial measure. See “Non-GAAP Reconciliation” in the appendix. Founded in 1881, this Illinois state- chartered community bank focuses on in-market relationships while having national diversification through equipment finance. • 53 Branches in Illinois and Missouri • 16 successful acquisitions since 2008
4 Overview of 1Q24 Solid Financial Performance Continued Success in Balance Sheet Management Strategies Positive Trends Across Key Metrics Prudent Increase in ACL and Decline in Net Charge-Offs 4 • Net income available to common shareholders of $11.7 million, or $0.53 diluted EPS • Pre-tax, pre-provision earnings(1) of $32.2 million • Steady net interest margin of 3.18% • Strong noninterest income of $21.2 million • Disciplined expense control kept noninterest expense consistent with prior quarter • Improvement in loan-to-deposit ratio • Growth in tangible book value per share • Increases in all capital ratios with CET1 ratio increasing 20bps to 8.60% • Growth in wealth management business driving higher levels of noninterest income • Continued growth in noninterest-bearing deposits resulting from new and expanded commercial relationships • Loan portfolio continues to shift towards core in-market C&I and CRE loans • ACL/Total Loans increased to 1.31% from 1.12% • NCOs declined from prior quarter • Increase due to specific reserve of $8.0 million on one multi-family construction project Notes: (1) Represents a non-GAAP financial measure. See “Non-GAAP Reconciliation” in the appendix.
5 Loan Portfolio 5 • Total loans decreased $172.6 million from prior quarter to $5.96 billion • Decrease primarily driven by decline in equipment finance portfolio of $54.5 million, continued runoff of GreenSky portfolio of $77.7 million, and lower C&I line utilization • Decrease in non-core portfolios partially offset by new loan production from high quality commercial clients that provide full banking relationships • Runoff from GreenSky portfolio rotated into investment portfolio Loan Portfolio Mix (in millions, as of quarter-end) 1Q 2024 4Q 2023 1Q 2023 Commercial loans and leases $ 1,872 $ 1,956 $ 2,090 Commercial real estate 2,397 2,407 2,448 Construction and land development 474 453 327 Residential real estate 378 380 370 Consumer 837 935 1,119 Total Loans $ 5,958 $ 6,131 $ 6,354 Total Loans ex. Commercial FHA Lines $ 5,950 $ 6,131 $ 6,344 $6,354 $6,367 $6,281 $6,131 $5,958 5.65% 5.80% 5.93% 6.00% 5.99% Total Loans Average Loan Yield 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 Total Loans and Average Loan Yield (in millions, as of quarter-end)
6 Total Deposits 6 • Total deposits increased $14.5 million from end of prior quarter, primarily due to increases in noninterest-bearing demand and brokered time, partially offset by seasonal outflows of servicing and public funds deposits • Noninterest-bearing deposits increased due to new and expanded commercial and small business relationships and a shift from interest-bearing checking • Short-term brokered deposits added to offset seasonal outflows and reduce other borrowings Deposit Mix (in millions, as of quarter-end) 1Q 2024 4Q 2023 1Q 2023 Noninterest-bearing demand $ 1,212 $ 1,145 $ 1,216 Interest-bearing: Checking $ 2,394 $ 2,512 $ 2,503 Money market $ 1,128 $ 1,136 $ 1,264 Savings $ 556 $ 559 $ 637 Time $ 845 $ 863 $ 767 Brokered time $ 188 $ 95 $ 39 Total Deposits $ 6,324 $ 6,310 $ 6,425 $6,425 $6,427 $6,405 $6,310 $6,324 1.70% 2.09% 2.32% 2.41% 2.49% Total Deposits Cost of Deposits 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 Total Deposits and Cost of Deposits (in millions, as of quarter-end)
7 Deposit Summary as of March 31, 2024 7 Deposits by Channel (in millions, as of quarter-end) 1Q 2024 4Q 2023 1Q 2023 Retail $ 2,768 $ 2,758 $ 2,829 Commercial 1,388 1,392 1,286 Public Funds 516 569 578 Wealth & Trust 324 322 327 Servicing 901 952 1,009 Brokered Deposits 309 210 141 Other 118 107 255 Total Deposits $ 6,324 $ 6,310 $ 6,425 Trend of Deposit Channel Mix (in millions, as of quarter-end) $6,425 $6,427 $6,405 $6,310 $6,324 Retail Commercial Public Funds Wealth & Trust Servicing Brokered Deposits Other 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024
8 6.5% 65.5% 8.6% 5.8% 3.3% 10.3% US GSE & US Agency MBS - agency MBS - non agency State & Muni CLOs Corporate Investment Portfolio As of March 31, 2024 8 Fair Value of Investments by Type • All Investments are classified as Available for Sale • Average T/E Yield is 4.36% for 1Q24 • Average Duration is 4.83 years • Purchased $167 million with T/E Yield of 5.92% and no sales in 1Q24 Investments by Yield and DurationInvestment Mix & Unrealized Gain (Loss) (in millions) Fair Value Book Value Unrealized Gain (Loss) US GSE & US Agency $ 68 $ 69 $ (1) MBS - agency 682 764 (82) MBS - non agency 90 93 (3) State & Municipal 61 67 (6) CLOs 34 34 — Corporate 107 117 (10) Total Investments $ 1,040 $ 1,144 $ (104) Duration Y ie ld 0 1 2 3 4 5 6 7 8 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% $1.04 billion
9 Liquidity Overview 9 Liquidity Sources (in millions) March 31, 2024 December 31, 2023 Cash and Cash Equivalents $ 167.3 $ 135.1 Unpledged Securities 506.2 346.8 FHLB Committed Liquidity 1,167.4 936.0 FRB Discount Window Availability 613.3 699.9 Total Estimated Liquidity $ 2,454.1 $ 2,117.8 Conditional Funding Based on Market Conditions Additional Credit Facility $ 431.0 $ 419.0 Brokered CDs (additional capacity) $ 400.0 $ 500.0
10 3.39% 3.23% 3.20% 3.21% 3.18% 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 $60.5 $58.8 $58.6 $58.1 $55.9 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 Net Interest Income/Margin 10 • Net interest income down slightly from prior quarter due to lower average earning assets • Net interest margin decreased 3bp to 3.18% as the increase in the cost of deposits exceeded the increase in the average yield on earning assets, as well as the impact of interest reversals on loans placed on non-accrual • Average rate on new and renewed loan originations decreased 34bps to 7.88% in 1Q24 from 8.22% in 4Q23 • Net interest margin expected to continue to be relatively stable as loan portfolio continues to reprice and the impact of continued repositioning in the investment portfolio is realized Net Interest Income (in millions) Net Interest Margin
11 Loans & Securities - Repricing and Maturity 11 Total Loans and Leases (net of unearned income)(1) (in millions) As of March 31, 2024 Repricing Term Rate Structure 3 mos or less 3-12 mos 1-3 years 3-5 years 5-10 years 10-15 years Over 15 years Total Floating Rate Adjustable Rate Fixed Rate Commercial loans and leases $ 710 $ 290 $ 539 $ 264 $ 38 $ 4 $ 27 $ 1,872 $ 565 $ 80 $ 1,227 Commercial real estate 707 345 679 427 186 19 34 2,397 517 233 1,647 Construction and land development 296 41 38 71 1 — 27 474 264 39 171 Residential real estate 72 54 77 64 85 20 7 379 52 119 208 Consumer 196 203 418 14 6 — — 837 113 — 724 Total $ 1,981 $ 933 $ 1,751 $ 839 $ 316 $ 43 $ 95 $ 5,958 $ 1,510 $ 471 $ 3,977 % of Total 33 % 16 % 29 % 14 % 5 % 1 % 2 % 100 % 25 % 8 % 67 % Weighted Average Rate 7.59 % 5.59 % 5.24 % 5.35 % 4.59 % 3.75 % 0.22 % (2) 5.97 % 8.16 % 4.78 % 5.27 % Investment Securities Available for Sale(3) (in millions) As of March 31, 2024 Maturity & Projected Cash Flow Distribution 1 year or less 1-3 years 3-5 years 5-10 years Over 10 years Total Amortized Cost $ 180 $ 160 $ 181 $ 330 $ 293 $ 1,144 % of Total 16 % 14 % 16 % 29 % 26 % 100 % Notes: (1) Based on projected principal payments for all loans plus the next reset for floating and adjustable rate loans and the maturity date of fixed rate loans. (2) Over 15 years category includes all nonaccrual loans and leases. (3) Projected principal cash flows for securities. Differences between amortized cost and total principal are included in Over 10 years.
12 Wealth Management 12 • Assets under administration increased mainly due to $97 million of new accounts and positive market performance • Wealth Management fees increased from prior quarter due to increases in estate and tax planning fees from new business development efforts • New technology planned to launch in 2Q24 • Continual hiring of wealth advisors positively impacting new business development Assets Under Administration (in millions) $3,503 $3,595 $3,501 $3,733 $3,888 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 $6.41 $6.27 $6.29 $6.60 $7.13 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 Wealth Management Revenue (in millions)
13 $15.8 $18.8 $11.5 $20.5 $21.2 Wealth Management Interchange Service Charges on Deposits Residential Mortgage All Other 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 Noninterest Income 13 • Noninterest income increased from prior quarter primarily due to higher wealth management revenue • 1Q24 noninterest income included incremental servicing revenues of $3.7 million related to the Greensky portfolio • 4Q23 noninterest income included incremental servicing revenues of $3.8 million and $1.1 million gain from the sale of Visa B stock offset by $2.9 million of losses on the sale of investment securities • Fee income expected to be $18.0 - $18.5 million in the near-term quarters Noninterest Income (in millions)
14 $44.5 $42.9 $42.0 $44.5 $44.9 57.6% 55.0% 55.8% 55.2% 58.0% Total Noninterest Expense Efficiency Ratio 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 Noninterest Expense and Operating Efficiency 14 Noninterest Expense and Efficiency Ratio (1) (Noninterest expense in millions) • Efficiency Ratio (1) was 58.0% in 1Q 2024 vs. 55.2% in 4Q 2023 • Slight increase in noninterest expense from prior quarter primarily attributable to seasonal impact of higher payroll taxes and higher FDIC insurance expense offset by lower health insurance costs in the first quarter • Near-term operating expense run- rate expected to be approximately $45.5 - $46.5 million Notes: (1) Represents a non-GAAP financial measure. See “Non-GAAP Reconciliation” in the appendix.
15 Asset Quality 15 • Nonperforming loans increased due to placement of 4 loans on non-accrual, totaling $47.4 million, 3 of which were multi-family construction or multi-family projects • Past due loans and substandard loans declined during the first quarter • Net charge-offs to average loans was 0.30% primarily driven by equipment finance with provision for credit losses on loans of $14.0 million, primarily related to increases to specific reserves, charge offs in the equipment finance portfolio and changes in forecasts and other Q factors Nonperforming Loans / Total Loans (Total Loans as of quarter-end) NCO / Average Loans 0.80% 0.86% 0.89% 0.92% 1.76% 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 0.14% 0.19% 0.22% 0.33% 0.30% 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024
16 $68,502 $9,459 $982 $(886) $78,057 ACL December 31, 2023 Specific Reserves Portfolio Changes Economic Factors ACL March 31, 2024 Changes in Allowance for Credit Losses 16 ($ in thousands) ▪ Changes to specific reserves ▪ Changes in Loans ▪ Changes in Credit quality including risk rating ▪ Changes in portfolio mix ▪ Aging of existing portfolio ▪ Other charge-offs and recoveries ▪ Change to macro- economic variables and forecasts ▪ Changes to other economic qualitative factors
17 ACL by Portfolio 17 ($ in thousands) March 31, 2024 December 31, 2023 Portfolio Loans ACL % of Total Loans Loans ACL % of Total Loans Commercial $ 813,963 $ 9,135 1.12 % $ 825,938 $ 8,897 1.08 % Commercial Other 601,704 12,194 2.03 % 656,592 12,950 1.97 % Equipment Finance Loans 494,068 11,806 2.39 % 531,143 12,496 2.35 % Equipment Finance Leases 455,879 13,466 2.95 % 473,350 12,940 2.73 % CRE non-owner occupied 1,591,455 13,353 0.84 % 1,622,668 12,716 0.78 % CRE owner occupied 450,149 4,858 1.08 % 436,857 4,742 1.09 % Multi-family 287,586 2,871 1.00 % 279,904 2,398 0.86 % Farmland 67,923 285 0.42 % 67,416 373 0.55 % Construction and Land Development 474,128 12,629 2.66 % 452,593 4,163 0.92 % Residential RE First Lien 316,310 4,986 1.58 % 317,388 4,906 1.55 % Other Residential 62,273 669 1.07 % 63,195 647 1.02 % Consumer 99,157 520 0.52 % 107,743 711 0.66 % Consumer Other(1) 737,935 3,091 0.42 % 827,435 3,059 0.37 % Total Loans 5,958,462 78,057 1.31 % 6,131,079 68,502 1.12 % Loans (excluding BaaS portfolio(1) and warehouse lines) 5,136,557 74,587 1.45 % 5,215,645 65,003 1.25 % Notes: (1) Primarily consists of loans originated through GreenSky relationship
18 2024 Outlook and Priorities 18 • Well positioned with increased levels of capital, liquidity, and reserves • Prudent risk management will remain top priority while economic uncertainty remains with business development efforts focused on adding new commercial and retail deposit relationships throughout our markets • Capitalizing on market disruption resulting from M&A to add new clients and banking talent • Strong financial performance and prudent balance sheet management should lead to further increases in capital ratios • Loan pipeline remains steady and new loan production within the community bank will continue to partially offset the runoff from the GreenSky portfolio and continued intentional reduction of the equipment finance portfolio • Neutral interest rate sensitivity positions Midland well for managing future changes in interest rates • Maintain disciplined expense management while also investing in areas that will enhance the long- term value of the franchise * Improvements in technology platform and additional advisors positively impacting business development in Wealth Management * Expanded presence in higher growth St. Louis market including the addition of a new market president resulting in new commercial, retail and wealth management clients * Banking-as-a-Service initiative expected to start making meaningful contribution to deposit gathering and fee income during 2024
19 APPENDIX 19
2020 Industries as a percentage of Commercial, CRE and Equipment Finance Loans and Leases with outstanding balances of $4.74 billion as of 3/31/2024 ($s in millions) RE/Rental & Leasing $1,673.6 35.3% All Others $567.5 12.0% Skilled Nursing $417.0 8.8% Construction - General $314.3 6.6% Manufacturing $234.2 4.9% Finance and Insurance $267.7 5.6% Accommodation & Food Svcs $238.8 5.0% Trans./Ground Passenger $187.9 4.0% Assisted Living $104.1 2.2% Ag., Forestry, & Fishing $141.9 3.0% General Freight Trucking $191.9 4.0% Retail Trade $168.4 3.5% Wholesale Trade $62.3 1.3% Other Services $102.6 2.2% Commercial Loans and Leases by Industry Health Care $70.5 1.5%
21 Commercial Real Estate Portfolio by Collateral Type 21 CRE Concentration (as of March 31, 2024) CRE as a % of Total Loans 48.2% CRE as a % of Total Risk-Based Capital (1) 263.7% Notes: (1) Represents non-owner occupied CRE loans only Collateral type as a percentage of the Commercial Real Estate and Construction Portfolio with outstanding balances of $2.87 billion as of March 31, 2024 ($s in millions) Skilled Nursing $420.8 14.6% Retail $466.6 16.2% Multi-Family $537.7 18.7% Industrial/Warehouse $218.4 7.6% Assisted Living $128.5 4.5% Hotel/Motel $176.4 6.1% All Other $164.0 5.7% Office $154.3 5.4% Farmland $67.7 2.4% Residential 1-4 Family $89.9 3.1% Raw Land $21.8 0.8% Restaurant $30.4 1.1% Mixed Use/Other $101.1 3.5% Medical Building $103.0 3.6% Special Purpose $110.9 3.9% C-Store/Gas Station $80.0 2.8%
22 Capital Ratios and Strategy 22 • Capital initiatives increased CET1 to 8.60% from 7.77% at 12/31/22 with limited buybacks below TBV • Internal capital generated from strong profitability and slower balance sheet growth expected to raise TCE ratio to 7.00%-7.75% by the end of 2024 • Capital actions and strong profitability expected to enable MSBI to raise capital ratios while maintaining current dividend payout Capital Strategy Capital Ratios (as of March 31, 2024) 6.58% 8.60% 9.92% 11.16% 13.68% 11.62% 10.33% 11.62% 12.77% Consolidated Bank Level TCE/TA Common Eq. Tier 1 Tier 1 Leverage Tier 1 RBC Total RBC
2323 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Tangible Book Value Per Share For the Year Ended (dollars in thousands, except per share data) 2018 2019 2020 2021 2022 2023 Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 608,525 $ 661,911 $ 621,391 $ 663,837 $ 758,574 $ 791,853 Adjustments: Preferred Stock (2,781) — — — (110,548) (110,548) Goodwill (164,673) (171,758) (161,904) (161,904) (161,904) (161,904) Other intangible assets, net (37,376) (34,886) (28,382) (24,374) (20,866) (16,108) Tangible common equity 403,695 455,267 431,105 477,559 465,256 503,293 Less: Accumulated other comprehensive income (AOCI) (2,108) 7,442 11,431 5,237 (83,797) (76,753) Tangible common equity excluding AOCI $ 405,803 $ 447,825 $ 419,674 $ 472,322 $ 549,053 $ 580,046 Common Shares Outstanding 23,751,798 24,420,345 22,325,471 22,050,537 22,214,913 21,551,402 Tangible Book Value Per Share $ 17.00 $ 18.64 $ 19.31 $ 21.66 $ 20.94 $ 23.35 Tangible Book Value Per Share excluding AOCI $ 17.09 $ 18.34 $ 18.80 $ 21.42 $ 24.72 $ 26.91
2424 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For The Year Ended (dollars in thousands, except per share data) 2018 2019 2020 2021 2022 2023 Income before income taxes - GAAP $ 50,805 $ 72,471 $ 32,014 $ 99,112 $ 129,838 $ 107,573 Adjustments to noninterest income: (Gain) on sales of investment securities, net (464) (674) (1,721) (537) 230 9,372 (Gain) on termination of hedged interest rate swaps — — — (2,159) (17,531) — (Gain) on sale of Visa B shares — — — — — (1,098) (Gain) on repurchase of subordinated debt — — — — — (676) Other income (89) 29 17 (48) — — Total adjustments to noninterest income (553) (645) (1,704) (2,744) (17,301) 7,598 Adjustments to noninterest expense: Impairment related to facilities optimization — (3,577) (12,847) — — — (Loss) gain on mortgage servicing rights held for sale (458) 490 (1,692) (222) (3,250) — FHLB advances prepayment fees — — (4,872) (8,536) — — Loss on repurchase of subordinated debt — (1,778) (193) — — — Integration and acquisition expenses (24,015) (5,493) (2,309) (4,356) (347) — Total adjustments to noninterest expense (24,473) (10,358) (21,913) (13,114) (3,597) — Adjusted earnings pre tax - non-GAAP 74,725 82,184 52,223 109,482 116,134 115,171 Adjusted earnings tax 17,962 19,358 12,040 26,261 27,113 29,682 Adjusted earnings - non-GAAP 56,763 62,826 40,183 83,221 89,021 85,489 Preferred stock dividends, net 141 46 — — 3,169 8,913 Adjusted earnings available to common shareholders $ 56,622 $ 62,780 $ 40,183 $ 83,221 $ 85,852 $ 76,576 Adjusted diluted earnings per common share $ 2.39 $ 2.54 $ 1.70 $ 3.65 $ 3.79 $ 3.42 Adjusted return on average tangible common equity 15.00 % 14.44 % 9.24 % 18.33 % 18.59 % 15.98 %
2525 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For The Quarter Ended March 31, December 31, September 30, June 30, March 31, (dollars in thousands, except per share data) 2024 2023 2023 2023 2023 Income before income taxes - GAAP $ 18,240 $ 27,152 $ 22,935 $ 28,820 $ 28,666 Adjustments to noninterest income: Loss on sales of investment securities, net — 2,894 4,961 869 648 (Gain) on termination of hedged interest rate swaps — — — — — (Gain) on sale of Visa B shares (1,098) — — — — (Gain) on repurchase of subordinated debt — — — (676) — Total adjustments to noninterest income — 1,796 4,961 193 648 Adjusted earnings pre tax - non-GAAP 18,240 28,948 27,896 29,013 29,314 Adjusted earnings tax 4,355 6,927 8,389 7,297 7,069 Adjusted earnings - non-GAAP 13,885 22,021 19,507 21,716 22,245 Preferred stock dividends 2,228 2,228 2,229 2,228 2,228 Adjusted earnings available to common shareholders $ 11,657 $ 19,793 $ 17,278 $ 19,488 $ 20,017 Adjusted diluted earnings per common share $ 0.53 $ 0.89 $ 0.78 $ 0.87 $ 0.88 Adjusted return on average assets 0.72 % 1.11 % 0.98 % 1.10 % 1.15 % Adjusted return on average shareholders' equity 7.07 % 11.42 % 10.03 % 11.21 % 11.76 % Adjusted return on average tangible common equity 9.34 % 16.51 % 14.24 % 16.10 % 17.11 % Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation For the Quarter Ended March 31, December 31, September 30, June 30, March 31, (dollars in thousands) 2024 2023 2023 2023 2023 Adjusted earnings pre tax - non-GAAP $ 18,240 $ 28,948 $ 27,896 $ 29,013 $ 29,314 Provision for credit losses 14,000 6,950 5,168 5,879 3,135 Adjusted pre-tax, pre-provision earnings - non-GAAP $ 32,240 $ 35,898 $ 33,064 $ 34,892 $ 32,449 Adjusted pre-tax, pre-provision return on average assets 1.67 % 1.80 % 1.66 % 1.76 % 1.67 %
2626 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) Efficiency Ratio Reconciliation For the Quarter Ended March 31, December 31, September 30, June 30, March 31, 2024 2023 2023 2023 2023 (dollars in thousands) Noninterest expense - GAAP $ 44,867 $ 44,488 $ 42,038 $ 42,894 $ 44,482 Loss on mortgage servicing rights held for sale — — — — — Adjusted noninterest expense $ 44,867 $ 44,488 $ 42,038 $ 42,894 $ 44,482 Net interest income - GAAP $ 55,920 $ 58,077 $ 58,596 $ 58,840 $ 60,504 Effect of tax-exempt income 215 183 205 195 244 Adjusted net interest income 56,135 58,260 58,801 59,035 60,748 Noninterest income - GAAP 21,187 20,513 11,545 18,753 15,779 Loss on sales of investment securities, net — 2,894 4,961 869 648 (Gain) on termination of hedged interest rate swaps — — — — — (Gain) on sale of Visa B shares — (1,098) — — — (Gain) on repurchase of subordinated debt — — — (676) — Adjusted noninterest income 21,187 22,309 16,506 18,946 16,427 Adjusted total revenue $ 77,322 $ 80,569 $ 75,307 $ 77,981 $ 77,175 Efficiency ratio 58.03 % 55.22 % 55.82 % 55.01 % 57.64 %
2727 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 March 31, December 31, September 30, June 30, March 31, (dollars in thousands, except per share data) 2024 2023(1) 2023 2023 2023 Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 791,006 $ 791,853 $ 757,610 $ 776,821 $ 775,643 Adjustments: Preferred Stock (110,548) (110,548) (110,548) (110,548) (110,548) Goodwill (161,904) (161,904) (161,904) (161,904) (161,904) Other intangible assets, net (15,019) (16,108) (17,238) (18,367) (19,575) Tangible common equity $ 503,535 $ 503,293 $ 467,920 $ 486,002 $ 483,616 Less: Accumulated other comprehensive income (AOCI) (81,419) (76,753) (101,181) (84,719) (77,797) Tangible common equity excluding AOCI $ 584,954 $ 580,046 $ 569,101 $ 570,721 $ 561,413 Total Assets to Tangible Assets: Total assets—GAAP $ 7,831,809 $ 7,866,868 $ 7,969,285 $ 8,034,721 $ 7,930,174 Adjustments: Goodwill (161,904) (161,904) (161,904) (161,904) (161,904) Other intangible assets, net (15,019) (16,108) (17,238) (18,367) (19,575) Tangible assets $ 7,654,886 $ 7,688,856 $ 7,790,143 $ 7,854,450 $ 7,748,695 Common Shares Outstanding 21,485,231 21,551,402 21,594,546 21,854,800 22,111,454 Tangible Common Equity to Tangible Assets 6.58 % 6.55 % 6.01 % 6.19 % 6.24 % Tangible Book Value Per Share $ 23.44 $ 23.35 $ 21.67 $ 22.24 $ 21.87 Tangible Book Value Per Share, excluding AOCI $ 27.23 $ 26.91 $ 26.35 $ 26.11 $ 25.39 Return on Average Tangible Common Equity (ROATCE) For the Quarter Ended March 31, December 31, September 30, June 30, March 31, (dollars in thousands) 2024 2023(1) 2023 2023 2023 Net income available to common shareholders $ 11,657 $ 18,483 $ 9,173 $ 19,347 $ 19,544 Average total shareholders' equity—GAAP $ 789,906 $ 764,790 $ 771,625 $ 776,791 $ 767,186 Adjustments: Preferred Stock (110,548) (110,548) (110,548) (110,548) (110,548) Goodwill (161,904) (161,904) (161,904) (161,904) (161,904) Other intangible assets, net (15,525) (16,644) (17,782) (18,937) (20,184) Average tangible common equity $ 501,929 $ 475,694 $ 481,391 $ 485,402 $ 474,550 ROATCE 9.34 % 15.41 % 7.56 % 15.99 % 16.70 %