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): October 24, 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 October 24, 2024 , Midland States Bancorp, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter of 2024. The press release is attached as Exhibit 99.1.
Item 7.01. Regulation FD Disclosure.
On October 24, 2024 , the Company made available on its website a slide presentation regarding the Company's third 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 third 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 Third Quarter Results
Third Quarter 2024 Highlights:
•Net income available to common shareholders of $16.2 million, or $0.74 per diluted share
•Adjusted pre-tax, pre-provision earnings of $27.5 million
•Tangible book value per share increased to $24.90, compared to $23.36 at June 30, 2024
•Common equity tier 1 capital ratio improved to 9.00%, compared to 8.64% at June 30, 2024
•Net interest margin of 3.10%, compared to 3.12% in prior quarter
•Efficiency ratio of 62.8%, compared to 65.2% in prior quarter
Effingham, IL, October 24, 2024 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income available to common shareholders of $16.2 million, or $0.74 per diluted share, for the third quarter of 2024, compared to $4.5 million, or $0.20 per diluted share, for the second quarter of 2024. This also compares to net income available to common shareholders of $9.2 million, or $0.41 per diluted share, for the third quarter of 2023.
Provision expense was $5.0 million in the third quarter of 2024 compared to $16.8 million and $5.2 million in the second quarter of 2024 and the third quarter of 2023, respectively. The elevated provision expense in the second quarter of 2024 was primarily due to credit deterioration and servicing issues involving one of our fintech partners, LendingPoint, subsequent to their system conversion in late 2023.
Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We executed well in the third quarter and delivered a higher level of profitability while making continued progress on our balance sheet management strategies, which resulted in further increases in all of our capital ratios, an increase in our tangible book value per share, and an increase in our level of liquidity with a reduction in our loan-to-deposit ratio. We continue to utilize the payoffs resulting from the intentional reduction of our equipment finance and consumer portfolios to fund high quality loans generated in our community bank and the purchase of investment securities. We are also seeing good results from the investments we have made in the business, such as increasing our presence and business development efforts in the St. Louis market, where our loan balances increased at an annualized rate of 12% during the third quarter, and growth in our Wealth Management revenues due to an increase in assets under administration, partially driven by the new wealth advisors we have added in recent quarters.
Improving our credit quality is a priority and we are taking proactive steps to resolve problem loans in order to reduce our level of non-performing and classified loans going forward. We continue to closely monitor the health of our borrowers and be conservative in downgrading loans where we see the potential for weakness. We also recently added a new Chief Credit Officer whose background and experience is consistent with our increased focus on in-market relationship lending in our community bank, which will continue to result in a higher quality, lower risk loan portfolio.
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“While we will remain conservative in new loan production while economic conditions remain uncertain, we are well positioned to benefit from lower interest rates and we expect positive trends in our net interest margin and revenue generated from our Wealth Management business. While maintaining disciplined expense control, we are continuing to make investments in talent and technology that will further enhance our ability to increase our market share, add attractive new client relationships in our community bank, and generate profitable growth. With the stronger balance sheet we are building, including a Total Capital Ratio of approximately 14%, we believe we are well positioned to support the continued growth of our franchise as economic conditions improve in the future and create additional value for our shareholders in the process,” said Mr. Ludwig.
Balance Sheet Highlights
Total assets were $7.75 billion at September 30, 2024, compared to $7.76 billion at June 30, 2024, and $7.97 billion at September 30, 2023. At September 30, 2024, portfolio loans were $5.75 billion, compared to $5.85 billion at June 30, 2024, and $6.28 billion at September 30, 2023.
Loans
During the third quarter of 2024, outstanding loans declined by $103.2 million, or 1.8%, from June 30, 2024, as the Company continued to shrink its equipment financing and consumer loan portfolios, and focus on commercial loan opportunities in our community banking regions.
Equipment finance loan and lease balances decreased $30.0 million during the third quarter of 2024 as the Company continued to reduce its concentration of this product within the overall loan portfolio. Consumer loans decreased $82.8 million due to loan payoffs and a cessation in loans originated through GreenSky. Our Greensky-originated loan balances decreased $63.0 million during the third quarter to $475.3 million at September 30, 2024. In addition, as previously disclosed, during the fourth quarter of 2023, the Company ceased originating loans through LendingPoint. As of September 30, 2024, the Company had $96.5 million in loans that were originated through and serviced by LendingPoint. Equipment financing and consumer loans comprised 15.0% and 11.5%, respectively, of the loan portfolio at September 30, 2024, compared to 15.2% and 12.7%, respectively, at June 30, 2024.
Increases in commercial FHA warehouse lines and commercial real estate loans of $50.2 million and $89.0 million, respectively, were offset by decreases in all other loan categories.
| As of | ||||||||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||||||||||
| (in thousands) | 2024 | 2024 | 2024 | 2023 | 2023 | |||||||||||||||||||||||||||
| Loan Portfolio | ||||||||||||||||||||||||||||||||
| Commercial loans | $ | 863,922 | $ | 939,458 | $ | 913,564 | $ | 951,387 | $ | 943,761 | ||||||||||||||||||||||
| Equipment finance loans | 442,552 | 461,409 | 494,068 | 531,143 | 578,931 | |||||||||||||||||||||||||||
| Equipment finance leases | 417,531 | 428,659 | 455,879 | 473,350 | 485,460 | |||||||||||||||||||||||||||
| Commercial FHA warehouse lines | 50,198 | — | 8,035 | — | 48,547 | |||||||||||||||||||||||||||
| Total commercial loans and leases | 1,774,203 | 1,829,526 | 1,871,546 | 1,955,880 | 2,056,699 | |||||||||||||||||||||||||||
| Commercial real estate | 2,510,472 | 2,421,505 | 2,397,113 | 2,406,845 | 2,412,164 | |||||||||||||||||||||||||||
| Construction and land development | 422,253 | 476,528 | 474,128 | 452,593 | 416,801 | |||||||||||||||||||||||||||
| Residential real estate | 378,657 | 378,393 | 378,583 | 380,583 | 375,211 | |||||||||||||||||||||||||||
| Consumer | 663,234 | 746,042 | 837,092 | 935,178 | 1,020,008 | |||||||||||||||||||||||||||
| Total loans | $ | 5,748,819 | $ | 5,851,994 | $ | 5,958,462 | $ | 6,131,079 | $ | 6,280,883 | ||||||||||||||||||||||
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Loan Quality
Overall, credit quality metrics remained consistent this quarter compared to the second quarter of 2024, albeit, nonperforming loans were still at elevated levels. Non-performing loans increased $2.4 million to $114.6 million at September 30, 2024, compared to $112.1 million as of June 30, 2024. Substandard loans increased $32.0 million to $167.5 million at September 30, 2024, as compared to June 30, 2024, primarily due to two multi-family projects that were downgraded this past quarter.
| As of and for the Three Months Ended | ||||||||||||||||||||||||||||||||
| (in thousands) | September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||||||||||||
| 2024 | 2024 | 2024 | 2023 | 2023 | ||||||||||||||||||||||||||||
| Asset Quality | ||||||||||||||||||||||||||||||||
| Loans 30-89 days past due | $ | 55,329 | $ | 54,045 | $ | 58,854 | $ | 82,778 | $ | 46,608 | ||||||||||||||||||||||
| Nonperforming loans | 114,556 | 112,124 | 104,979 | 56,351 | 55,981 | |||||||||||||||||||||||||||
| Nonperforming assets | 126,771 | 123,774 | 116,721 | 67,701 | 58,677 | |||||||||||||||||||||||||||
| Substandard loans | 167,549 | 135,555 | 149,049 | 184,224 | 143,793 | |||||||||||||||||||||||||||
| Net charge-offs | 11,379 | 2,874 | 4,445 | 5,117 | 3,449 | |||||||||||||||||||||||||||
| Loans 30-89 days past due to total loans | 0.96 | % | 0.92 | % | 0.99 | % | 1.35 | % | 0.74 | % | ||||||||||||||||||||||
| Nonperforming loans to total loans | 1.99 | % | 1.92 | % | 1.76 | % | 0.92 | % | 0.89 | % | ||||||||||||||||||||||
| Nonperforming assets to total assets | 1.64 | % | 1.60 | % | 1.49 | % | 0.86 | % | 0.74 | % | ||||||||||||||||||||||
| Allowance for credit losses to total loans | 1.49 | % | 1.58 | % | 1.31 | % | 1.12 | % | 1.06 | % | ||||||||||||||||||||||
| Allowance for credit losses to nonperforming loans | 74.90 | % | 82.22 | % | 74.35 | % | 121.56 | % | 119.09 | % | ||||||||||||||||||||||
| Net charge-offs to average loans | 0.78 | % | 0.20 | % | 0.30 | % | 0.33 | % | 0.22 | % | ||||||||||||||||||||||
The allowance for credit losses on loans totaled $85.8 million at September 30, 2024, compared to $92.2 million at June 30, 2024, and $66.7 million at September 30, 2023. The allowance as a percentage of total loans was 1.49% at September 30, 2024, compared to 1.58% at June 30, 2024, and 1.06% at September 30, 2023.
Notably, the Company recognized provision expense of $14.0 million in the second quarter of 2024 related to the loans originated and serviced by LendingPoint, increasing the allowance to $14.6 million on this portfolio. Credit deterioration and servicing issues following their system conversion have resulted in increased losses within this portfolio. In the third quarter of 2024, loans totaling $6.2 million were charged off. At September 30, 2024, the Company had an allowance of $8.3 million on the $96.5 million of loans serviced by LendingPoint.
Deposits
Total deposits were $6.26 billion at September 30, 2024, compared with $6.12 billion at June 30, 2024. Noninterest-bearing deposits decreased $57.9 million to $1.05 billion at September 30, 2024, while interest-bearing deposits increased $196.7 million to $5.21 billion at September 30, 2024. Brokered time
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deposits increased $138.0 million to $269.4 million, and represented 4.31% of total deposits at September 30, 2024.
| As of | ||||||||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||||||||||
| (in thousands) | 2024 | 2024 | 2024 | 2023 | 2023 | |||||||||||||||||||||||||||
| Deposit Portfolio | ||||||||||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 1,050,617 | $ | 1,108,521 | $ | 1,212,382 | $ | 1,145,395 | $ | 1,154,515 | ||||||||||||||||||||||
| Interest-bearing: | ||||||||||||||||||||||||||||||||
| Checking | 2,389,970 | 2,343,533 | 2,394,163 | 2,511,840 | 2,572,224 | |||||||||||||||||||||||||||
| Money market | 1,187,139 | 1,143,668 | 1,128,463 | 1,135,629 | 1,090,962 | |||||||||||||||||||||||||||
| Savings | 510,260 | 538,462 | 555,552 | 559,267 | 582,359 | |||||||||||||||||||||||||||
| Time | 849,413 | 852,415 | 845,190 | 862,865 | 885,858 | |||||||||||||||||||||||||||
| Brokered time | 269,437 | 131,424 | 188,234 | 94,533 | 119,084 | |||||||||||||||||||||||||||
| Total deposits | $ | 6,256,836 | $ | 6,118,023 | $ | 6,323,984 | $ | 6,309,529 | $ | 6,405,002 | ||||||||||||||||||||||
Results of Operations Highlights
Net Interest Income and Margin
During the third quarter of 2024, net interest income and net interest margin, on a tax-equivalent basis, were $55.2 million and 3.10%, respectively, compared to $55.2 million and 3.12%, respectively, in the second quarter of 2024. Net interest income and net interest margin, on a tax-equivalent basis, were $58.8 million and 3.20%, respectively, in the third quarter of 2023.
Average interest-earning assets for the third quarter of 2024 were $7.07 billion, compared to $7.13 billion for the second quarter of 2024. The yield on interest-earning assets increased 7 basis points to 5.91% compared to the second quarter of 2024. Interest-earning assets averaged $7.28 billion for the third quarter of 2023.
Average loans were $5.78 billion for the third quarter of 2024, compared to $5.92 billion for the second quarter of 2024 and $6.30 billion for the third quarter of 2023. The yield on loans was 6.15% for the third quarter of 2024, up from 6.03% for the second quarter of 2024 and 5.93% for the third quarter of 2023.
Investment securities averaged $1.16 billion for the third quarter of 2024, and yielded 4.71%, compared to an average balance and yield of $1.10 billion and 4.69%, respectively, for the second quarter of 2024. The Company purchased additional higher-yielding investments resulting in the increased average balance and yield. Investment securities averaged $863.0 million for the third quarter of 2023.
Average interest-bearing liabilities for the third quarter of 2024 were $5.76 billion, compared to $5.78 billion for the second quarter of 2024. The cost of funds increased 9 basis points to 3.45% compared to the second quarter of 2024. Interest-bearing liabilities averaged $5.92 billion for the third quarter of 2023.
Average interest-bearing deposits were $5.13 billion for the third quarter of 2024, compared to $5.10 billion for the second quarter of 2024, and $5.35 billion for the third quarter of 2023. Cost of interest-bearing deposits was 3.25% in the third quarter of 2024, which represented a 14 basis point increase from the second quarter of 2024, due to increased competition.
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| For the Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | September 30, 2024 | June 30, 2024 | September 30, 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 | $ | 75,255 | $ | 1,031 | 5.45 | % | $ | 65,250 | $ | 875 | 5.40 | % | $ | 78,391 | $ | 1,036 | 5.24 | % | ||||||||||||||||||||||||||||||||||||||
Investment securities(1) | 1,162,751 | 13,752 | 4.71 | 1,098,452 | 12,805 | 4.69 | 862,998 | 7,822 | 3.60 | |||||||||||||||||||||||||||||||||||||||||||||||
Loans(1)(2) | 5,783,408 | 89,344 | 6.15 | 5,915,523 | 88,738 | 6.03 | 6,297,568 | 94,118 | 5.93 | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans held for sale | 7,505 | 124 | 6.57 | 4,910 | 84 | 6.84 | 6,078 | 104 | 6.80 | |||||||||||||||||||||||||||||||||||||||||||||||
| Nonmarketable equity securities | 41,137 | 788 | 7.62 | 44,216 | 963 | 8.76 | 39,347 | 710 | 7.16 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 7,070,056 | 105,039 | 5.91 | 7,128,351 | 103,465 | 5.84 | 7,284,382 | 103,790 | 5.65 | |||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 653,279 | 669,370 | 622,969 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 7,723,335 | $ | 7,797,721 | $ | 7,907,351 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-Bearing Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | $ | 5,132,640 | $ | 41,970 | 3.25 | % | $ | 5,101,365 | $ | 39,476 | 3.11 | % | $ | 5,354,356 | $ | 37,769 | 2.80 | % | ||||||||||||||||||||||||||||||||||||||
| Short-term borrowings | 53,577 | 602 | 4.47 | 30,449 | 308 | 4.07 | 20,127 | 14 | 0.28 | |||||||||||||||||||||||||||||||||||||||||||||||
| FHLB advances & other borrowings | 428,739 | 4,743 | 4.40 | 500,758 | 5,836 | 4.69 | 402,500 | 4,557 | 4.49 | |||||||||||||||||||||||||||||||||||||||||||||||
| Subordinated debt | 89,120 | 1,228 | 5.48 | 93,090 | 1,265 | 5.47 | 93,441 | 1,280 | 5.43 | |||||||||||||||||||||||||||||||||||||||||||||||
| Trust preferred debentures | 50,990 | 1,341 | 10.46 | 50,921 | 1,358 | 10.73 | 50,379 | 1,369 | 10.78 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 5,755,066 | 49,884 | 3.45 | 5,776,583 | 48,243 | 3.36 | 5,920,803 | 44,989 | 3.01 | |||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 1,075,712 | 1,132,451 | 1,116,988 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 97,235 | 104,841 | 97,935 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 795,322 | 783,846 | 771,625 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholder’s equity | $ | 7,723,335 | $ | 7,797,721 | $ | 7,907,351 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Interest Margin | $ | 55,155 | 3.10 | % | $ | 55,222 | 3.12 | % | $ | 58,801 | 3.20 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Cost of Deposits | 2.69 | % | 2.55 | % | 2.32 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
(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 September 30, 2024, June 30, 2024 and September 30, 2023, respectively.
(2)Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.
For the nine months ended September 30, 2024, net interest income, on a tax-equivalent basis, decreased to $166.5 million, with a tax-equivalent net interest margin of 3.13%, compared to net interest income, on a tax-equivalent basis, of $178.6 million, and a tax-equivalent net interest margin of 3.27% for the nine months ended September 30, 2023.
The yield on earning assets increased 34 basis points to 5.84% for the nine months ended September 30, 2024 compared to the prior year. However, the cost of interest-bearing liabilities increased at a faster rate during this period, increasing 57 basis points to 3.34% for the nine months ended September 30, 2024.
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| For the Nine Months Ended | ||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | September 30, 2024 | September 30, 2023 | ||||||||||||||||||||||||||||||||||||
| Interest-earning assets | Average Balance | Interest & Fees | Yield/Rate | Average Balance | Interest & Fees | Yield/Rate | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 69,960 | $ | 2,857 | 5.45 | % | $ | 76,939 | $ | 2,868 | 4.98 | % | ||||||||||||||||||||||||||
Investment securities(1) | 1,083,597 | 37,265 | 4.59 | 844,946 | 21,103 | 3.33 | ||||||||||||||||||||||||||||||||
Loans(1)(2) | 5,903,216 | 267,570 | 6.05 | 6,324,578 | 274,005 | 5.79 | ||||||||||||||||||||||||||||||||
| Loans held for sale | 5,281 | 263 | 6.65 | 3,900 | 179 | 6.14 | ||||||||||||||||||||||||||||||||
| Nonmarketable equity securities | 40,429 | 2,438 | 8.06 | 44,034 | 2,104 | 6.39 | ||||||||||||||||||||||||||||||||
| Total interest-earning assets | 7,102,483 | 310,393 | 5.84 | 7,294,397 | 300,259 | 5.50 | ||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 663,967 | 615,383 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 7,766,450 | $ | 7,909,780 | ||||||||||||||||||||||||||||||||||
| Interest-Bearing Liabilities | ||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | $ | 5,142,979 | $ | 120,660 | 3.13 | % | $ | 5,223,852 | $ | 97,791 | 2.50 | % | ||||||||||||||||||||||||||
| Short-term borrowings | 49,750 | 1,746 | 4.69 | 26,865 | 53 | 0.26 | ||||||||||||||||||||||||||||||||
| FHLB advances & other borrowings | 414,259 | 13,615 | 4.39 | 471,084 | 15,959 | 4.53 | ||||||||||||||||||||||||||||||||
| Subordinated debt | 91,921 | 3,773 | 5.48 | 96,820 | 3,985 | 5.49 | ||||||||||||||||||||||||||||||||
| Trust preferred debentures | 50,873 | 4,088 | 10.73 | 50,216 | 3,887 | 10.35 | ||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 5,749,782 | 143,882 | 3.34 | 5,868,837 | 121,675 | 2.77 | ||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 1,119,764 | 1,184,410 | ||||||||||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 107,192 | 84,650 | ||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 789,712 | 771,883 | ||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 7,766,450 | $ | 7,909,780 | ||||||||||||||||||||||||||||||||||
| Net Interest Margin | $ | 166,511 | 3.13 | % | $ | 178,584 | 3.27 | % | ||||||||||||||||||||||||||||||
| Cost of Deposits | 2.57 | % | 2.04 | % | ||||||||||||||||||||||||||||||||||
(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 $0.6 million for each of the nine months ended September 30, 2024 and 2023, respectively.
(2)Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.
Noninterest Income
Noninterest income was $19.3 million for the third quarter of 2024, compared to $17.7 million for the second quarter of 2024. Noninterest income for the second quarter of 2024 included a $0.2 million gain on the repurchase of subordinated debt, offset by $0.2 million of net losses on the sale of investment securities. The third quarter of 2023 included $5.0 million of losses on the sale of investment securities.
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Excluding these transactions, noninterest income for the third quarter of 2024, the second quarter of 2024, and the third quarter of 2023 was $19.3 million, $17.6 million, and $16.5 million, respectively.
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||
| (in thousands) | 2024 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||
| Noninterest income | ||||||||||||||||||||||||||||||||
| Wealth management revenue | $ | 7,104 | $ | 6,801 | $ | 6,288 | $ | 21,037 | $ | 18,968 | ||||||||||||||||||||||
| Service charges on deposit accounts | 3,411 | 3,121 | 3,149 | 9,648 | 8,744 | |||||||||||||||||||||||||||
| Interchange revenue | 3,506 | 3,563 | 3,609 | 10,427 | 10,717 | |||||||||||||||||||||||||||
| Residential mortgage banking revenue | 697 | 557 | 507 | 1,781 | 1,452 | |||||||||||||||||||||||||||
| Income on company-owned life insurance | 1,982 | 1,925 | 918 | 5,708 | 2,685 | |||||||||||||||||||||||||||
| Loss on sales of investment securities, net | (44) | (152) | (4,961) | (196) | (6,478) | |||||||||||||||||||||||||||
| Other income | 2,683 | 1,841 | 2,035 | 9,777 | 9,989 | |||||||||||||||||||||||||||
| Total noninterest income | $ | 19,339 | $ | 17,656 | $ | 11,545 | $ | 58,182 | $ | 46,077 | ||||||||||||||||||||||
Wealth management revenue totaled $7.1 million in the third quarter of 2024, an increase of $0.3 million, or 4.5%, as compared to the second quarter of 2024, due to increases in assets under administration and estate fees. Assets under administration increased to $4.27 billion at September 30, 2024 from $4.00 billion at June 30, 2024, primarily due to improved sales activity. Assets under administration totaled $3.50 billion at September 30, 2023.
Income on company-owned life insurance income totaled $2.0 million, $1.9 million and $0.9 million for the third quarter of 2024, the second quarter of 2024, and the third quarter of 2023, respectively. The Company surrendered certain low-yielding life insurance policies and purchased additional policies in the third quarter of 2023, resulting in the increase in revenue.
Other income totaled $2.7 million in the third quarter of 2024 compared to $1.8 million in the second quarter of 2024. Income from the sale of SBA loans in the third quarter of 2024 of $0.2 million and losses from the disposition of repossessed leased assets in the second quarter of 2024 of $0.6 million resulted in the quarter over quarter increase in other income.
Noninterest Expense
Noninterest expense was $46.7 million in the third quarter of 2024, compared to $47.5 million in the second quarter of 2024 and $42.0 million in the third quarter of 2023. Noninterest expense for the second quarter of 2024 included $4.1 million of aggregate expenses related to OREO impairment and property taxes, and accruals related to various legal proceedings. Excluding these items, noninterest expense for the third quarter of 2024, the second quarter of 2024, and the third quarter of 2023 was $46.7 million, $43.4 million, and $42.0 million, respectively. Costs related to increased staffing levels, upgrades to our ATM fleet, and loan collection and OREO expenses drove the increase in noninterest expense in the third quarter of 2024 compared to the prior quarter.
7
The efficiency ratio improved to 62.76% for the quarter ended September 30, 2024, compared to 65.16% for the quarter ended June 30, 2024. The efficiency ratio for the third quarter of 2023 was 55.82%.
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||
| (in thousands) | 2024 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||
| Noninterest expense | ||||||||||||||||||||||||||||||||
| Salaries and employee benefits | $ | 24,382 | $ | 22,872 | $ | 22,307 | $ | 71,356 | $ | 69,407 | ||||||||||||||||||||||
| Occupancy and equipment | 4,393 | 3,964 | 3,730 | 12,499 | 12,052 | |||||||||||||||||||||||||||
| Data processing | 6,955 | 7,205 | 6,468 | 20,882 | 19,323 | |||||||||||||||||||||||||||
| Professional services | 1,744 | 2,243 | 1,554 | 6,242 | 4,977 | |||||||||||||||||||||||||||
| Amortization of intangible assets | 951 | 1,016 | 1,129 | 3,056 | 3,628 | |||||||||||||||||||||||||||
| FDIC insurance | 1,402 | 1,219 | 1,107 | 3,895 | 3,632 | |||||||||||||||||||||||||||
| Other expense | 6,906 | 8,960 | 5,743 | 21,149 | 16,395 | |||||||||||||||||||||||||||
| Total noninterest expense | $ | 46,733 | $ | 47,479 | $ | 42,038 | $ | 139,079 | $ | 129,414 | ||||||||||||||||||||||
Income Tax Expense
Income tax expense was $4.1 million for the third quarter of 2024, compared to $1.7 million for the second quarter of 2024 and $11.5 million for the third quarter of 2023. The resulting effective tax rates were 18.1%, 19.9% and 50.3%, respectively. Tax expense for the third quarter of 2023 included a $1.4 million return to provision adjustment and $4.5 million associated with the surrender of company-owned life insurance policies, as previously discussed.
Capital
At September 30, 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 September 30, 2024 | |||||||||||||||||
| Midland States Bank | Midland States Bancorp, Inc. | Minimum Regulatory Requirements (2) | |||||||||||||||
| Total capital to risk-weighted assets | 13.34% | 13.98% | 10.50% | ||||||||||||||
| Tier 1 capital to risk-weighted assets | 12.09% | 11.65% | 8.50% | ||||||||||||||
| Common equity Tier 1 capital to risk-weighted assets | 12.09% | 9.00% | 7.00% | ||||||||||||||
| Tier 1 leverage ratio | 10.47% | 10.10% | 4.00% | ||||||||||||||
Tangible common equity to tangible assets (1) | N/A | 7.03% | N/A | ||||||||||||||
(1) A non-GAAP financial measure. Refer to page 16 for a reconciliation to the comparable GAAP financial measure.
(2) Includes the capital conservation buffer of 2.5%, as applicable.
The impact of rising interest rates on the Company’s investment portfolio and cash flow hedges resulted in an accumulated other comprehensive loss of $60.6 million at September 30, 2024, which reduced tangible book value by $2.84 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 third quarter of 2024, the Company repurchased
8
23,113 shares of its common stock at a weighted average price of $22.54 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 September 30, 2024, the Company had total assets of approximately $7.75 billion, and its Wealth Management Group had assets under administration of approximately $4.27 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 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, 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
9
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
10
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) | ||||||||||||||||||||||||||||||||
| As of and for the Three Months Ended | As of and for the Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||
| (dollars in thousands, except per share data) | 2024 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||
| Earnings Summary | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 54,950 | $ | 55,052 | $ | 58,596 | $ | 165,922 | $ | 177,940 | ||||||||||||||||||||||
| Provision for credit losses | 5,000 | 16,800 | 5,168 | 35,800 | 14,182 | |||||||||||||||||||||||||||
| Noninterest income | 19,339 | 17,656 | 11,545 | 58,182 | 46,077 | |||||||||||||||||||||||||||
| Noninterest expense | 46,733 | 47,479 | 42,038 | 139,079 | 129,414 | |||||||||||||||||||||||||||
| Income before income taxes | 22,556 | 8,429 | 22,935 | 49,225 | 80,421 | |||||||||||||||||||||||||||
| Income taxes | 4,080 | 1,679 | 11,533 | 10,114 | 25,672 | |||||||||||||||||||||||||||
| Net income | 18,476 | 6,750 | 11,402 | 39,111 | 54,749 | |||||||||||||||||||||||||||
| Preferred dividends | 2,229 | 2,228 | 2,229 | 6,685 | 6,685 | |||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 16,247 | $ | 4,522 | $ | 9,173 | $ | 32,426 | $ | 48,064 | ||||||||||||||||||||||
| Diluted earnings per common share | $ | 0.74 | $ | 0.20 | $ | 0.41 | $ | 1.47 | $ | 2.14 | ||||||||||||||||||||||
| Weighted average common shares outstanding - diluted | 21,678,242 | 21,734,849 | 21,977,196 | 21,732,093 | 22,223,986 | |||||||||||||||||||||||||||
| Return on average assets | 0.95 | % | 0.35 | % | 0.57 | % | 0.67 | % | 0.93 | % | ||||||||||||||||||||||
| Return on average shareholders' equity | 9.24 | % | 3.46 | % | 5.86 | % | 6.62 | % | 9.48 | % | ||||||||||||||||||||||
Return on average tangible common equity (1) | 12.69 | % | 3.66 | % | 7.56 | % | 8.62 | % | 13.37 | % | ||||||||||||||||||||||
| Net interest margin | 3.10 | % | 3.12 | % | 3.20 | % | 3.13 | % | 3.27 | % | ||||||||||||||||||||||
Efficiency ratio (1) | 62.76 | % | 65.16 | % | 55.82 | % | 61.91 | % | 56.15 | % | ||||||||||||||||||||||
Adjusted Earnings Performance Summary (1) | ||||||||||||||||||||||||||||||||
| Adjusted earnings available to common shareholders | $ | 16,223 | $ | 4,511 | $ | 17,278 | $ | 32,391 | $ | 56,783 | ||||||||||||||||||||||
| Adjusted diluted earnings per common share | $ | 0.74 | $ | 0.20 | $ | 0.78 | $ | 1.47 | $ | 2.53 | ||||||||||||||||||||||
| Adjusted return on average assets | 0.95 | % | 0.35 | % | 0.98 | % | 0.67 | % | 1.07 | % | ||||||||||||||||||||||
| Adjusted return on average shareholders' equity | 9.23 | % | 3.46 | % | 10.03 | % | 6.61 | % | 10.99 | % | ||||||||||||||||||||||
| Adjusted return on average tangible common equity | 12.67 | % | 3.65 | % | 14.24 | % | 8.61 | % | 15.80 | % | ||||||||||||||||||||||
| Adjusted pre-tax, pre-provision earnings | $ | 27,523 | $ | 25,214 | $ | 33,064 | $ | 84,977 | $ | 100,405 | ||||||||||||||||||||||
| Adjusted pre-tax, pre-provision return on average assets | 1.42 | % | 1.30 | % | 1.66 | % | 1.46 | % | 1.70 | % | ||||||||||||||||||||||
| Market Data | ||||||||||||||||||||||||||||||||
| Book value per share at period end | $ | 33.08 | $ | 31.59 | $ | 29.96 | ||||||||||||||||||||||||||
Tangible book value per share at period end (1) | $ | 24.90 | $ | 23.36 | $ | 21.67 | ||||||||||||||||||||||||||
Tangible book value per share excluding accumulated other comprehensive income at period end (1) | $ | 27.74 | $ | 27.22 | $ | 26.35 | ||||||||||||||||||||||||||
| Market price at period end | $ | 22.38 | $ | 22.65 | $ | 20.54 | ||||||||||||||||||||||||||
| Common shares outstanding at period end | 21,393,905 | 21,377,215 | 21,594,546 | |||||||||||||||||||||||||||||
| Capital | ||||||||||||||||||||||||||||||||
| Total capital to risk-weighted assets | 13.98 | % | 13.83 | % | 12.76 | % | ||||||||||||||||||||||||||
| Tier 1 capital to risk-weighted assets | 11.65 | % | 11.23 | % | 10.53 | % | ||||||||||||||||||||||||||
| Common equity tier 1capital to risk-weighted assets | 9.00 | % | 8.64 | % | 8.07 | % | ||||||||||||||||||||||||||
| Tier 1 leverage ratio | 10.10 | % | 9.84 | % | 9.59 | % | ||||||||||||||||||||||||||
Tangible common equity to tangible assets (1) | 7.03 | % | 6.59 | % | 6.01 | % | ||||||||||||||||||||||||||
| Wealth Management | ||||||||||||||||||||||||||||||||
| Trust assets under administration | $ | 4,268,539 | $ | 3,996,175 | $ | 3,501,225 | ||||||||||||||||||||||||||
(1) Non-GAAP financial measures. Refer to pages 14 - 16 for a reconciliation to the comparable GAAP financial measures.
11
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||||||||||||||
| As of | ||||||||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||||||||||
| (in thousands) | 2024 | 2024 | 2024 | 2023 | 2023 | |||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 121,873 | $ | 124,646 | $ | 167,316 | $ | 135,061 | $ | 132,132 | ||||||||||||||||||||||
| Investment securities | 1,216,795 | 1,099,654 | 1,044,900 | 920,396 | 839,344 | |||||||||||||||||||||||||||
| Loans | 5,748,819 | 5,851,994 | 5,958,462 | 6,131,079 | 6,280,883 | |||||||||||||||||||||||||||
| Allowance for credit losses on loans | (85,804) | (92,183) | (78,057) | (68,502) | (66,669) | |||||||||||||||||||||||||||
| Total loans, net | 5,663,015 | 5,759,811 | 5,880,405 | 6,062,577 | 6,214,214 | |||||||||||||||||||||||||||
| Loans held for sale | 8,001 | 5,555 | 5,043 | 3,811 | 6,089 | |||||||||||||||||||||||||||
| Premises and equipment, net | 84,672 | 83,040 | 81,831 | 82,814 | 82,741 | |||||||||||||||||||||||||||
| Other real estate owned | 8,646 | 8,304 | 8,920 | 9,112 | 480 | |||||||||||||||||||||||||||
| Loan servicing rights, at lower of cost or fair value | 18,400 | 18,902 | 19,577 | 20,253 | 20,933 | |||||||||||||||||||||||||||
| Goodwill | 161,904 | 161,904 | 161,904 | 161,904 | 161,904 | |||||||||||||||||||||||||||
| Other intangible assets, net | 13,052 | 14,003 | 15,019 | 16,108 | 17,238 | |||||||||||||||||||||||||||
| Company-owned life insurance | 209,193 | 207,211 | 205,286 | 203,485 | 201,750 | |||||||||||||||||||||||||||
| Other assets | 245,932 | 274,244 | 241,608 | 251,347 | 292,460 | |||||||||||||||||||||||||||
| Total assets | $ | 7,751,483 | $ | 7,757,274 | $ | 7,831,809 | $ | 7,866,868 | $ | 7,969,285 | ||||||||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 1,050,617 | $ | 1,108,521 | $ | 1,212,382 | $ | 1,145,395 | $ | 1,154,515 | ||||||||||||||||||||||
| Interest-bearing deposits | 5,206,219 | 5,009,502 | 5,111,602 | 5,164,134 | 5,250,487 | |||||||||||||||||||||||||||
| Total deposits | 6,256,836 | 6,118,023 | 6,323,984 | 6,309,529 | 6,405,002 | |||||||||||||||||||||||||||
| Short-term borrowings | 13,849 | 7,208 | 214,446 | 34,865 | 17,998 | |||||||||||||||||||||||||||
| FHLB advances and other borrowings | 425,000 | 600,000 | 255,000 | 476,000 | 538,000 | |||||||||||||||||||||||||||
| Subordinated debt | 82,744 | 91,656 | 93,617 | 93,546 | 93,475 | |||||||||||||||||||||||||||
| Trust preferred debentures | 51,058 | 50,921 | 50,790 | 50,616 | 50,457 | |||||||||||||||||||||||||||
| Other liabilities | 103,737 | 103,694 | 102,966 | 110,459 | 106,743 | |||||||||||||||||||||||||||
| Total liabilities | 6,933,224 | 6,971,502 | 7,040,803 | 7,075,015 | 7,211,675 | |||||||||||||||||||||||||||
| Total shareholders’ equity | 818,259 | 785,772 | 791,006 | 791,853 | 757,610 | |||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 7,751,483 | $ | 7,757,274 | $ | 7,831,809 | $ | 7,866,868 | $ | 7,969,285 | ||||||||||||||||||||||
12
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||
| (in thousands, except per share data) | 2024 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||
| Net interest income: | ||||||||||||||||||||||||||||||||
| Interest income | $ | 104,834 | $ | 103,295 | $ | 103,585 | $ | 309,804 | $ | 299,615 | ||||||||||||||||||||||
| Interest expense | 49,884 | 48,243 | 44,989 | 143,882 | 121,675 | |||||||||||||||||||||||||||
| Net interest income | 54,950 | 55,052 | 58,596 | 165,922 | 177,940 | |||||||||||||||||||||||||||
| Provision for credit losses on loans | 5,000 | 17,000 | 5,168 | 36,000 | 14,182 | |||||||||||||||||||||||||||
| Provision for credit losses on unfunded commitments | — | (200) | — | (200) | — | |||||||||||||||||||||||||||
| Total provision for credit losses | 5,000 | 16,800 | 5,168 | 35,800 | 14,182 | |||||||||||||||||||||||||||
| Net interest income after provision for credit losses | 49,950 | 38,252 | 53,428 | 130,122 | 163,758 | |||||||||||||||||||||||||||
| Noninterest income: | ||||||||||||||||||||||||||||||||
| Wealth management revenue | 7,104 | 6,801 | 6,288 | 21,037 | 18,968 | |||||||||||||||||||||||||||
| Service charges on deposit accounts | 3,411 | 3,121 | 3,149 | 9,648 | 8,744 | |||||||||||||||||||||||||||
| Interchange revenue | 3,506 | 3,563 | 3,609 | 10,427 | 10,717 | |||||||||||||||||||||||||||
| Residential mortgage banking revenue | 697 | 557 | 507 | 1,781 | 1,452 | |||||||||||||||||||||||||||
| Income on company-owned life insurance | 1,982 | 1,925 | 918 | 5,708 | 2,685 | |||||||||||||||||||||||||||
| Loss on sales of investment securities, net | (44) | (152) | (4,961) | (196) | (6,478) | |||||||||||||||||||||||||||
| Other income | 2,683 | 1,841 | 2,035 | 9,777 | 9,989 | |||||||||||||||||||||||||||
| Total noninterest income | 19,339 | 17,656 | 11,545 | 58,182 | 46,077 | |||||||||||||||||||||||||||
| Noninterest expense: | ||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 24,382 | 22,872 | 22,307 | 71,356 | 69,407 | |||||||||||||||||||||||||||
| Occupancy and equipment | 4,393 | 3,964 | 3,730 | 12,499 | 12,052 | |||||||||||||||||||||||||||
| Data processing | 6,955 | 7,205 | 6,468 | 20,882 | 19,323 | |||||||||||||||||||||||||||
| Professional services | 1,744 | 2,243 | 1,554 | 6,242 | 4,977 | |||||||||||||||||||||||||||
| Amortization of intangible assets | 951 | 1,016 | 1,129 | 3,056 | 3,628 | |||||||||||||||||||||||||||
| FDIC insurance | 1,402 | 1,219 | 1,107 | 3,895 | 3,632 | |||||||||||||||||||||||||||
| Other expense | 6,906 | 8,960 | 5,743 | 21,149 | 16,395 | |||||||||||||||||||||||||||
| Total noninterest expense | 46,733 | 47,479 | 42,038 | 139,079 | 129,414 | |||||||||||||||||||||||||||
| Income before income taxes | 22,556 | 8,429 | 22,935 | 49,225 | 80,421 | |||||||||||||||||||||||||||
| Income taxes | 4,080 | 1,679 | 11,533 | 10,114 | 25,672 | |||||||||||||||||||||||||||
| Net income | 18,476 | 6,750 | 11,402 | 39,111 | 54,749 | |||||||||||||||||||||||||||
| Preferred stock dividends | 2,229 | 2,228 | 2,229 | 6,685 | 6,685 | |||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 16,247 | $ | 4,522 | $ | 9,173 | $ | 32,426 | $ | 48,064 | ||||||||||||||||||||||
| Basic earnings per common share | $ | 0.74 | $ | 0.20 | $ | 0.41 | $ | 1.47 | $ | 2.14 | ||||||||||||||||||||||
| Diluted earnings per common share | $ | 0.74 | $ | 0.20 | $ | 0.41 | $ | 1.47 | $ | 2.14 | ||||||||||||||||||||||
13
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) | ||||||||||||||||||||||||||||||||
| Adjusted Earnings Reconciliation | ||||||||||||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||
| (dollars in thousands, except per share data) | 2024 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||
| Income before income taxes - GAAP | $ | 22,556 | $ | 8,429 | $ | 22,935 | $ | 49,225 | $ | 80,421 | ||||||||||||||||||||||
| Adjustments to noninterest income: | ||||||||||||||||||||||||||||||||
| Loss on sales of investment securities, net | 44 | 152 | 4,961 | 196 | 6,478 | |||||||||||||||||||||||||||
| (Gain) on repurchase of subordinated debt | (77) | (167) | — | (244) | (676) | |||||||||||||||||||||||||||
| Total adjustments to noninterest income | (33) | (15) | 4,961 | (48) | 5,802 | |||||||||||||||||||||||||||
| Adjusted earnings pre tax - non-GAAP | 22,523 | 8,414 | 27,896 | 49,177 | 86,223 | |||||||||||||||||||||||||||
| Adjusted earnings tax | 4,071 | 1,675 | 8,389 | 10,101 | 22,755 | |||||||||||||||||||||||||||
| Adjusted earnings - non-GAAP | 18,452 | 6,739 | 19,507 | 39,076 | 63,468 | |||||||||||||||||||||||||||
| Preferred stock dividends | 2,229 | 2,228 | 2,229 | 6,685 | 6,685 | |||||||||||||||||||||||||||
| Adjusted earnings available to common shareholders | $ | 16,223 | $ | 4,511 | $ | 17,278 | $ | 32,391 | $ | 56,783 | ||||||||||||||||||||||
| Adjusted diluted earnings per common share | $ | 0.74 | $ | 0.20 | $ | 0.78 | $ | 1.47 | $ | 2.53 | ||||||||||||||||||||||
| Adjusted return on average assets | 0.95 | % | 0.35 | % | 0.98 | % | 0.67 | % | 1.07 | % | ||||||||||||||||||||||
| Adjusted return on average shareholders' equity | 9.23 | % | 3.46 | % | 10.03 | % | 6.61 | % | 10.99 | % | ||||||||||||||||||||||
| Adjusted return on average tangible common equity | 12.67 | % | 3.65 | % | 14.24 | % | 8.61 | % | 15.80 | % | ||||||||||||||||||||||
| Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation | ||||||||||||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||
| (dollars in thousands) | 2024 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||
| Adjusted earnings pre tax - non-GAAP | $ | 22,523 | $ | 8,414 | $ | 27,896 | $ | 49,177 | $ | 86,223 | ||||||||||||||||||||||
| Provision for credit losses | 5,000 | 16,800 | 5,168 | 35,800 | 14,182 | |||||||||||||||||||||||||||
| Adjusted pre-tax, pre-provision earnings - non-GAAP | $ | 27,523 | $ | 25,214 | $ | 33,064 | $ | 84,977 | $ | 100,405 | ||||||||||||||||||||||
| Adjusted pre-tax, pre-provision return on average assets | 1.42 | % | 1.30 | % | 1.66 | % | 1.46 | % | 1.70 | % | ||||||||||||||||||||||
14
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) | ||||||||||||||||||||||||||||||||
| Efficiency Ratio Reconciliation | ||||||||||||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||
| (dollars in thousands) | 2024 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||
| Noninterest expense - GAAP | $ | 46,733 | $ | 47,479 | $ | 42,038 | $ | 139,079 | $ | 129,414 | ||||||||||||||||||||||
| Net interest income - GAAP | $ | 54,950 | $ | 55,052 | $ | 58,596 | $ | 165,922 | $ | 177,940 | ||||||||||||||||||||||
| Effect of tax-exempt income | 205 | 170 | 205 | 589 | 644 | |||||||||||||||||||||||||||
| Adjusted net interest income | 55,155 | 55,222 | 58,801 | 166,511 | 178,584 | |||||||||||||||||||||||||||
| Noninterest income - GAAP | 19,339 | 17,656 | 11,545 | 58,182 | 46,077 | |||||||||||||||||||||||||||
| Loss on sales of investment securities, net | 44 | 152 | 4,961 | 196 | 6,478 | |||||||||||||||||||||||||||
| (Gain) on repurchase of subordinated debt | (77) | (167) | — | (244) | (676) | |||||||||||||||||||||||||||
| Adjusted noninterest income | 19,306 | 17,641 | 16,506 | 58,134 | 51,879 | |||||||||||||||||||||||||||
| Adjusted total revenue | $ | 74,461 | $ | 72,863 | $ | 75,307 | $ | 224,645 | $ | 230,463 | ||||||||||||||||||||||
| Efficiency ratio | 62.76 | % | 65.16 | % | 55.82 | % | 61.91 | % | 56.15 | % | ||||||||||||||||||||||
| Return on Average Tangible Common Equity (ROATCE) | ||||||||||||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||
| (dollars in thousands) | 2024 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 16,247 | $ | 4,522 | $ | 9,173 | $ | 32,426 | $ | 48,064 | ||||||||||||||||||||||
| Average total shareholders' equity—GAAP | $ | 795,322 | $ | 783,846 | $ | 771,625 | $ | 789,712 | $ | 771,883 | ||||||||||||||||||||||
| 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 | (13,506) | (14,483) | (17,782) | (14,501) | (18,959) | |||||||||||||||||||||||||||
| Average tangible common equity | $ | 509,364 | $ | 496,911 | $ | 481,391 | $ | 502,759 | $ | 480,472 | ||||||||||||||||||||||
| ROATCE | 12.69 | % | 3.66 | % | 7.56 | % | 8.62 | % | 13.37 | % | ||||||||||||||||||||||
15
| 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 | ||||||||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||||||||||
| (dollars in thousands, except per share data) | 2024 | 2024 | 2024 | 2023 | 2023 | |||||||||||||||||||||||||||
| Shareholders' Equity to Tangible Common Equity | ||||||||||||||||||||||||||||||||
| Total shareholders' equity—GAAP | $ | 818,259 | $ | 785,772 | $ | 791,006 | $ | 791,853 | $ | 757,610 | ||||||||||||||||||||||
| 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 | (13,052) | (14,003) | (15,019) | (16,108) | (17,238) | |||||||||||||||||||||||||||
| Tangible common equity | 532,755 | 499,317 | 503,535 | 503,293 | 467,920 | |||||||||||||||||||||||||||
| Less: Accumulated other comprehensive loss (AOCI) | (60,640) | (82,581) | (81,419) | (76,753) | (101,181) | |||||||||||||||||||||||||||
| Tangible common equity excluding AOCI | $ | 593,395 | $ | 581,898 | $ | 584,954 | $ | 580,046 | $ | 569,101 | ||||||||||||||||||||||
| Total Assets to Tangible Assets: | ||||||||||||||||||||||||||||||||
| Total assets—GAAP | $ | 7,751,483 | $ | 7,757,274 | $ | 7,831,809 | $ | 7,866,868 | $ | 7,969,285 | ||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||
| Goodwill | (161,904) | (161,904) | (161,904) | (161,904) | (161,904) | |||||||||||||||||||||||||||
| Other intangible assets, net | (13,052) | (14,003) | (15,019) | (16,108) | (17,238) | |||||||||||||||||||||||||||
| Tangible assets | $ | 7,576,527 | $ | 7,581,367 | $ | 7,654,886 | $ | 7,688,856 | $ | 7,790,143 | ||||||||||||||||||||||
| Common Shares Outstanding | 21,393,905 | 21,377,215 | 21,485,231 | 21,551,402 | 21,594,546 | |||||||||||||||||||||||||||
| Tangible Common Equity to Tangible Assets | 7.03 | % | 6.59 | % | 6.58 | % | 6.55 | % | 6.01 | % | ||||||||||||||||||||||
| Tangible Book Value Per Share | $ | 24.90 | $ | 23.36 | $ | 23.44 | $ | 23.35 | $ | 21.67 | ||||||||||||||||||||||
| Tangible Book Value Per Share, excluding AOCI | $ | 27.74 | $ | 27.22 | $ | 27.23 | $ | 26.91 | $ | 26.35 | ||||||||||||||||||||||
16
1 Midland States Bancorp, Inc. NASDAQ: MSBI Third 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, 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 September 30, 2024 $7.8 Billion Total Assets $5.7 Billion Total Loans $6.3 Billion Total Deposits $4.3 Billion Assets Under Administration YTD Adjusted ROAA(1): 0.67% YTD Adjusted Return on TCE(1): 8.61% TCE/TA: 7.03% YTD PTPP(1) ROAA: 1.46% Dividend Yield: 5.54% Price/Tangible Book: 0.9x Price/LTM EPS: 9.7x 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 3Q24 Financial Performance Continued Success in Balance Sheet Management Strategies Successfully Growing Community Bank Continued Investments in Talent and Technology 4 • Net income available to common shareholders of $16.2 million, or $0.74 diluted EPS • Pre-tax, pre-provision earnings(1) of $27.5 million • Strong noninterest income of $19.3 million • Net interest margin stable at 3.10% • Tangible book value per share increased 6.6% to $24.90 from prior quarter. • Increase in capital ratios with CET1 increasing 36 bps to 9.00% • Increased liquidity with reduction in loan-to-deposit ratio • Runoff in non-core loan portfolios funding new loan production and purchase of higher-yielding investment securities • Another good quarter of business development in community bank with full banking relationships added with high quality in-market clients • Community bank loans increased $45 million during 3Q24, offset by intentional reduction of equipment finance and consumer portfolios • Loan portfolio continues to shift towards core in-market C&I and CRE loans resulting in higher quality loan portfolio • Strength of franchise allowing Midland to continue attracting high quality banking talent • New technology platform in Wealth Management will enhance ability to cross-sell to community bank clients • New talent and technology investments expected to drive profitable growth and further enhance the value of Midland franchise Notes: (1) Represents a non-GAAP financial measure. See “Non-GAAP Reconciliation” in the appendix.
5 Loan Portfolio 5 • Total loans decreased $103.2 million from prior quarter to $5.75 billion • Decrease primarily driven by decline in equipment finance portfolio of $30.0 million and continued runoff of GreenSky portfolio of $63.0 million • Decrease in non-core portfolios partially offset by new loan production from high quality commercial clients that provide full banking relationships • Investments made to increase business development efforts in St. Louis resulted in total loans increasing at an annualized rate of 12% during 3Q24 in this market • Runoff from GreenSky portfolio rotated into investment portfolio Loan Portfolio Mix (in millions, as of quarter-end) 3Q 2024 2Q 2024 3Q 2023 Commercial loans and leases $ 1,775 $ 1,829 $ 2,057 Commercial real estate 2,510 2,422 2,412 Construction and land development 422 477 417 Residential real estate 379 378 375 Consumer 663 746 1,020 Total Loans $ 5,749 $ 5,852 $ 6,281 Total Loans ex. Commercial FHA Lines $ 5,699 $ 5,852 $ 6,232 $6,281 $6,131 $5,958 $5,852 $5,749 5.93% 6.00% 5.99% 6.03% 6.15% Total Loans Average Loan Yield 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 Total Loans and Average Loan Yield (in millions, as of quarter-end)
6 Loan Segments 6 • Total loans in our Community Bank increased $45 million from prior quarter to $3.18 billion • Loans in St. Louis region increased $25 million or 12% annualized in 3Q24 • Focused on core, in-market loan relationships • Continuing to add talent in faster growing markets to drive quality loan relationships and commercial deposits Loan Portfolio Segments (in millions, as of quarter-end) 3Q 2024 2Q 2024 3Q 2023 Regions: Eastern $ 903 $ 884 $ 853 Northern 731 725 708 Southern 695 700 702 St. Louis 850 825 704 Community Bank $ 3,179 $ 3,134 $ 2,967 Other: FHA Warehouse Line $ 50 $ — $ 49 Specialty Finance $ 1,003 $ 1,093 $ 1,194 Equipment Finance 860 890 1,064 BaaS(1) 657 735 1,007 Total Loans $ 5,749 $ 5,852 $ 6,281 Loan Segment Mix Community Bank, 55.3% Specialty Finance, 17.4% Equipment Finance, 15.0% BaaS, 11.4% FHA Warehouse, 0.9% Notes: (1) includes loans originated through Greensky and LendingPoint relationships
7 Total Deposits 7 • Total deposits increased $138.8 million from end of prior quarter, primarily due to increases in brokered time • Average balances of non-interest bearing demand deposits declined $57 million compared to prior quarter primarily due to seasonal outflows and lower average balances • Brokered time deposits increased $138.0 million from prior quarter as rates provided lower cost of funds than other wholesale borrowings, which were reduced following addition of brokered time deposits Deposit Mix (in millions, as of quarter-end) 3Q 2024 2Q 2024 3Q 2023 Noninterest-bearing demand $ 1,051 $ 1,109 $ 1,155 Interest-bearing: Checking 2,390 2,344 2,572 Money market 1,187 1,144 1,091 Savings 510 538 582 Time 849 852 886 Brokered time 270 131 119 Total Deposits $ 6,257 $ 6,118 $ 6,405 $6,405 $6,310 $6,324 $6,118 $6,257 2.32% 2.41% 2.49% 2.55% 2.69% Total Deposits Cost of Deposits 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 Total Deposits and Cost of Deposits (in millions, as of quarter-end)
8 Deposit Summary 8 Deposits by Channel (in millions, as of quarter-end) 3Q 2024 2Q 2024 3Q 2023 Retail $ 2,695 $ 2,742 $ 2,756 Commercial 1,219 1,217 1,231 Public Funds 574 569 615 Wealth & Trust 332 299 318 Servicing 959 932 1,020 Brokered Deposits 391 239 228 Other 87 120 237 Total Deposits $ 6,257 $ 6,118 $ 6,405 $6,405 $6,310 $6,324 $6,118 $6,257 Retail Commercial Public Funds Wealth & Trust Servicing Brokered Deposits Other 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 • Deposits excluding brokered remained relatively stable from prior quarter • Total brokered deposits increased $152 million in 3Q24 • Interest rates will decrease for servicing and brokered deposits reducing pressure on cost of funds Trend of Deposit Channel Mix (in millions, as of quarter-end)
9 3.5% 68.9% 7.1% 5.8% 7.3% 7.4% US GSE & US Agency MBS - agency MBS - non agency State & Muni Corporate Other Investment Portfolio As of September 30, 2024 9 Fair Value of Investments by Type • All Investments are classified as Available for Sale • Average T/E Yield is 4.71% for 3Q24 • Average Duration is 4.87 years • Purchased $163 million with T/E Yield of 5.10% and sold $11 million with T/E Yield of 3.85% in 3Q24 Investments by Yield and DurationInvestment Mix & Unrealized Gain (Loss) (in millions) Fair Value Book Value Unrealized Gain (Loss) US GSE & US Agency $ 43 $ 44 $ (1) MBS - agency 835 897 (62) MBS - non agency 86 87 (1) State & Municipal 70 75 (5) Corporate 88 95 (7) Other 90 90 — Total Investments $ 1,212 $ 1,288 $ (76) Duration Y ie ld -1 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% 8.0% $1.21 billion
10 3.20% 3.21% 3.18% 3.12% 3.10% 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 $58.6 $58.1 $55.9 $55.1 $55.0 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 Net Interest Income/Margin 10 • Net interest income down slightly from prior quarter due to higher interest-bearing deposit rates and average short-term borrowings • Net interest margin decreased 2 bp to 3.10% as the increase in the cost of deposits exceeded the increase in the average yield on earning assets • Average rate on new and renewed loan originations was 7.82% in 3Q24 and higher than average rates on loan payoffs making them accretive to net interest margin • Deposit rates starting to decline following Fed rate cuts and expected to positively impact net interest margin in 2025 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 September 30, 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 $ 722 $ 275 $ 537 $ 197 $ 30 $ 5 $ 8 $ 1,774 $ 557 $ 78 $ 1,139 Commercial real estate 862 361 769 362 142 14 1 2,511 601 235 1,675 Construction and land development 291 44 76 10 1 — — 422 233 31 158 Residential real estate 74 56 85 67 74 19 4 379 54 109 216 Consumer 132 196 235 85 15 — — 663 83 — 580 Total $ 2,081 $ 932 $ 1,702 $ 721 $ 262 $ 38 $ 13 $ 5,749 $ 1,528 $ 453 $ 3,768 % of Total 35 % 16 % 30 % 13 % 5 % 1 % — % 100 % 27 % 8 % 65 % Weighted Average Rate 7.14 % 5.63 % 5.19 % 5.73 % 4.62 % 4.10 % 3.84 % 6.00 % 7.83 % 4.96 % 5.40 % Investment Securities Available for Sale(2) (in millions) As of September 30, 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 $ 189 $ 187 $ 214 $ 331 $ 367 $ 1,288 % of Total 15 % 14 % 17 % 26 % 28 % 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) 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 $273 million mainly due to $178 million in new assets and market performance • Wealth Management fees increased due to higher AUA and net new accounts • New technology that integrates Wealth Management data into mobile banking app that is expected to positively impact cross-selling to community bank clients • Continual hiring of wealth advisors positively impacting new business development Assets Under Administration (in millions) $3,501 $3,733 $3,888 $3,996 $4,269 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 $6.29 $6.60 $7.13 $6.80 $7.10 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 Wealth Management Revenue (in millions)
13 $11.5 $20.5 $21.2 $17.7 $19.3 Wealth Management Interchange Service Charges on Deposits Residential Mortgage All Other 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 Noninterest Income 13 • Noninterest income increased from prior quarter primarily due to higher Wealth Management revenue resulting from increased AUA and higher deposit service charges • 3Q24 noninterest income includes $0.2 million gain on sale of SBA loans and $0.4 million of earnings on limited partnership investments • Other income negatively impacted by losses on sale of repossessed and other equipment of $0.2 million in current quarter • Fee income expected to be $18.0 - $18.5 million in the near-term quarters Noninterest Income (in millions)
14 $42.0 $44.5 $44.9 $47.5 $46.7 55.8% 55.2% 58.0% 65.2% 62.8% Total Noninterest Expense Efficiency Ratio 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 Noninterest Expense and Operating Efficiency 14 Noninterest Expense and Efficiency Ratio (1) (Noninterest expense in millions) • Efficiency Ratio (1) was 62.8% in 3Q 2024 vs. 65.2% in 2Q 2024 • Compensation and benefits increased $1.5 million due to new staff additions and incentive compensation • Other expenses decreased $2.0 million as prior quarter included a $3.0 million accrual for legal action offset by increases in loan collection and continued OREO expenses in the current 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 from prior quarter • Net charge-offs to average loans was 0.78% driven by equipment finance and $6.2 million of charge offs in the Lending Point portfolio • General stability in asset quality resulted in lower provision for credit losses than prior quarter with ACL/Total Loans of 1.49% • Taking steps to improve asset quality through focus on relationship lending and tighter credit standards Nonperforming Loans / Total Loans (Total Loans as of quarter-end) NCO / Average Loans 0.69% 0.68% 1.49% 1.58% 1.55%0.20% 0.24% 0.27% 0.34% 0.37% 0.07% 0.89% 0.92% 1.76% 1.92% 1.99% Lending Point Equipment Finance All other 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 0.08% 0.07% 0.05% (0.06)% 0.02% 0.14% 0.26% 0.25% 0.26% 0.33% 0.43% 0.22% 0.33% 0.30% 0.20% 0.78% Lending Point Equipment Finance All other 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024
16 $92,183 $(1,120) $(4,320) $(938) $85,804 ACL June 30, 2024 Specific Reserves Portfolio Changes Economic Factors ACL September 30, 2024 Changes in Allowance for Credit Losses 16 ($ 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 ▪ Reduction due to charge offs in Lending Point Portfolio ▪ Change to macro- economic variables and forecasts ▪ Changes to other economic qualitative factors
17 ACL by Portfolio 17 ($ in thousands) September 30, 2024 June 30, 2024 Portfolio Loans ACL % of Total Loans Loans ACL % of Total Loans Commercial $ 797,318 $ 9,263 1.16 % $ 829,888 $ 8,821 1.06 % Commercial Other 559,354 14,844 2.65 % 570,979 15,426 2.70 % Equipment Finance Loans 442,552 11,236 2.54 % 461,409 11,839 2.57 % Equipment Finance Leases 417,531 13,724 3.29 % 428,659 13,288 3.10 % CRE non-owner occupied 1,630,930 13,623 0.84 % 1,621,102 13,949 0.86 % CRE owner occupied 455,101 5,017 1.10 % 438,117 5,286 1.21 % Multi-family 355,988 3,619 1.02 % 293,863 2,636 0.90 % Farmland 68,453 269 0.39 % 68,423 326 0.48 % Construction and Land Development 422,253 12,061 2.86 % 476,528 12,966 2.72 % Residential RE First Lien 315,634 4,738 1.50 % 315,039 4,616 1.47 % Other Residential 63,023 614 0.97 % 63,354 577 0.91 % Consumer 90,626 531 0.59 % 94,763 499 0.53 % Consumer Other(1) 572,608 7,501 1.31 % 651,279 13,793 2.12 % Total Loans $ 5,748,819 $ 85,804 1.49 % $ 5,851,994 $ 92,183 1.58 % Loans (excluding BaaS portfolio(1) and warehouse lines) 5,048,243 74,715 1.48 % 5,125,723 74,815 1.46 % Notes: (1) Primarily consists of loans originated through GreenSky and LendingPoint relationships
18 2024 Outlook and Priorities 18 • Well positioned with increased levels of capital, liquidity, and reserves • Continuing to focus on improving credit quality through core relationship lending and tightened credit • 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 • Prudent balance sheet management and earnings 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 • Well positioned to benefit from lower interest rates with lower funding costs expected to lead to expanded net interest margin • Positive trends in key areas should lead to consistent level of profitability * Continued disciplined expense management while making investments in the business to increase market share, add clients, and generate profitable growth in the future * Wealth Management revenue trending higher due to contributions of new advisors * BaaS initiative continuing to seek high quality FinTech partners
19 APPENDIX 19
2020 Industries as a percentage of Commercial, CRE and Equipment Finance Loans and Leases with outstanding balances of $4.71 billion as of September 30, 2024 ($s in millions) RE/Rental & Leasing $1,708.9 36.3% All Others $569.1 12.1% Skilled Nursing $394.2 8.4% Construction - General $293.2 6.2% Manufacturing $214.8 4.6% Finance and Insurance $218.9 4.7% Accommodation & Food Svcs $305.5 6.5% Trans./Ground Passenger $171.2 3.6% Assisted Living $102.5 2.2% Ag., Forestry, & Fishing $149.6 3.2% General Freight Trucking $171.0 3.6% Retail Trade $174.1 3.7% Wholesale Trade $63.7 1.4% Other Services $102.2 2.2% Commercial Loans and Leases by Industry Health Care $68.0 1.4%
21 Commercial Real Estate Portfolio by Collateral Type 21 CRE Concentration (as of September 30, 2024) CRE as a % of Total Loans 51.0% CRE as a % of Total Risk-Based Capital (1) 267.2% 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 $2.93 billion as of September 30, 2024 ($s in millions) Skilled Nursing $397.7 13.7% Retail $461.0 15.7% Multi-Family $556.0 19.0% Industrial/Warehouse $216.9 7.4% Assisted Living $124.5 4.2% Hotel/Motel $243.3 8.3% All Other $151.0 5.1% Office $147.2 5.0% Farmland $68.3 2.3% Residential 1-4 Family $94.6 3.2% Raw Land $22.3 0.8% Restaurant $30.1 1.0% Mixed Use/Other $118.4 4.0% Medical Building $93.2 3.2% Special Purpose $128.6 4.4% C-Store/Gas Station $79.8 2.7%
22 Capital Ratios and Strategy 22 • Capital initiatives increased CET1 to 9.00% from 7.77% at December 31, 2022 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 September 30, 2024) 7.03% 9.00% 10.10% 11.65% 13.98% 12.09% 10.47% 12.09% 13.34% 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) loss 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 September 30, June 30, March 31, December 31, September 30, (dollars in thousands, except per share data) 2024 2024 2024 2023 2023 Income before income taxes - GAAP $ 22,556 $ 8,429 $ 18,240 $ 27,152 $ 22,935 Adjustments to noninterest income: Loss on sales of investment securities, net 44 152 — 2,894 4,961 (Gain) on sale of Visa B shares — — — (1,098) — (Gain) on repurchase of subordinated debt (77) (167) — — — Total adjustments to noninterest income (33) (15) — 1,796 4,961 Adjusted earnings pre tax - non-GAAP 22,523 8,414 18,240 28,948 27,896 Adjusted earnings tax 4,071 1,675 4,355 6,927 8,389 Adjusted earnings - non-GAAP 18,452 6,739 13,885 22,021 19,507 Preferred stock dividends 2,229 2,228 2,228 2,228 2,229 Adjusted earnings available to common shareholders $ 16,223 $ 4,511 $ 11,657 $ 19,793 $ 17,278 Adjusted diluted earnings per common share $ 0.74 $ 0.20 $ 0.53 $ 0.89 $ 0.78 Adjusted return on average assets 0.95 % 0.35 % 0.72 % 1.11 % 0.98 % Adjusted return on average shareholders' equity 9.23 % 3.46 % 7.07 % 11.42 % 10.03 % Adjusted return on average tangible common equity 12.67 % 3.65 % 9.34 % 16.51 % 14.24 % Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation For the Quarter Ended September 30, June 30, March 31, December 31, September 30, (dollars in thousands) 2024 2024 2024 2023 2023 Adjusted earnings pre tax - non-GAAP $ 22,523 $ 8,414 $ 18,240 $ 28,948 $ 27,896 Provision for credit losses 5,000 16,800 14,000 6,950 5,168 Adjusted pre-tax, pre-provision earnings - non-GAAP $ 27,523 $ 25,214 $ 32,240 $ 35,898 $ 33,064 Adjusted pre-tax, pre-provision return on average assets 1.42 % 1.30 % 1.67 % 1.80 % 1.66 %
2626 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) Efficiency Ratio Reconciliation For the Quarter Ended September 30, June 30, March 31, December 31, September 30, 2024 2024 2024 2023 2023 (dollars in thousands) Noninterest expense - GAAP $ 46,733 $ 47,479 $ 44,867 $ 44,488 $ 42,038 Net interest income - GAAP $ 54,950 $ 55,052 $ 55,920 $ 58,077 $ 58,596 Effect of tax-exempt income 205 170 215 183 205 Adjusted net interest income 55,155 55,222 56,135 58,260 58,801 Noninterest income - GAAP 19,339 17,656 21,187 20,513 11,545 Loss on sales of investment securities, net 44 152 — 2,894 4,961 (Gain) on sale of Visa B shares — — — (1,098) — (Gain) on repurchase of subordinated debt (77) (167) — — — Adjusted noninterest income 19,306 17,641 21,187 22,309 16,506 Adjusted total revenue $ 74,461 $ 72,863 $ 77,322 $ 80,569 $ 75,307 Efficiency ratio 62.76 % 65.16 % 58.03 % 55.22 % 55.82 %
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 September 30, June 30, March 31, December 31, September 30, (dollars in thousands, except per share data) 2024 2024 2024 2023 2023 Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 818,259 $ 785,772 $ 791,006 $ 791,853 $ 757,610 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 (13,052) (14,003) (15,019) (16,108) (17,238) Tangible common equity $ 532,755 $ 499,317 $ 503,535 $ 503,293 $ 467,920 Less: Accumulated other comprehensive income (AOCI) (60,640) (82,581) (81,419) (76,753) (101,181) Tangible common equity excluding AOCI $ 593,395 $ 581,898 $ 584,954 $ 580,046 $ 569,101 Total Assets to Tangible Assets: Total assets—GAAP $ 7,751,483 $ 7,757,274 $ 7,831,809 $ 7,866,868 $ 7,969,285 Adjustments: Goodwill (161,904) (161,904) (161,904) (161,904) (161,904) Other intangible assets, net (13,052) (14,003) (15,019) (16,108) (17,238) Tangible assets $ 7,576,527 $ 7,581,367 $ 7,654,886 $ 7,688,856 $ 7,790,143 Common Shares Outstanding 21,393,905 21,377,215 21,485,231 21,551,402 21,594,546 Tangible Common Equity to Tangible Assets 7.03 % 6.59 % 6.58 % 6.55 % 6.01 % Tangible Book Value Per Share $ 24.90 $ 23.36 $ 23.44 $ 23.35 $ 21.67 Tangible Book Value Per Share, excluding AOCI $ 27.74 $ 27.22 $ 27.23 $ 26.91 $ 26.35 Return on Average Tangible Common Equity (ROATCE) For the Quarter Ended September 30, June 30, March 31, December 31, September 30, (dollars in thousands) 2024 2024 2024 2023 2023 Net income available to common shareholders $ 16,247 $ 4,522 $ 11,657 $ 18,483 $ 9,173 Average total shareholders' equity—GAAP $ 795,322 $ 783,846 $ 789,906 $ 764,790 $ 771,625 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 (13,506) (14,483) (15,525) (16,644) (17,782) Average tangible common equity $ 509,364 $ 496,911 $ 501,929 $ 475,694 $ 481,391 ROATCE 12.69 % 3.66 % 9.34 % 15.41 % 7.56 %