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): January 26, 2017
Midland States Bancorp, Inc.
(Exact Name of Registrant as Specified in Charter)
| Illinois | 001-35272 | 37-1233196 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1201 Network Centre Drive
Effingham, Illinois 62401
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (217) 342-7321
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)) |
Item 2.02. Results of Operations and Financial Condition.
On January 26, 2017, Midland States Bancorp, Inc. (the “Company”) issued a press release announcing its earnings results for the fourth quarter of 2016. The press release is attached as Exhibit 99.1.
Item 7.01. Regulation FD Disclosure
On January 26, 2017, the Company made available on its website a slide presentation regarding the Company's fourth quarter 2016 financial results and acquisition of Centrue Financial Corporation, which will be used as part of a publicly accessible conference call on January 27, 2017. The slide presentation is attached as Exhibit 99.2.
The information in this Form 8-K and the attached exhibits shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Press Release of Midland States Bancorp, Inc., dated January 26, 2017 | |
| 99.2 | Slide Presentation of Midland States Bancorp, Inc. regarding fourth quarter 2016 financial results and acquisition of Centrue Financial Corporation |
SignatureS
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: January 26, 2017 | Midland States Bancorp, Inc. | ||
| By: | /s/ Douglas J. Tucker | ||
| Name: | Douglas J. Tucker | ||
| Title: | Senior Vice President and Corporate Counsel | ||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release of Midland States Bancorp, Inc., dated January 26, 2017 | |
| 99.2 | Slide Presentation of Midland States Bancorp, Inc. regarding fourth quarter 2016 financial results and acquisition of Centrue Financial Corporation |
EXHIBIT 99.1
Midland States Bancorp, Inc. Announces 2016 Fourth Quarter Results
Highlights
- Net income of $11.6 million, or $0.72 diluted earnings per share
- Average loans increased $118 million, or 20.7% annualized
- Return on average assets of 1.44%; Return on average equity of 14.05%
- Acquisition of Sterling Trust added $400 million in assets under administration
- Operational Excellence initiative adopted to drive increased efficiencies
- Definitive agreement signed to acquire Centrue Financial Corporation
EFFINGHAM, Ill., Jan. 26, 2017 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the “Company”) today reported net income of $11.6 million, or $0.72 diluted earnings per share, for the fourth quarter of 2016, compared with net income of $8.1 million, or $0.51 diluted earnings per share, for the third quarter of 2016, and net income of $7.7 million, or $0.63 diluted earnings per share, for the fourth quarter of 2015.
“We continued to see strong loan demand during the fourth quarter, resulting in a 21% annualized increase in average loans,” said Leon J. Holschbach, President and Chief Executive Officer of the Company. “With the exception of commercial loans, which were impacted by fluctuations in warehouse lines of credit, we generated significant growth across all of our major lending areas, with the largest increases coming in our residential mortgage, consumer and construction portfolios.
“During the fourth quarter, we also executed a number of strategic actions designed to strengthen the Company over the longer-term. These actions included expanding our Wealth Management business with the acquisition of Sterling Trust, repositioning our investment securities portfolio to enhance our credit quality and capital ratios, and launching our Operational Excellence initiative to increase efficiencies across the organization.
“Looking ahead to 2017, we are seeing healthy economic conditions across our markets and we are expecting continued growth across all of our major business lines. The pending acquisition of Centrue Financial Corporation will add another catalyst for increasing our earnings power. Combined with the improved efficiencies that we expect to generate from the implementation of our Operational Excellence strategic initiative, we anticipate delivering another year of strong earnings growth and further value creation for our shareholders,” said Mr. Holschbach.
Adjusted Earnings
Financial results for the fourth quarter of 2016 included a $14.3 million gain on sale of a portfolio of private label collateralized mortgage obligations (“CMOs”), $2.1 million in charges related to the Company’s branch network optimization actions, and $1.6 million in other integration and acquisition-related expenses. Excluding these items, adjusted earnings were $6.3 million, or $0.39 diluted earnings per share, for the fourth quarter of 2016, compared with adjusted earnings of $8.3 million, or $0.52 diluted earnings per share, for the third quarter of 2016. The decline in adjusted earnings is primarily attributable to lower interest income from investment securities of $1.7 million following the sale of the portfolio of CMOs, as well as a higher provision for loan losses. A reconciliation of adjusted earnings to net income according to generally accepted accounting principles (“GAAP”) is provided in the financial tables at the end of this press release.
The cost savings resulting from the Operational Excellence initiative are expected to fully offset the reduction in interest income from investment securities in 2017 resulting from the sale of the CMO portfolio. Following the completion of the branch network optimization efforts in the first quarter of 2017, the Company expects non-interest expense to range between $29 million and $30 million per quarter, excluding integration and acquisition-related expenses and prior to the completion of the acquisition of Centrue Financial Corporation.
Net Interest Income
Net interest income for the fourth quarter of 2016 was $26.0 million, a decrease of 4.8% from $27.3 million for the third quarter of 2016. The decrease in net interest income was primarily attributable to lower interest income on investment securities following the sale of the portfolio of private label CMOs. The decrease in interest income on investment securities was partially offset by a $1.0 million increase in interest income on loans (excluding accretion income) due to 20.7% annualized growth in the average balance of loans.
The Company’s net interest income benefits from accretion income associated with purchased loan portfolios. Accretion income totaled $2.2 million for the fourth quarter of 2016, compared with $2.6 million for the third quarter of 2016.
Relative to the fourth quarter of 2015, net interest income decreased $0.5 million. Excluding the impact of a $2.2 million decrease in accretion income, net interest income increased $1.8 million. This increase resulted from a $3.4 million increase in interest income on loans (excluding the effect of accretion income) due to 17.8% growth in the average balance of loans, partially offset by a $1.7 million decline in interest income on investment securities following the sale of the portfolio of CMOs.
Net Interest Margin
Net interest margin for the fourth quarter of 2016 was 3.70%, compared to 4.00% for the third quarter of 2016. The Company’s net interest margin benefits from accretion income on purchased loan portfolios. Excluding accretion income, net interest margin was 3.44% for the fourth quarter of 2016, compared with 3.66% for the third quarter of 2016. The decrease in net interest margin excluding accretion income was primarily attributable to the sale of the CMO portfolio.
Relative to the fourth quarter of 2015, the net interest margin declined from 4.19%, primarily due to a decline in accretion income. Excluding accretion income, the net interest margin declined from 3.56%, which was primarily attributable to lower average yields on investment securities following the sale of the portfolio of CMOs.
Noninterest Income
Noninterest income for the fourth quarter of 2016 was $30.5 million, an increase of 104% from $14.9 million for the third quarter of 2016. The increase was primarily attributable to a $14.3 million gain on the sale of the CMO portfolio. Excluding the gain on sale of the CMOs, non-interest income for the fourth quarter of 2016 was $16.2 million, an increase of 8.4% over the third quarter of 2016. The increase was due to higher commercial FHA, residential mortgage banking, and wealth management revenue, partially offset by lower other income.
Commercial FHA revenue for the fourth quarter of 2016 was $3.7 million, an increase of 13.6% from $3.3 million in the third quarter of 2016. The Company originated $159.0 million in rate lock commitments during the fourth quarter of 2016, compared to $73.4 million in the prior quarter. The Company also recorded mortgage servicing rights impairment of $0.7 million in the fourth quarter of 2016, which negatively impacted the reported commercial FHA revenue.
Residential mortgage banking revenue for the fourth quarter of 2016 was $6.2 million, an increase of 25.1% from $5.0 million in the third quarter of 2016. Residential mortgage banking revenue was positively impacted in the fourth quarter of 2016 by the recapture of previously recorded mortgage servicing rights impairment totaling $3.6 million.
Relative to the fourth quarter of 2015, noninterest income increased 138% from $12.8 million. The increase was due to the gain on sale of the CMOs, as well as increases in all of the Company’s major fee generating businesses.
Noninterest Expense
Noninterest expense for the fourth quarter of 2016 was $34.1 million, which included $2.1 million in charges related to the Company’s branch network optimization actions and $1.6 million in other integration and acquisition-related expenses. Excluding these expenses, noninterest expense for the fourth quarter of 2016 was $30.4 million, an increase of 6.2% from $28.7 million for the third quarter of 2016. The increase was primarily driven by higher salaries and benefits expense resulting from higher bonus accruals and the addition of employees from the Sterling Trust acquisition, as well as an increase in professional fees.
Relative to the fourth quarter of 2015, noninterest expense excluding the charges related to the Company’s branch network optimization actions and other integration and acquisition-related expenses increased 9.9% from $27.7 million. The increase was primarily due to higher salaries and benefits expense resulting from an increase in FTEs over the past 12 months, as well as higher professional fees.
Income Tax Expense
Income tax expense was $8.3 million for the fourth quarter of 2016, compared to $4.1 million for the third quarter of 2016. The effective tax rate for the fourth quarter of 2016 was 41.8%, compared to 33.8% in the prior quarter. The increase in the effective tax rate for the fourth quarter of 2016 was primarily attributable to the write-off of state tax refunds and tax credits obtained through the Heartland acquisition.
For the full year 2017, the Company expects its effective tax rate to return to a level approximate to the effective tax rate in the third quarter of 2016.
Loan Portfolio
Total loans outstanding were $2.32 billion at December 31, 2016, compared with $2.31 billion at September 30, 2016, and $2.00 billion at December 31, 2015. The $7.2 million increase in the loan portfolio from September 30, 2016 was primarily driven by a $13.3 million increase in commercial real estate loans, a $36.8 million increase in residential real estate loans, a $21.9 million increase in consumer loans, a $9.1 million increase in equipment lease financing loans, and a $13.4 million increase in construction loans. These increases were partially offset by an $87.2 million decrease in commercial loans.
Approximately $65 million of the decline in commercial loans was attributable to a decrease in advances on a warehouse line of credit to a customer that originates government-guaranteed commercial FHA loans. The advances on this warehouse line of credit are short-term in nature.
Deposits
Total deposits were $2.40 billion at December 31, 2016, compared with $2.42 billion at September 30, 2016, and $2.37 billion at December 31, 2015. Total deposits at December 31, 2016 were impacted by $73 million of deposit outflow related to fluctuations in the deposit balances of the warehouse line of credit customer referenced above, as part of their ordinary course of business. This temporary deposit outflow was partially offset by increases in non-interest bearing, money market, and savings deposits from other customers.
Asset Quality
Non-performing loans totaled $31.6 million, or 1.36% of total loans, at December 31, 2016, compared with $29.9 million, or 1.29% of total loans, at September 30, 2016, and $24.9 million, or 1.26% of total loans, at December 31, 2015. The increase in non-performing loans from September 30, 2016 is primarily due to one commercial loan relationship.
Net charge-offs for the fourth quarter of 2016 were $3.1 million, or 0.54% of average loans on an annualized basis. Net charge-offs consisted of $1.6 million in commercial loans, $0.7 million in commercial real estate loans, $0.5 million in residential loans and $0.4 million in lease financing loans. Approximately $1.5 million of the commercial loan charge-offs related to one commercial credit that was fully reserved for in prior quarters.
The Company recorded a provision for loan losses of $2.4 million for the fourth quarter of 2016, primarily reflecting the higher level of net charge-offs in the quarter.
The Company’s allowance for loan losses was 0.64% of total loans and 47.0% of non-performing loans at December 31, 2016, compared with 0.67% and 52.0%, respectively, at September 30, 2016. Including the fair market value discounts recorded in connection with acquired loan portfolios, the allowance for loan losses to total loans ratio was 1.02% at December 31, 2016, compared with 1.06% at September 30, 2016.
Capital
At December 31, 2016, the Company exceeded all regulatory capital requirements under Basel III and was considered to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:
| December 31, 2016 | Well Capitalized Regulatory Requirements | |||
| Total capital to risk-weighted assets | 13.85 | % | 10.00 | % |
| Tier 1 capital to risk-weighted assets | 11.27 | % | 8.00 | % |
| Tier 1 leverage ratio | 9.76 | % | 5.00 | % |
| Tier 1 common capital to risk-weighted assets | 9.35 | % | 6.50 | % |
| Tangible common equity to tangible assets | 8.36 | % | NA | |
Conference Call, Webcast and Slide Presentation
The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, January 27, 2017. During the call, management will review the fourth quarter results, operational highlights and the Centrue transaction. The call can be accessed via telephone at (877) 516-3531 (passcode: 47777304). A recorded replay can be accessed through February 3, 2017 by dialing (855) 859-2056; passcode: 47777304.
A slide presentation relating to the fourth quarter results and the Centrue transaction will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website.
About Midland States Bancorp, Inc.
Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. Midland had assets of approximately $3.2 billion, and its Midland Wealth Management Group had assets under administration of approximately $1.7 billion as of December 31, 2016. Midland provides a full range of commercial and consumer banking products and services, merchant credit card services, trust and investment management, and insurance and financial planning services. In addition, commercial equipment leasing services are provided through Heartland Business Credit, and multi-family and healthcare facility FHA financing is provided through Love Funding, Midland's non-bank subsidiaries. Midland has more than 80 locations across the United States. For additional information, visit www.midlandsb.com or follow Midland on LinkedIn at https://www.linkedin.com/company/midland-states-bank.
Non-GAAP Financial Measures
Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures include “Adjusted Earnings,” “Adjusted Diluted Earnings Per Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Yield on Loans Excluding Accretion Income, ” “Net Interest Margin Excluding Accretion Income,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures.
Forward-Looking Statements
Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements," including but not limited to statements about the Company’s expected loan production, operating expenses and future earnings levels including with respect to the planned acquisition of Centrue Financial Corporation. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe" or "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) | |||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||
| (in thousands, except per share data) | 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||||
| Earnings Summary | |||||||||||||||||||||||
| Net interest income | $ | 25,959 | $ | 27,265 | $ | 27,989 | $ | 24,041 | $ | 26,452 | |||||||||||||
| Provision for loan losses | 2,445 | 1,392 | 629 | 1,125 | 1,052 | ||||||||||||||||||
| Noninterest income | 30,486 | 14,937 | 14,016 | 12,618 | 12,799 | ||||||||||||||||||
| Noninterest expense | 34,093 | 28,663 | 30,903 | 27,639 | 27,692 | ||||||||||||||||||
| Income before income taxes | 19,907 | 12,147 | 10,473 | 7,895 | 10,507 | ||||||||||||||||||
| Income taxes | 8,327 | 4,102 | 3,683 | 2,777 | 2,811 | ||||||||||||||||||
| Net income | 11,580 | 8,045 | 6,790 | 5,118 | 7,696 | ||||||||||||||||||
| Net income (loss) attributable to noncontrolling interest in subsidiaries | (3 | ) | (6 | ) | 1 | (1 | ) | 1 | |||||||||||||||
| Net income attributable to Midland States Bancorp, Inc. | $ | 11,583 | $ | 8,051 | $ | 6,789 | $ | 5,119 | $ | 7,695 | |||||||||||||
| Diluted earnings per common share | $ | 0.72 | $ | 0.51 | $ | 0.50 | $ | 0.42 | $ | 0.63 | |||||||||||||
| Weighted average shares outstanding - diluted | 16,032,016 | 15,858,273 | 13,635,074 | 12,229,293 | 12,181,664 | ||||||||||||||||||
| Return on average assets | 1.44 | % | 1.03 | % | 0.89 | % | 0.70 | % | 1.06 | % | |||||||||||||
| Return on average shareholders' equity | 14.05 | % | 10.04 | % | 10.18 | % | 8.69 | % | 13.19 | % | |||||||||||||
| Return on average tangible common shareholders' equity | 16.84 | % | 12.01 | % | 12.67 | % | 11.22 | % | 17.26 | % | |||||||||||||
| Net interest margin | 3.70 | % | 4.00 | % | 4.20 | % | 3.80 | % | 4.19 | % | |||||||||||||
| Efficiency ratio | 76.64 | % | 64.56 | % | 66.46 | % | 67.73 | % | 68.83 | % | |||||||||||||
| Adjusted Earnings Performance Summary | |||||||||||||||||||||||
| Adjusted earnings | $ | 6,300 | $ | 8,269 | $ | 7,107 | $ | 5,767 | $ | 7,525 | |||||||||||||
| Adjusted diluted earnings per common share | $ | 0.39 | $ | 0.52 | $ | 0.52 | $ | 0.47 | $ | 0.61 | |||||||||||||
| Adjusted return on average assets | 0.78 | % | 1.06 | % | 0.93 | % | 0.79 | % | 1.04 | % | |||||||||||||
| Adjusted return on average shareholders' equity | 7.64 | % | 10.32 | % | 10.66 | % | 9.79 | % | 12.90 | % | |||||||||||||
| Adjusted return on average tangible common shareholders' equity | 9.16 | % | 12.34 | % | 13.27 | % | 12.64 | % | 16.88 | % | |||||||||||||
| Net interest margin excluding accretion income | 3.44 | % | 3.66 | % | 3.52 | % | 3.55 | % | 3.56 | % | |||||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
| (in thousands, except per share data) | 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||||||
| Net interest income: | |||||||||||||||||||||||||
| Total interest income | $ | 29,981 | $ | 31,186 | $ | 32,115 | $ | 27,967 | $ | 30,300 | |||||||||||||||
| Total interest expense | 4,022 | 3,921 | 4,126 | 3,926 | 3,848 | ||||||||||||||||||||
| Net interest income | 25,959 | 27,265 | 27,989 | 24,041 | 26,452 | ||||||||||||||||||||
| Provision for loan losses | 2,445 | 1,392 | 629 | 1,125 | 1,052 | ||||||||||||||||||||
| Net interest income after provision for loan losses | 23,514 | 25,873 | 27,360 | 22,916 | 25,400 | ||||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||||
| Commercial FHA revenue | 3,704 | 3,260 | 8,538 | 6,562 | 3,045 | ||||||||||||||||||||
| Residential mortgage banking revenue | 6,241 | 4,990 | 1,037 | 1,121 | 3,328 | ||||||||||||||||||||
| Wealth management revenue | 2,495 | 1,941 | 1,870 | 1,785 | 1,831 | ||||||||||||||||||||
| Service charges on deposit accounts | 988 | 1,044 | 965 | 907 | 979 | ||||||||||||||||||||
| Interchange revenue | 921 | 920 | 945 | 964 | 858 | ||||||||||||||||||||
| FDIC loss sharing expense | - | - | (1,608 | ) | (53 | ) | (212 | ) | |||||||||||||||||
| Gain on sales of investment securities, net | 14,387 | 39 | 72 | 204 | 33 | ||||||||||||||||||||
| Other-than-temporary impairment on investment securities | - | - | - | (824 | ) | - | |||||||||||||||||||
| Other income | 1,750 | 2,743 | 2,197 | 1,952 | 2,937 | ||||||||||||||||||||
| Total noninterest income | 30,486 | 14,937 | 14,016 | 12,618 | 12,799 | ||||||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||||
| Salaries and employee benefits | 17,326 | 16,568 | 17,012 | 15,387 | 13,725 | ||||||||||||||||||||
| Occupancy and equipment | 3,266 | 3,271 | 3,233 | 3,310 | 3,424 | ||||||||||||||||||||
| Data processing | 2,828 | 2,586 | 2,624 | 2,620 | 2,546 | ||||||||||||||||||||
| Professional | 2,898 | 1,877 | 1,573 | 1,701 | 2,079 | ||||||||||||||||||||
| Amortization of intangible assets | 534 | 514 | 519 | 580 | 598 | ||||||||||||||||||||
| Other | 7,241 | 3,847 | 5,942 | 4,041 | 5,320 | ||||||||||||||||||||
| Total noninterest expense | 34,093 | 28,663 | 30,903 | 27,639 | 27,692 | ||||||||||||||||||||
| Income before income taxes | 19,907 | 12,147 | 10,473 | 7,895 | 10,507 | ||||||||||||||||||||
| Income taxes | 8,327 | 4,102 | 3,683 | 2,777 | 2,811 | ||||||||||||||||||||
| Net income | 11,580 | 8,045 | 6,790 | 5,118 | 7,696 | ||||||||||||||||||||
| Net (loss) income attributable to noncontrolling interest in subsidiaries | (3 | ) | (6 | ) | 1 | (1 | ) | 1 | |||||||||||||||||
| Net income attributable to Midland States Bancorp, Inc. | $ | 11,583 | $ | 8,051 | $ | 6,789 | $ | 5,119 | $ | 7,695 | |||||||||||||||
| Basic earnings per common share | $ | 0.74 | $ | 0.51 | $ | 0.51 | $ | 0.43 | $ | 0.64 | |||||||||||||||
| Diluted earnings per common share | $ | 0.72 | $ | 0.51 | $ | 0.50 | $ | 0.42 | $ | 0.63 | |||||||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||||||||
| As of | |||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
| (in thousands) | 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||||
| Cash and cash equivalents | $ | 190,716 | $ | 228,030 | $ | 123,366 | $ | 162,416 | $ | 212,475 | |||||||||||||||
| Investment securities available-for-sale at fair value | 246,339 | 252,212 | 238,781 | 232,074 | 236,627 | ||||||||||||||||||||
| Investment securities held to maturity at amortized cost | 78,672 | 82,941 | 84,756 | 88,085 | 87,521 | ||||||||||||||||||||
| Loans | 2,319,976 | 2,312,778 | 2,161,041 | 2,016,034 | 1,995,589 | ||||||||||||||||||||
| Allowance for loan losses | (14,862 | ) | (15,559 | ) | (14,752 | ) | (14,571 | ) | (15,988 | ) | |||||||||||||||
| Total loans, net | 2,305,114 | 2,297,219 | 2,146,289 | 2,001,463 | 1,979,601 | ||||||||||||||||||||
| Loans held for sale at fair value | 70,565 | 61,363 | 101,782 | 103,365 | 54,413 | ||||||||||||||||||||
| Premises and equipment, net | 66,692 | 70,727 | 72,147 | 72,421 | 73,133 | ||||||||||||||||||||
| Other real estate owned | 3,560 | 4,828 | 3,540 | 4,740 | 5,472 | ||||||||||||||||||||
| Mortgage servicing rights at lower of cost or market | 68,008 | 64,689 | 62,808 | 65,486 | 66,651 | ||||||||||||||||||||
| Intangible assets | 7,187 | 5,391 | 5,905 | 6,424 | 7,004 | ||||||||||||||||||||
| Goodwill | 48,836 | 46,519 | 46,519 | 46,519 | 46,519 | ||||||||||||||||||||
| Cash surrender value of life insurance policies | 74,226 | 74,276 | 73,665 | 53,173 | 52,729 | ||||||||||||||||||||
| Other assets | 73,808 | 59,532 | 62,226 | 61,914 | 62,679 | ||||||||||||||||||||
| Total assets | $ | 3,233,723 | $ | 3,247,727 | $ | 3,021,784 | $ | 2,898,080 | $ | 2,884,824 | |||||||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||||||||||
| Noninterest bearing deposits | $ | 562,333 | $ | 629,113 | $ | 528,966 | $ | 546,664 | $ | 543,401 | |||||||||||||||
| Interest bearing deposits | 1,842,033 | 1,790,919 | 1,825,586 | 1,843,046 | 1,824,247 | ||||||||||||||||||||
| Total deposits | 2,404,366 | 2,420,032 | 2,354,552 | 2,389,710 | 2,367,648 | ||||||||||||||||||||
| Short-term borrowings | 131,557 | 138,289 | 125,014 | 101,649 | 107,538 | ||||||||||||||||||||
| FHLB advances and other borrowings | 237,518 | 237,543 | 97,588 | 40,133 | 40,178 | ||||||||||||||||||||
| Subordinated debt | 54,508 | 54,484 | 54,459 | 61,903 | 61,859 | ||||||||||||||||||||
| Trust preferred debentures | 37,405 | 37,316 | 37,229 | 37,142 | 37,057 | ||||||||||||||||||||
| Other liabilities | 46,561 | 38,273 | 36,627 | 28,982 | 37,488 | ||||||||||||||||||||
| Total liabilities | 2,911,915 | 2,925,937 | 2,705,469 | 2,659,519 | 2,651,768 | ||||||||||||||||||||
| Midland States Bancorp, Inc. shareholders’ equity | 321,770 | 321,749 | 316,268 | 238,386 | 232,880 | ||||||||||||||||||||
| Noncontrolling interest in subsidiaries | 38 | 41 | 47 | 175 | 176 | ||||||||||||||||||||
| Total shareholders’ equity | 321,808 | 321,790 | 316,315 | 238,561 | 233,056 | ||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 3,233,723 | $ | 3,247,727 | $ | 3,021,784 | $ | 2,898,080 | $ | 2,884,824 | |||||||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (in thousands) | 2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||||||
| Loan Portfolio | ||||||||||||||||||||
| Commercial loans | $ | 457,827 | $ | 545,069 | $ | 489,228 | $ | 484,618 | $ | 499,573 | ||||||||||
| Commercial real estate loans | 969,615 | 956,298 | 929,399 | 897,099 | 876,784 | |||||||||||||||
| Construction and land development loans | 177,325 | 163,900 | 181,667 | 159,507 | 150,266 | |||||||||||||||
| Residential real estate loans | 253,713 | 216,935 | 179,184 | 158,221 | 163,224 | |||||||||||||||
| Consumer loans | 270,017 | 248,131 | 205,060 | 158,938 | 161,512 | |||||||||||||||
| Lease financing loans | 191,479 | 182,445 | 176,503 | 157,651 | 144,230 | |||||||||||||||
| Total loans | $ | 2,319,976 | $ | 2,312,778 | $ | 2,161,041 | $ | 2,016,034 | $ | 1,995,589 | ||||||||||
| Deposit Portfolio | ||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 562,333 | $ | 629,113 | $ | 528,966 | $ | 546,664 | $ | 543,401 | ||||||||||
| NOW accounts | 656,248 | 658,021 | 627,003 | 612,475 | 621,925 | |||||||||||||||
| Money market accounts | 399,851 | 366,193 | 374,537 | 415,130 | 377,654 | |||||||||||||||
| Savings accounts | 166,910 | 162,742 | 164,792 | 163,163 | 155,778 | |||||||||||||||
| Time deposits | 400,304 | 420,779 | 431,173 | 433,386 | 446,621 | |||||||||||||||
| Brokered deposits | 218,720 | 183,184 | 228,081 | 218,892 | 222,269 | |||||||||||||||
| Total deposits | $ | 2,404,366 | $ | 2,420,032 | $ | 2,354,552 | $ | 2,389,710 | $ | 2,367,648 | ||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||
| (in thousands) | 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||
| Average Balance Sheets | |||||||||||||||||||||
| Cash and cash equivalents | $ | 140,439 | $ | 154,764 | $ | 232,362 | $ | 223,951 | $ | 184,072 | |||||||||||
| Investment securities | 334,438 | 348,265 | 338,224 | 327,267 | 345,114 | ||||||||||||||||
| Loans | 2,385,780 | 2,268,178 | 2,171,814 | 2,063,568 | 2,039,046 | ||||||||||||||||
| Total interest-earning assets | 2,860,657 | 2,771,207 | 2,742,400 | 2,614,786 | 2,568,232 | ||||||||||||||||
| Non-earning assets | 337,694 | 329,504 | 324,880 | 317,648 | 312,154 | ||||||||||||||||
| Total assets | $ | 3,198,351 | $ | 3,100,711 | $ | 3,067,280 | $ | 2,932,434 | $ | 2,880,386 | |||||||||||
| Interest-bearing deposits | $ | 1,838,760 | $ | 1,803,189 | $ | 1,844,493 | $ | 1,832,599 | $ | 1,813,974 | |||||||||||
| Short-term borrowings | 151,191 | 134,052 | 114,651 | 120,753 | 118,118 | ||||||||||||||||
| FHLB advances and other borrowings | 183,614 | 165,774 | 185,195 | 99,499 | 48,583 | ||||||||||||||||
| Subordinated debt | 54,495 | 54,470 | 61,677 | 61,878 | 61,835 | ||||||||||||||||
| Trust preferred debentures | 37,357 | 37,266 | 37,182 | 37,094 | 37,013 | ||||||||||||||||
| Total interest-bearing liabilities | 2,265,417 | 2,194,751 | 2,243,198 | 2,151,823 | 2,079,523 | ||||||||||||||||
| Noninterest-bearing deposits | 562,958 | 550,816 | 522,632 | 511,019 | 529,196 | ||||||||||||||||
| Other noninterest-bearing liabilities | 42,050 | 36,235 | 33,188 | 32,671 | 40,247 | ||||||||||||||||
| Shareholders' equity | 327,926 | 318,909 | 268,262 | 236,921 | 231,420 | ||||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,198,351 | $ | 3,100,711 | $ | 3,067,280 | $ | 2,932,434 | $ | 2,880,386 | |||||||||||
| Yields | |||||||||||||||||||||
| Cash and cash equivalents | 0.53 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.27 | % | |||||||||||
| Investment securities | 3.13 | % | 4.93 | % | 5.12 | % | 5.31 | % | 5.02 | % | |||||||||||
| Loans | 4.63 | % | 4.79 | % | 5.22 | % | 4.68 | % | 5.15 | % | |||||||||||
| Total interest-earning assets | 4.26 | % | 4.57 | % | 4.81 | % | 4.40 | % | 4.79 | % | |||||||||||
| Interest-bearing deposits | 0.48 | % | 0.48 | % | 0.50 | % | 0.49 | % | 0.48 | % | |||||||||||
| Short-term borrowings | 0.22 | % | 0.24 | % | 0.24 | % | 0.23 | % | 0.20 | % | |||||||||||
| FHLB advances and other borrowings | 0.78 | % | 0.73 | % | 0.56 | % | 0.55 | % | 0.87 | % | |||||||||||
| Subordinated debt | 6.37 | % | 6.38 | % | 6.87 | % | 6.87 | % | 6.79 | % | |||||||||||
| Trust preferred debentures | 4.99 | % | 5.03 | % | 4.95 | % | 4.80 | % | 4.60 | % | |||||||||||
| Total interest-bearing liabilities | 0.71 | % | 0.71 | % | 0.74 | % | 0.73 | % | 0.73 | % | |||||||||||
| Net interest margin | 3.70 | % | 4.00 | % | 4.20 | % | 3.80 | % | 4.19 | % | |||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| As of and for the Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (in thousands, except per share data) | 2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||||||
| Asset Quality | ||||||||||||||||||||
| Loans 30-89 days past due | $ | 10,767 | $ | 10,318 | $ | 10,453 | $ | 6,616 | $ | 10,120 | ||||||||||
| Nonperforming loans | 31,603 | 29,926 | 18,430 | 18,787 | 24,891 | |||||||||||||||
| Nonperforming assets | 34,550 | 34,304 | 21,469 | 22,312 | 29,206 | |||||||||||||||
| Net charge-offs | 3,142 | 585 | 448 | 2,542 | 220 | |||||||||||||||
| Loans 30-89 days past due to total loans | 0.46 | % | 0.45 | % | 0.48 | % | 0.33 | % | 0.51 | % | ||||||||||
| Nonperforming loans to total loans | 1.36 | % | 1.29 | % | 0.85 | % | 0.93 | % | 1.25 | % | ||||||||||
| Nonperforming assets to total assets | 1.07 | % | 1.06 | % | 0.71 | % | 0.77 | % | 1.01 | % | ||||||||||
| Allowance for loan losses to total loans | 0.64 | % | 0.67 | % | 0.68 | % | 0.72 | % | 0.80 | % | ||||||||||
| Allowance for loan losses to nonperforming loans | 47.03 | % | 51.99 | % | 80.04 | % | 77.56 | % | 64.23 | % | ||||||||||
| Net charge-offs to average loans | 0.54 | % | 0.11 | % | 0.09 | % | 0.51 | % | 0.04 | % | ||||||||||
| Wealth Management | ||||||||||||||||||||
| Trust assets under administration | $ | 1,658,235 | $ | 1,235,132 | $ | 1,198,044 | $ | 1,189,693 | $ | 1,181,128 | ||||||||||
| Market Data | ||||||||||||||||||||
| Book value per share at period end | $ | 20.78 | $ | 20.89 | $ | 20.53 | $ | 20.19 | $ | 19.74 | ||||||||||
| Tangible book value per share at period end | $ | 17.16 | $ | 17.52 | $ | 17.13 | $ | 15.71 | $ | 15.20 | ||||||||||
| Market price at period end | $ | 36.18 | $ | 25.34 | $ | 21.69 | $ | N/A | $ | N/A | ||||||||||
| Shares outstanding at period end | 15,483,499 | 15,404,423 | 15,402,946 | 11,804,779 | 11,797,404 | |||||||||||||||
| Capital | ||||||||||||||||||||
| Total capital to risk-weighted assets | 13.85 | % | 13.53 | % | 13.91 | % | 11.67 | % | 11.82 | % | ||||||||||
| Tier 1 capital to risk-weighted assets | 11.27 | % | 10.94 | % | 11.23 | % | 8.48 | % | 8.62 | % | ||||||||||
| Tier 1 leverage ratio | 9.76 | % | 9.82 | % | 9.77 | % | 7.25 | % | 7.49 | % | ||||||||||
| Tier 1 common capital to risk-weighted assets | 9.35 | % | 9.03 | % | 9.24 | % | 6.40 | % | 6.50 | % | ||||||||||
| Tangible common equity to tangible assets | 8.36 | % | 8.44 | % | 8.89 | % | 6.52 | % | 6.33 | % | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||||||||
| (in thousands, except per share data) | 2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||||||||||||
| Adjusted Earnings Reconciliation | ||||||||||||||||||||||||||
| Income before income taxes - GAAP | $ | 19,907 | $ | 12,147 | $ | 10,473 | $ | 7,895 | $ | 10,507 | ||||||||||||||||
| Adjustments to other income: | ||||||||||||||||||||||||||
| Gain on sales of investment securities, net | 14,387 | 39 | 72 | 204 | 33 | |||||||||||||||||||||
| Other than-temporary-impairment on investment securities | - | - | - | (824 | ) | - | ||||||||||||||||||||
| FDIC loss-sharing expense | - | - | - | - | (212 | ) | ||||||||||||||||||||
| Amortization of FDIC indemnification asset, net | - | - | - | - | (39 | ) | ||||||||||||||||||||
| Reversal of contingent consideration accrual | - | - | 350 | - | - | |||||||||||||||||||||
| Total adjusted other income | 14,387 | 39 | 422 | (620 | ) | (218 | ) | |||||||||||||||||||
| Adjustments to other expense: | ||||||||||||||||||||||||||
| Expenses associated with payoff of subordinated debt | - | - | 511 | - | - | |||||||||||||||||||||
| Net expense from loss share termination agreement | 351 | - | - | - | - | |||||||||||||||||||||
| Branch network optimization plan charges | 2,099 | - | - | - | - | |||||||||||||||||||||
| Integration and acquisition expenses | 1,200 | 352 | 406 | 385 | 214 | |||||||||||||||||||||
| Total adjusted other expense | 3,650 | 352 | 917 | 385 | 214 | |||||||||||||||||||||
| Adjusted earnings pre tax | 9,170 | 12,460 | 10,968 | 8,900 | 10,939 | |||||||||||||||||||||
| Adjusted earnings tax | 2,870 | 4,191 | 3,861 | 3,133 | 3,414 | |||||||||||||||||||||
| Adjusted earnings - non-GAAP | $ | 6,300 | $ | 8,269 | $ | 7,107 | $ | 5,767 | $ | 7,525 | ||||||||||||||||
| Adjusted diluted EPS | $ | 0.39 | $ | 0.52 | $ | 0.52 | $ | 0.47 | $ | 0.61 | ||||||||||||||||
| Adjusted return on average assets | 0.78 | % | 1.06 | % | 0.93 | % | 0.79 | % | 1.04 | % | ||||||||||||||||
| Adjusted return on average shareholders' equity | 7.64 | % | 10.32 | % | 10.66 | % | 9.79 | % | 12.90 | % | ||||||||||||||||
| Adjusted return on average tangible common equity | 9.16 | % | 12.34 | % | 13.27 | % | 12.64 | % | 16.88 | % | ||||||||||||||||
| Yield on Loans | ||||||||||||||||||||||||||
| Reported yield on loans | 4.63 | % | 4.79 | % | 5.22 | % | 4.68 | % | 5.15 | % | ||||||||||||||||
| Effect of accretion income on acquired loans | (0.30 | ) | % | (0.41 | ) | % | (0.85 | ) | % | (0.30 | ) | % | (0.78 | ) | % | |||||||||||
| Yield on loans excluding accretion income | 4.33 | % | 4.38 | % | 4.37 | % | 4.38 | % | 4.37 | % | ||||||||||||||||
| Net Interest Margin | ||||||||||||||||||||||||||
| Reported net interest margin | 3.70 | % | 4.00 | % | 4.20 | % | 3.80 | % | 4.19 | % | ||||||||||||||||
| Effect of accretion income on acquired loans | (0.26 | ) | % | (0.34 | ) | % | (0.68 | ) | % | (0.25 | ) | % | (0.63 | ) | % | |||||||||||
| Net interest margin excluding accretion income | 3.44 | % | 3.66 | % | 3.52 | % | 3.55 | % | 3.56 | % | ||||||||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||
| Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share | ||||||||||||||||||||||||||
| As of | ||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||||||||
| (in thousands, except per share data) | 2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||||||||||||
| Shareholders' Equity to Tangible Common Equity | ||||||||||||||||||||||||||
| Total shareholders' equity—GAAP | $ | 321,808 | $ | 321,790 | $ | 316,315 | $ | 238,561 | $ | 233,056 | ||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Noncontrolling interest in subsidiaries | (38 | ) | (41 | ) | (47 | ) | (175 | ) | (176 | ) | ||||||||||||||||
| Goodwill | (48,836 | ) | (46,519 | ) | (46,519 | ) | (46,519 | ) | (46,519 | ) | ||||||||||||||||
| Other intangibles | (7,187 | ) | (5,391 | ) | (5,905 | ) | (6,424 | ) | (7,004 | ) | ||||||||||||||||
| Tangible common equity | $ | 265,747 | $ | 269,839 | $ | 263,844 | $ | 185,443 | $ | 179,357 | ||||||||||||||||
| Total Assets to Tangible Assets: | ||||||||||||||||||||||||||
| Total assets—GAAP | 3,233,723 | 3,247,727 | 3,021,784 | 2,898,080 | 2,884,824 | |||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Goodwill | (48,836 | ) | (46,519 | ) | (46,519 | ) | (46,519 | ) | (46,519 | ) | ||||||||||||||||
| Other intangibles | (7,187 | ) | (5,391 | ) | (5,905 | ) | (6,424 | ) | (7,004 | ) | ||||||||||||||||
| Tangible assets | $ | 3,177,700 | $ | 3,195,817 | $ | 2,969,360 | $ | 2,845,137 | $ | 2,831,301 | ||||||||||||||||
| Common Shares Outstanding | 15,483,499 | 15,404,423 | 15,402,946 | 11,804,779 | 11,797,404 | |||||||||||||||||||||
| Tangible Common Equity to Tangible Assets | 8.36 | % | 8.44 | % | 8.89 | % | 6.52 | % | 6.33 | % | ||||||||||||||||
| Tangible Book Value Per Share | $ | 17.16 | $ | 17.52 | $ | 17.13 | $ | 15.71 | $ | 15.20 | ||||||||||||||||
| Return on Average Tangible Common Equity (ROATCE) | ||||||||||||||||||||||||||
| As of | ||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||||||||
| (in thousands) | 2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||||||||||||
| Net Income | $ | 11,583 | $ | 8,051 | $ | 6,789 | $ | 5,119 | $ | 7,695 | ||||||||||||||||
| Average total shareholders' equity—GAAP | $ | 327,926 | $ | 318,909 | $ | 268,262 | $ | 236,921 | $ | 231,420 | ||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Noncontrolling interest in subsidiaries | (40 | ) | (49 | ) | (121 | ) | (184 | ) | (204 | ) | ||||||||||||||||
| Goodwill | (46,594 | ) | (46,519 | ) | (46,519 | ) | (46,519 | ) | (46,997 | ) | ||||||||||||||||
| Other intangibles | (7,718 | ) | (5,656 | ) | (6,184 | ) | (6,740 | ) | (7,324 | ) | ||||||||||||||||
| Average tangible common equity | $ | 273,574 | $ | 266,685 | $ | 215,438 | $ | 183,478 | $ | 176,895 | ||||||||||||||||
| ROATCE | 16.84 | % | 12.01 | % | 12.67 | % | 11.22 | % | 17.26 | % | ||||||||||||||||
CONTACTS:
Jeffrey G. Ludwig, Exec. V.P., at jludwig@midlandsb.com or (217) 342-7321
Kevin L. Thompson, Chief Financial Officer, at kthompson@midlandsb.com or (217) 342-7321
Douglas J. Tucker, Sr. V.P., Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321
EXHIBIT 99.2
