Summary
- Net income available to common shareholders of $29.7 million, or $1.30 per diluted share
- $17.5 million gain on the termination of forward starting interest rate swaps, $3.3 million loss on commercial mortgage servicing rights held for sale and $3.5 million impairment on other real estate owned
- Total loans increased 7.0% annualized from prior quarter
- Tangible book value per share increased 4.0% from end of prior quarter
- Tangible common equity to tangible assets increased 24 basis points from end of prior quarter
EFFINGHAM, Ill., Jan. 26, 2023 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the "Company") today reported net income available to common shareholders of $29.7 million, or $1.30 per diluted share, for the fourth quarter of 2022 compared to $23.5 million, or $1.04, respectively, for the third quarter of 2022. This also compares to net income available to common shareholders of $23.1 million, or $1.02 per diluted share, for the fourth quarter of 2021.
Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, "Our fourth quarter performance completed a very successful year in which we generated a record level of earnings. For the full year, we generated return on assets of 1.31%, up from 1.18% in 2021, and return on tangible common equity of 20.8%, up from 17.9% in 2021. In the fourth quarter, our solid financial performance resulted in significant growth in both book value and tangible book value per share, as well as increases in most of our capital ratios.
"As we begin 2023, we are maintaining our conservative approach to new loan production and expect a relatively low level of loan growth until economic conditions improve. Even with a lower level of loan growth, we believe that we are well positioned to continue generating strong financial performance as we get additional leverage from the investments in talent and technology that we have made over the past few years. While we expect the macro environment to be challenging, particularly in the first half of the year, we believe that we will deliver strong results for our shareholders as we continue executing on our long-term strategies to enhance the value of the Midland franchise," said Mr. Ludwig.
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2022 was $63.6 million, a decrease of $0.5 million, or 0.7%, from $64.0 million for the third quarter of 2022, which was primarily due to increased deposit costs. Accretion income associated with purchased loan portfolios totaled $0.3 million for the fourth quarter of 2022, compared to $0.5 million for the third quarter of 2022.
Relative to the fourth quarter of 2021, net interest income increased 17.0%, from $54.3 million. The increase was primarily attributable to higher average balances of interest-earning assets, a more favorable asset mix, and higher yields on interest-earning assets. Paycheck Protection Program ("PPP") loan fees recognized as loan interest income totaled $1.5 million during the fourth quarter of 2021. Accretion income associated with purchased loan portfolios for the fourth quarter of 2021 was $0.8 million.
Net interest margin for the fourth quarter of 2022 was 3.50%, compared to 3.63% for the third quarter of 2022 as an increase in the cost of deposits more than offset the increase in the average yield on earning assets. The contribution of PPP loan fees to net interest margin was 1 basis point during the third quarter of 2022, while the fourth quarter of 2022 had no PPP loan fee impact. Additionally, the contribution of acquired loan discount accretion to net interest margin was 2 basis points during the fourth quarter of 2022 and 3 basis points during the third quarter of 2022.
Relative to the fourth quarter of 2021, net interest margin increased from 3.25%. This increase was primarily attributable to higher yields on interest-earning assets and a more favorable mix of interest-earning assets. PPP loan fees recognized as loan interest income contributed 9 basis points to net interest margin and acquired loan discount accretion contributed 4 basis points to net interest margin during the fourth quarter of 2021.
Noninterest Income
Noninterest income for the fourth quarter of 2022 was $33.8 million and was positively impacted by a $17.5 million gain on the termination of forward starting interest rate swaps. Excluding this transaction, noninterest income for the fourth quarter of 2022 was $16.3 million compared to $15.8 million for the third quarter of 2022.
Noninterest income for the fourth quarter of 2021 was $22.5 million and was positively impacted by $3.9 million in unrealized income on equity investments, a $1.8 million gain on the termination of an FHLB interest rate swap, and a $1.0 million gain on company-owned life insurance. Impairment on commercial mortgage servicing rights negatively impacted noninterest income by $2.1 million in the fourth quarter of 2021. Excluding these transactions, noninterest income decreased from the fourth quarter of 2021 to the fourth quarter of 2022, primarily due to declines in wealth management and residential mortgage banking revenue.
Wealth management revenue was $6.2 million for both the third and fourth quarters of 2022. Compared to the fourth quarter of 2021, wealth management revenue decreased 13.2%, primarily due to a decline in assets under administration resulting from market performance.
Noninterest Expense
Noninterest expense for the fourth quarter of 2022 was $49.9 million, an increase of 14.8% from $43.5 million in the third quarter of 2022. The increase was primarily due to a $3.3 million loss on commercial mortgage servicing rights held for sale and OREO impairment charges of $3.5 million recognized in the fourth quarter of 2022.
Relative to the fourth quarter of 2021, noninterest expense increased 9.1% from $45.8 million. Noninterest expense for the fourth quarter of 2021 included $4.9 million FHLB advance prepayment fees and $0.2 million in integration and acquisition expenses. Excluding these adjustments, noninterest expense for the fourth quarter of 2022 increased $2.4 million, primarily due to a modest increase in staffing levels and increases across most expense items consistent with the growth of the Company including the full quarter impact of the branch purchase completed in June 2022.
Loan Portfolio
Total loans outstanding were $6.31 billion at December 31, 2022, compared with $6.20 billion at September 30, 2022, and $5.22 billion at December 31, 2021. The growth in total loans from September 30, 2022 was primarily attributable to higher balances of consumer and construction and land development loans.
Equipment finance balances increased from $1.03 billion at September 30, 2022 to $1.11 billion at December 31, 2022.
Compared to loan balances at December 31, 2021, the Company experienced growth in all loan portfolios with the exception of commercial FHA warehouse lines and PPP loans.
Deposits
Total deposits were $6.36 billion at December 31, 2022, compared with $6.40 billion at September 30, 2022, and $6.11 billion at December 31, 2021. The decrease in total deposits from the end of the prior quarter was primarily attributable to a decline in noninterest-bearing demand partially offset by a small increase in interest-bearing deposits.
Asset Quality
Nonperforming loans totaled $49.4 million, or 0.78% of total loans, at December 31, 2022 compared with $46.9 million, or 0.76% of total loans, at September 30, 2022. At December 31, 2021, nonperforming loans totaled $42.6 million, or 0.81% of total loans.
Net charge-offs for the fourth quarter of 2022 were $0.5 million, or 0.03% of average loans on an annualized basis, compared to net charge-offs of $3.2 million, or 0.21% of average loans on an annualized basis, for the third quarter of 2022, and $4.6 million, or 0.37% of average loans on an annualized basis, for the fourth quarter of 2021.
The Company recorded a provision for credit losses of $3.5 million for the fourth quarter of 2022. Provision for credit losses on loans totaled $3.0 million for the fourth quarter of 2022, which was primarily related to the growth in total loans and negative economic forecasts. Provision for credit losses on unfunded commitments of $0.6 million was also recorded during the quarter.
The Company's allowance for credit losses on loans was 0.97% of total loans and 123.53% of nonperforming loans at December 31, 2022, compared with 0.95% of total loans and 125.08% of nonperforming loans at September 30, 2022.
Capital
At December 31, 2022, 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 December 31, 2022 | |||||
| Midland States Bank | Midland States Bancorp, Inc. | Minimum Regulatory Requirements(2) | |||
| Total capital to risk-weighted assets | 11.51% | 12.38% | 10.50% | ||
| Tier 1 capital to risk-weighted assets | 10.71% | 10.21% | 8.50% | ||
| Tier 1 leverage ratio | 9.90% | 9.43% | 4.00% | ||
| Common equity Tier 1 capital | 10.71% | 7.77% | 7.00% | ||
| Tangible common equity to tangible assets(1) | N/A | 6.06% | N/A | ||
(1) A non-GAAP financial measure. Refer to page 15 for a reconciliation to the comparable GAAP financial measure.
(2) Includes the capital conservation buffer of 2.5%.
Since the beginning of 2022, the impact of rising interest rates on the Company's investment portfolio has resulted in an $89.0 million decline in accumulated other comprehensive income, which has negatively impacted tangible book value per share by $4.02, and the tangible common equity to tangible assets ratio by 117 basis points.
On August 24, 2022, the Company issued and sold 4,600,000 depositary shares, each representing a 1/40th ownership interest in a share of the Company's 7.75% fixed-rate reset non-cumulative perpetual preferred stock, Series A, par value $2.00 per share (the "Series A preferred stock"), with a liquidation preference of $25 per depositary share (equivalent to $1,000 per share of Series A Preferred Stock). The Series A preferred stock qualifies as Tier 1 capital for purposes of regulatory capital calculations. The gross proceeds were $115.0 million while net proceeds from the issuance of the Series A preferred stock, after deducting $4.5 million of offering costs, including the underwriting discount and other expenses, were $110.5 million. The Company declared and paid $3.2 million of preferred dividends during the fourth quarter of 2022.
Stock Repurchase Program
During the fourth quarter of 2022, the Company did not repurchase any shares under its stock repurchase program. On December 6, 2022, 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, 2023. The previous repurchase plan terminated on December 31, 2022.
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, 2023, to discuss its financial results.
Telephone Access: https://register.vevent.com/register/BIc01dcecf8df0417783e5b208a72ec906
A slide presentation relating to the fourth quarter 2022 financial results will be accessible prior to the scheduled conference call. This earnings release should be read together with the slide presentation. The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company's investor relations website at investors.midlandsb.com under the "News and Events" tab.
About Midland States Bancorp, Inc.
Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of December 31, 2022, the Company had total assets of approximately $7.86 billion, and its Wealth Management Group had assets under administration of approximately $3.60 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" and "Return on Average Tangible Common Equity." The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company's funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.
Forward-Looking Statements
Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company's plans, objectives, future performance, goals and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, the impact of inflation, the effects of the Coronavirus Disease 2019 pandemic and its potential effects on the economic environment; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; developments and uncertainty related to the future use and availability of some reference rates, such as the London Inter-Bank Offered Rate, as well as other alternative reference rates, and the adoption of a substitute; changes to U.S. tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
CONTACTS:
Jeffrey G. Ludwig, President and CEO, at jludwig@midlandsb.com or (217) 342-7321
Eric T. Lemke, Chief Financial Officer, at elemke@midlandsb.com or (217) 342-7321
Douglas J. Tucker, SVP and Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||
| Earnings Summary | ||||||||||||||||||||
| Net interest income | $ | 63,550 | $ | 64,024 | $ | 61,334 | $ | 56,827 | $ | 54,301 | ||||||||||
| Provision for credit losses | 3,544 | 6,974 | 5,441 | 4,167 | 467 | |||||||||||||||
| Noninterest income | 33,839 | 15,826 | 14,613 | 15,613 | 22,523 | |||||||||||||||
| Noninterest expense | 49,943 | 43,496 | 41,339 | 40,884 | 45,757 | |||||||||||||||
| Income before income taxes | 43,902 | 29,380 | 29,167 | 27,389 | 30,600 | |||||||||||||||
| Income taxes | 11,030 | 5,859 | 7,284 | 6,640 | 7,493 | |||||||||||||||
| Net income | 32,872 | 23,521 | 21,883 | 20,749 | 23,107 | |||||||||||||||
| Preferred dividends | 3,169 | - | - | - | - | |||||||||||||||
| Net income available to common shareholders | $ | 29,703 | $ | 23,521 | $ | 21,883 | $ | 20,749 | $ | 23,107 | ||||||||||
| Diluted earnings per common share | $ | 1.30 | $ | 1.04 | $ | 0.97 | $ | 0.92 | $ | 1.02 | ||||||||||
| Weighted average common shares outstanding - diluted | 22,503,611 | 22,390,438 | 22,360,819 | 22,350,307 | 22,350,771 | |||||||||||||||
| Return on average assets | 1.66 | % | 1.22 | % | 1.19 | % | 1.16 | % | 1.26 | % | ||||||||||
| Return on average shareholders' equity | 17.41 | % | 13.31 | % | 13.65 | % | 12.80 | % | 14.04 | % | ||||||||||
| Return on average tangible common equity(1) | 25.89 | % | 20.20 | % | 19.14 | % | 17.84 | % | 19.69 | % | ||||||||||
| Net interest margin | 3.50 | % | 3.63 | % | 3.65 | % | 3.50 | % | 3.25 | % | ||||||||||
| Efficiency ratio(1) | 58.26 | % | 54.26 | % | 53.10 | % | 55.73 | % | 52.61 | % | ||||||||||
| Adjusted Earnings Performance Summary(1) | ||||||||||||||||||||
| Adjusted earnings available to common shareholders | $ | 19,278 | $ | 23,568 | $ | 22,191 | $ | 20,815 | $ | 25,416 | ||||||||||
| Adjusted diluted earnings per common share | $ | 0.85 | $ | 1.04 | $ | 0.98 | $ | 0.92 | $ | 1.12 | ||||||||||
| Adjusted return on average assets | 1.13 | % | 1.22 | % | 1.21 | % | 1.16 | % | 1.39 | % | ||||||||||
| Adjusted return on average shareholders' equity | 11.89 | % | 13.34 | % | 13.84 | % | 12.84 | % | 15.44 | % | ||||||||||
| Adjusted return on average tangible common equity | 16.80 | % | 20.24 | % | 19.41 | % | 17.89 | % | 21.65 | % | ||||||||||
| Adjusted pre-tax, pre-provision earnings | $ | 33,165 | $ | 36,415 | $ | 35,902 | $ | 32,041 | $ | 36,324 | ||||||||||
| Adjusted pre-tax, pre-provision return on average assets | 1.68 | % | 1.89 | % | 1.95 | % | 1.79 | % | 1.98 | % | ||||||||||
(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures.
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
| (in thousands, except per share data) | 2022 | 2022 | 2022 | 2022 | 2021 | ||||||||||||||
| Net interest income: | |||||||||||||||||||
| Interest income | $ | 90,215 | $ | 79,556 | $ | 69,236 | $ | 62,748 | $ | 60,427 | |||||||||
| Interest expense | 26,665 | 15,532 | 7,902 | 5,921 | 6,126 | ||||||||||||||
| Net interest income | 63,550 | 64,024 | 61,334 | 56,827 | 54,301 | ||||||||||||||
| Provision for credit losses: | |||||||||||||||||||
| Provision for credit losses on loans | 2,950 | 6,974 | 4,741 | 4,132 | - | ||||||||||||||
| Provision for credit losses on unfunded commitments | 594 | - | 700 | 256 | 388 | ||||||||||||||
| Provision for other credit losses | - | - | - | (221 | ) | 79 | |||||||||||||
| Total provision for credit losses | 3,544 | 6,974 | 5,441 | 4,167 | 467 | ||||||||||||||
| Net interest income after provision for credit losses | 60,006 | 57,050 | 55,893 | 52,660 | 53,834 | ||||||||||||||
| Noninterest income: | |||||||||||||||||||
| Wealth management revenue | 6,227 | 6,199 | 6,143 | 7,139 | 7,176 | ||||||||||||||
| Residential mortgage banking revenue | 316 | 210 | 384 | 599 | 1,103 | ||||||||||||||
| Service charges on deposit accounts | 2,511 | 2,597 | 2,304 | 2,068 | 2,338 | ||||||||||||||
| Interchange revenue | 3,478 | 3,531 | 3,590 | 3,280 | 3,677 | ||||||||||||||
| (Loss) gain on sales of investment securities, net | - | (129 | ) | (101 | ) | - | - | ||||||||||||
| Gain on termination of hedged interest rate swaps | 17,531 | - | - | - | 1,845 | ||||||||||||||
| Impairment on commercial mortgage servicing rights | - | - | (869 | ) | (394 | ) | (2,072 | ) | |||||||||||
| Company-owned life insurance | 796 | 929 | 840 | 1,019 | 1,904 | ||||||||||||||
| Other income | 2,980 | 2,489 | 2,322 | 1,902 | 6,552 | ||||||||||||||
| Total noninterest income | 33,839 | 15,826 | 14,613 | 15,613 | 22,523 | ||||||||||||||
| Noninterest expense: | |||||||||||||||||||
| Salaries and employee benefits | 22,901 | 22,889 | 22,645 | 21,870 | 22,109 | ||||||||||||||
| Occupancy and equipment | 3,748 | 3,850 | 3,489 | 3,755 | 3,429 | ||||||||||||||
| Data processing | 6,302 | 6,093 | 6,082 | 5,873 | 5,819 | ||||||||||||||
| Professional | 1,726 | 1,693 | 1,516 | 1,972 | 1,499 | ||||||||||||||
| Amortization of intangible assets | 1,333 | 1,361 | 1,318 | 1,398 | 1,425 | ||||||||||||||
| Other real estate owned | 3,779 | 582 | 309 | 518 | 243 | ||||||||||||||
| Loss on mortgage servicing rights held for sale | 3,250 | - | - | - | - | ||||||||||||||
| FHLB advances prepayment fees | - | - | - | - | 4,859 | ||||||||||||||
| Other expense | 6,904 | 7,028 | 5,980 | 5,498 | 6,374 | ||||||||||||||
| Total noninterest expense | 49,943 | 43,496 | 41,339 | 40,884 | 45,757 | ||||||||||||||
| Income before income taxes | 43,902 | 29,380 | 29,167 | 27,389 | 30,600 | ||||||||||||||
| Income taxes | 11,030 | 5,859 | 7,284 | 6,640 | 7,493 | ||||||||||||||
| Net income | 32,872 | 23,521 | 21,883 | 20,749 | 23,107 | ||||||||||||||
| Preferred stock dividends | 3,169 | - | - | - | - | ||||||||||||||
| Net income available to common shareholders | $ | 29,703 | $ | 23,521 | $ | 21,883 | $ | 20,749 | $ | 23,107 | |||||||||
| Basic earnings per common share | $ | 1.31 | $ | 1.04 | $ | 0.97 | $ | 0.92 | $ | 1.03 | |||||||||
| Diluted earnings per common share | $ | 1.30 | $ | 1.04 | $ | 0.97 | $ | 0.92 | $ | 1.02 | |||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 150,321 | $ | 313,188 | $ | 270,117 | $ | 332,264 | $ | 680,371 | ||||||||||
| Investment securities | 776,860 | 690,504 | 769,278 | 858,246 | 916,132 | |||||||||||||||
| Loans | 6,306,467 | 6,198,451 | 5,795,544 | 5,539,961 | 5,224,801 | |||||||||||||||
| Allowance for credit losses on loans | (61,051 | ) | (58,639 | ) | (54,898 | ) | (52,938 | ) | (51,062 | ) | ||||||||||
| Total loans, net | 6,245,416 | 6,139,812 | 5,740,646 | 5,487,023 | 5,173,739 | |||||||||||||||
| Loans held for sale | 1,286 | 4,338 | 5,298 | 8,931 | 32,045 | |||||||||||||||
| Premises and equipment, net | 78,293 | 77,519 | 77,668 | 77,857 | 79,220 | |||||||||||||||
| Other real estate owned | 6,729 | 11,141 | 11,131 | 11,537 | 12,059 | |||||||||||||||
| Loan servicing rights, at lower of cost or fair value | 1,205 | 1,297 | 25,879 | 27,484 | 28,865 | |||||||||||||||
| Commercial FHA mortgage loan servicing rights held for sale | 20,745 | 23,995 | - | - | - | |||||||||||||||
| Goodwill | 161,904 | 161,904 | 161,904 | 161,904 | 161,904 | |||||||||||||||
| Other intangible assets, net | 20,866 | 22,198 | 23,559 | 22,976 | 24,374 | |||||||||||||||
| Company-owned life insurance | 150,443 | 149,648 | 148,900 | 148,060 | 148,378 | |||||||||||||||
| Other assets | 241,433 | 226,333 | 201,432 | 202,433 | 186,718 | |||||||||||||||
| Total assets | $ | 7,855,501 | $ | 7,821,877 | $ | 7,435,812 | $ | 7,338,715 | $ | 7,443,805 | ||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 1,935,773 | $ | 2,025,237 | $ | 1,972,261 | $ | 1,965,032 | $ | 2,245,701 | ||||||||||
| Interest-bearing deposits | 4,428,879 | 4,370,015 | 4,212,177 | 4,092,507 | 3,864,947 | |||||||||||||||
| Total deposits | 6,364,652 | 6,395,252 | 6,184,438 | 6,057,539 | 6,110,648 | |||||||||||||||
| Short-term borrowings | 42,311 | 58,518 | 67,689 | 60,352 | 76,803 | |||||||||||||||
| FHLB advances and other borrowings | 460,000 | 360,000 | 285,000 | 310,171 | 310,171 | |||||||||||||||
| Subordinated debt | 99,772 | 139,370 | 139,277 | 139,184 | 139,091 | |||||||||||||||
| Trust preferred debentures | 49,975 | 49,824 | 49,674 | 49,524 | 49,374 | |||||||||||||||
| Other liabilities | 80,217 | 79,634 | 73,546 | 76,959 | 93,881 | |||||||||||||||
| Total liabilities | 7,096,927 | 7,082,598 | 6,799,624 | 6,693,729 | 6,779,968 | |||||||||||||||
| Total shareholders' equity | 758,574 | 739,279 | 636,188 | 644,986 | 663,837 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,855,501 | $ | 7,821,877 | $ | 7,435,812 | $ | 7,338,715 | $ | 7,443,805 | ||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||
| As of | |||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| (in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 | ||||||||||
| Loan Portfolio | |||||||||||||||
| Equipment finance loans | $ | 616,751 | $ | 577,323 | $ | 546,267 | $ | 528,572 | $ | 521,973 | |||||
| Equipment finance leases | 491,744 | 457,611 | 439,202 | 429,000 | 423,280 | ||||||||||
| Commercial FHA warehouse lines | 25,029 | 51,309 | 23,872 | 83,999 | 91,927 | ||||||||||
| SBA PPP loans | 1,916 | 2,810 | 6,409 | 22,862 | 52,477 | ||||||||||
| Other commercial loans | 870,878 | 904,841 | 814,710 | 802,692 | 783,811 | ||||||||||
| Total commercial loans and leases | 2,006,318 | 1,993,894 | 1,830,460 | 1,867,125 | 1,873,468 | ||||||||||
| Commercial real estate | 2,433,159 | 2,466,303 | 2,335,655 | 2,114,041 | 1,816,828 | ||||||||||
| Construction and land development | 320,882 | 225,549 | 203,955 | 188,668 | 193,749 | ||||||||||
| Residential real estate | 366,094 | 356,225 | 340,103 | 329,331 | 338,151 | ||||||||||
| Consumer | 1,180,014 | 1,156,480 | 1,085,371 | 1,040,796 | 1,002,605 | ||||||||||
| Total loans | $ | 6,306,467 | $ | 6,198,451 | $ | 5,795,544 | $ | 5,539,961 | $ | 5,224,801 | |||||
| Deposit Portfolio | |||||||||||||||
| Noninterest-bearing demand | $ | 1,935,773 | $ | 2,025,237 | $ | 1,972,261 | $ | 1,965,032 | $ | 2,245,701 | |||||
| Interest-bearing: | |||||||||||||||
| Checking | 1,920,458 | 1,905,439 | 1,808,885 | 1,779,018 | 1,663,021 | ||||||||||
| Money market | 1,184,101 | 1,125,333 | 1,027,547 | 964,352 | 869,067 | ||||||||||
| Savings | 661,932 | 704,245 | 740,364 | 710,955 | 679,115 | ||||||||||
| Time | 649,552 | 620,960 | 620,363 | 619,386 | 630,583 | ||||||||||
| Brokered time | 12,836 | 14,038 | 15,018 | 18,796 | 23,161 | ||||||||||
| Total deposits | $ | 6,364,652 | $ | 6,395,252 | $ | 6,184,438 | $ | 6,057,539 | $ | 6,110,648 | |||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (dollars in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||
| Average Balance Sheets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 220,938 | $ | 195,657 | $ | 226,517 | $ | 384,231 | $ | 685,655 | ||||||||||
| Investment securities | 736,579 | 749,022 | 818,927 | 894,634 | 915,707 | |||||||||||||||
| Loans | 6,240,277 | 6,040,358 | 5,677,791 | 5,274,051 | 4,995,794 | |||||||||||||||
| Loans held for sale | 3,883 | 6,044 | 9,865 | 31,256 | 34,272 | |||||||||||||||
| Nonmarketable equity securities | 43,618 | 37,765 | 36,338 | 36,378 | 39,203 | |||||||||||||||
| Total interest-earning assets | 7,245,295 | 7,028,846 | 6,769,438 | 6,620,550 | 6,670,631 | |||||||||||||||
| Non-earning assets | 609,866 | 618,138 | 615,348 | 631,187 | 605,060 | |||||||||||||||
| Total assets | $ | 7,855,161 | $ | 7,646,984 | $ | 7,384,786 | $ | 7,251,737 | $ | 7,275,691 | ||||||||||
| Interest-bearing deposits | $ | 4,452,801 | $ | 4,325,098 | $ | 4,152,764 | $ | 3,953,249 | $ | 3,913,475 | ||||||||||
| Short-term borrowings | 47,391 | 58,271 | 59,301 | 70,044 | 66,677 | |||||||||||||||
| FHLB advances and other borrowings | 460,598 | 340,163 | 307,611 | 311,282 | 319,954 | |||||||||||||||
| Subordinated debt | 107,374 | 139,324 | 139,232 | 139,139 | 139,046 | |||||||||||||||
| Trust preferred debentures | 49,902 | 49,751 | 49,602 | 49,451 | 49,307 | |||||||||||||||
| Total interest-bearing liabilities | 5,118,066 | 4,912,607 | 4,708,510 | 4,523,165 | 4,488,459 | |||||||||||||||
| Noninterest-bearing deposits | 1,936,977 | 1,969,873 | 1,967,263 | 1,989,413 | 2,049,802 | |||||||||||||||
| Other noninterest-bearing liabilities | 50,935 | 63,638 | 66,009 | 81,832 | 84,538 | |||||||||||||||
| Shareholders' equity | 749,183 | 700,866 | 643,004 | 657,327 | 652,892 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,855,161 | $ | 7,646,984 | $ | 7,384,786 | $ | 7,251,737 | $ | 7,275,691 | ||||||||||
| Yields | ||||||||||||||||||||
| Earning Assets | ||||||||||||||||||||
| Cash and cash equivalents | 3.85 | % | 2.28 | % | 0.83 | % | 0.18 | % | 0.16 | % | ||||||||||
| Investment securities | 2.62 | % | 2.44 | % | 2.41 | % | 2.22 | % | 2.12 | % | ||||||||||
| Loans | 5.26 | % | 4.83 | % | 4.49 | % | 4.40 | % | 4.36 | % | ||||||||||
| Loans held for sale | 4.86 | % | 3.87 | % | 3.15 | % | 2.86 | % | 3.53 | % | ||||||||||
| Nonmarketable equity securities | 6.16 | % | 5.78 | % | 5.38 | % | 5.40 | % | 5.07 | % | ||||||||||
| Total interest-earning assets | 4.96 | % | 4.51 | % | 4.12 | % | 3.87 | % | 3.62 | % | ||||||||||
| Interest-Bearing Liabilities | ||||||||||||||||||||
| Interest-bearing deposits | 1.77 | % | 0.94 | % | 0.37 | % | 0.22 | % | 0.22 | % | ||||||||||
| Short-term borrowings | 0.26 | % | 0.19 | % | 0.15 | % | 0.14 | % | 0.12 | % | ||||||||||
| FHLB advances and other borrowings | 3.67 | % | 2.83 | % | 1.87 | % | 1.58 | % | 1.75 | % | ||||||||||
| Subordinated debt | 5.45 | % | 5.77 | % | 5.78 | % | 5.78 | % | 5.78 | % | ||||||||||
| Trust preferred debentures | 8.47 | % | 6.54 | % | 5.05 | % | 4.21 | % | 3.90 | % | ||||||||||
| Total interest-bearing liabilities | 2.07 | % | 1.25 | % | 0.67 | % | 0.53 | % | 0.54 | % | ||||||||||
| Cost of Deposits | 1.23 | % | 0.65 | % | 0.25 | % | 0.15 | % | 0.15 | % | ||||||||||
| Net Interest Margin | 3.50 | % | 3.63 | % | 3.65 | % | 3.50 | % | 3.25 | % | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| As of and for the Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||
| Asset Quality | ||||||||||||||||||||
| Loans 30-89 days past due | $ | 32,372 | $ | 28,275 | $ | 16,212 | $ | 29,044 | $ | 17,514 | ||||||||||
| Nonperforming loans | 49,423 | 46,882 | 56,883 | 52,900 | 42,580 | |||||||||||||||
| Nonperforming assets | 57,824 | 59,524 | 69,344 | 66,164 | 57,068 | |||||||||||||||
| Net charge-offs | 538 | 3,233 | 2,781 | 2,256 | 4,613 | |||||||||||||||
| Loans 30-89 days past due to total loans | 0.51 | % | 0.46 | % | 0.28 | % | 0.52 | % | 0.34 | % | ||||||||||
| Nonperforming loans to total loans | 0.78 | % | 0.76 | % | 0.98 | % | 0.95 | % | 0.81 | % | ||||||||||
| Nonperforming assets to total assets | 0.74 | % | 0.76 | % | 0.93 | % | 0.90 | % | 0.77 | % | ||||||||||
| Allowance for credit losses to total loans | 0.97 | % | 0.95 | % | 0.95 | % | 0.96 | % | 0.98 | % | ||||||||||
| Allowance for credit losses to nonperforming loans | 123.53 | % | 125.08 | % | 96.51 | % | 100.07 | % | 119.92 | % | ||||||||||
| Net charge-offs to average loans | 0.03 | % | 0.21 | % | 0.20 | % | 0.17 | % | 0.37 | % | ||||||||||
| Wealth Management | ||||||||||||||||||||
| Trust assets under administration | $ | 3,505,372 | $ | 3,355,019 | $ | 3,503,227 | $ | 3,934,140 | $ | 4,100,179 | ||||||||||
| Market Data | ||||||||||||||||||||
| Book value per share at period end | $ | 29.17 | $ | 28.48 | $ | 28.84 | $ | 29.26 | $ | 30.11 | ||||||||||
| Tangible book value per share at period end(1) | $ | 20.94 | $ | 20.14 | $ | 20.43 | $ | 20.87 | $ | 21.66 | ||||||||||
| Market price at period end | $ | 26.62 | $ | 23.57 | $ | 24.04 | $ | 28.86 | $ | 24.79 | ||||||||||
| Common shares outstanding at period end | 22,214,913 | 22,074,740 | 22,060,255 | 22,044,626 | 22,050,537 | |||||||||||||||
| Capital | ||||||||||||||||||||
| Total capital to risk-weighted assets | 12.38 | % | 12.79 | % | 11.44 | % | 11.74 | % | 12.19 | % | ||||||||||
| Tier 1 capital to risk-weighted assets | 10.21 | % | 10.05 | % | 8.63 | % | 8.82 | % | 9.16 | % | ||||||||||
| Tier 1 common capital to risk-weighted assets | 7.77 | % | 7.56 | % | 7.66 | % | 7.80 | % | 8.08 | % | ||||||||||
| Tier 1 leverage ratio | 9.43 | % | 9.40 | % | 7.98 | % | 7.96 | % | 7.75 | % | ||||||||||
| Tangible common equity to tangible assets(1) | 6.06 | % | 5.82 | % | 6.22 | % | 6.43 | % | 6.58 | % | ||||||||||
(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures.
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) | ||||||||||||||||||||
| Adjusted Earnings Reconciliation | ||||||||||||||||||||
| For The Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||
| Income before income taxes - GAAP | $ | 43,902 | $ | 29,380 | $ | 29,167 | $ | 27,389 | $ | 30,600 | ||||||||||
| Adjustments to noninterest income: | ||||||||||||||||||||
| Loss on sales of investment securities, net | - | 129 | 101 | - | - | |||||||||||||||
| (Gain) on termination of hedged interest rate swaps | (17,531 | ) | - | - | - | (1,845 | ) | |||||||||||||
| Total adjustments to noninterest income | (17,531 | ) | 129 | 101 | - | (1,845 | ) | |||||||||||||
| Adjustments to noninterest expense: | ||||||||||||||||||||
| (Loss) on mortgage servicing rights held for sale | (3,250 | ) | - | - | - | - | ||||||||||||||
| FHLB advances prepayment fees | - | - | - | - | (4,859 | ) | ||||||||||||||
| Integration and acquisition expenses | - | 68 | (324 | ) | (91 | ) | (171 | ) | ||||||||||||
| Total adjustments to noninterest expense | (3,250 | ) | 68 | (324 | ) | (91 | ) | (5,030 | ) | |||||||||||
| Adjusted earnings pre tax | 29,621 | 29,441 | 29,592 | 27,480 | 33,785 | |||||||||||||||
| Adjusted earnings tax | 7,174 | 5,873 | 7,401 | 6,665 | 8,369 | |||||||||||||||
| Adjusted earnings - non-GAAP | 22,447 | 23,568 | 22,191 | 20,815 | 25,416 | |||||||||||||||
| Preferred stock dividends | 3,169 | - | - | - | - | |||||||||||||||
| Adjusted earnings available to common shareholders | $ | 19,278 | $ | 23,568 | $ | 22,191 | $ | 20,815 | $ | 25,416 | ||||||||||
| Adjusted diluted earnings per common share | $ | 0.85 | $ | 1.04 | $ | 0.98 | $ | 0.92 | $ | 1.12 | ||||||||||
| Adjusted return on average assets | 1.13 | % | 1.22 | % | 1.21 | % | 1.16 | % | 1.39 | % | ||||||||||
| Adjusted return on average shareholders' equity | 11.89 | % | 13.34 | % | 13.84 | % | 12.84 | % | 15.44 | % | ||||||||||
| Adjusted return on average tangible common equity | 16.80 | % | 20.24 | % | 19.41 | % | 17.89 | % | 21.65 | % | ||||||||||
| Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (dollars in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||
| Adjusted earnings pre tax - non-GAAP | $ | 29,621 | $ | 29,441 | $ | 29,592 | $ | 27,480 | $ | 33,785 | ||||||||||
| Provision for credit losses | 3,544 | 6,974 | 5,441 | 4,167 | 467 | |||||||||||||||
| Impairment on commercial mortgage servicing rights | - | - | 869 | 394 | 2,072 | |||||||||||||||
| Adjusted pre-tax, pre-provision earnings - non-GAAP | $ | 33,165 | $ | 36,415 | $ | 35,902 | $ | 32,041 | $ | 36,324 | ||||||||||
| Adjusted pre-tax, pre-provision return on average assets | 1.68 | % | 1.89 | % | 1.95 | % | 1.79 | % | 1.98 | % | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) | ||||||||||||||||||||
| Efficiency Ratio Reconciliation | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | ||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Noninterest expense - GAAP | $ | 49,943 | $ | 43,496 | $ | 41,339 | $ | 40,884 | $ | 45,757 | ||||||||||
| Loss on mortgage servicing rights held for sale | (3,250 | ) | - | - | - | - | ||||||||||||||
| FHLB advances prepayment fees | - | - | - | - | (4,859 | ) | ||||||||||||||
| Integration and acquisition expenses | - | 68 | (324 | ) | (91 | ) | (171 | ) | ||||||||||||
| Adjusted noninterest expense | $ | 46,693 | $ | 43,564 | $ | 41,015 | $ | 40,793 | $ | 40,727 | ||||||||||
| Net interest income - GAAP | $ | 63,550 | $ | 64,024 | $ | 61,334 | $ | 56,827 | $ | 54,301 | ||||||||||
| Effect of tax-exempt income | 286 | 307 | 321 | 369 | 372 | |||||||||||||||
| Adjusted net interest income | 63,836 | 64,331 | 61,655 | 57,196 | 54,673 | |||||||||||||||
| Noninterest income - GAAP | 33,839 | 15,826 | 14,613 | 15,613 | 22,523 | |||||||||||||||
| Impairment on commercial mortgage servicing rights | - | - | 869 | 394 | 2,072 | |||||||||||||||
| Loss on sales of investment securities, net | - | 129 | 101 | - | - | |||||||||||||||
| (Gain) on termination of hedged interest rate swaps | (17,531 | ) | - | - | - | (1,845 | ) | |||||||||||||
| Adjusted noninterest income | 16,308 | 15,955 | 15,583 | 16,007 | 22,750 | |||||||||||||||
| Adjusted total revenue | $ | 80,144 | $ | 80,286 | $ | 77,238 | $ | 73,203 | $ | 77,423 | ||||||||||
| Efficiency ratio | 58.26 | % | 54.26 | % | 53.10 | % | 55.73 | % | 52.61 | % | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) | ||||||||||||||||||||
| Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||
| Shareholders' Equity to Tangible Common Equity | ||||||||||||||||||||
| Total shareholders' equity-GAAP | $ | 758,574 | $ | 739,279 | $ | 636,188 | $ | 644,986 | $ | 663,837 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Preferred Stock | (110,548 | ) | (110,548 | ) | - | - | - | |||||||||||||
| Goodwill | (161,904 | ) | (161,904 | ) | (161,904 | ) | (161,904 | ) | (161,904 | ) | ||||||||||
| Other intangible assets, net | (20,866 | ) | (22,198 | ) | (23,559 | ) | (22,976 | ) | (24,374 | ) | ||||||||||
| Tangible common equity | $ | 465,256 | $ | 444,629 | $ | 450,725 | $ | 460,106 | $ | 477,558 | ||||||||||
| Total Assets to Tangible Assets: | ||||||||||||||||||||
| Total assets-GAAP | $ | 7,855,501 | $ | 7,821,877 | $ | 7,435,812 | $ | 7,338,715 | $ | 7,443,805 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Goodwill | (161,904 | ) | (161,904 | ) | (161,904 | ) | (161,904 | ) | (161,904 | ) | ||||||||||
| Other intangible assets, net | (20,866 | ) | (22,198 | ) | (23,559 | ) | (22,976 | ) | (24,374 | ) | ||||||||||
| Tangible assets | $ | 7,672,731 | $ | 7,637,775 | $ | 7,250,349 | $ | 7,153,835 | $ | 7,257,527 | ||||||||||
| Common Shares Outstanding | 22,214,913 | 22,074,740 | 22,060,255 | 22,044,626 | 22,050,537 | |||||||||||||||
| Tangible Common Equity to Tangible Assets | 6.06 | % | 5.82 | % | 6.22 | % | 6.43 | % | 6.58 | % | ||||||||||
| Tangible Book Value Per Share | $ | 20.94 | $ | 20.14 | $ | 20.43 | $ | 20.87 | $ | 21.66 | ||||||||||
| Return on Average Tangible Common Equity (ROATCE) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (dollars in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||
| Net income | $ | 32,872 | $ | 23,521 | $ | 21,883 | $ | 20,749 | $ | 23,107 | ||||||||||
| Average total shareholders' equity-GAAP | $ | 749,183 | $ | 700,866 | $ | 643,004 | $ | 657,327 | $ | 652,892 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Preferred Stock | (110,548 | ) | (54,072 | ) | - | - | - | |||||||||||||
| Goodwill | (161,904 | ) | (161,904 | ) | (161,904 | ) | (161,904 | ) | (161,904 | ) | ||||||||||
| Other intangible assets, net | (22,859 | ) | (22,589 | ) | (22,570 | ) | (23,638 | ) | (25,311 | ) | ||||||||||
| Average tangible common equity | $ | 453,872 | $ | 462,301 | $ | 458,530 | $ | 471,785 | $ | 465,677 | ||||||||||
| ROATCE | 25.89 | % | 20.20 | % | 19.14 | % | 17.84 | % | 19.69 | % | ||||||||||
