Midland States Bancorp, Inc. Announces 2021 Fourth Quarter

Summary

  • Net income of $23.1 million, or $1.02 diluted earnings per share
  • Total loans increased 25.2% annualized
  • Total deposits increased 9.1% from end of prior quarter
  • Non-performing loans declined 22.0% from end of prior quarter
  • Net interest income increased 5.7% from prior quarter to $54.3 million
  • Efficiency ratio improved to 52.61% from 58.78% in prior quarter
  • Book value and tangible book value per share increased 1.6% and 2.3%, respectively

EFFINGHAM, Ill., Jan. 27, 2022 (GLOBE NEWSWIRE) — Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $23.1 million, or $1.02 diluted earnings per share, for the fourth quarter of 2021, which included a $4.9 million FHLB advance prepayment fee and a $1.9 million gain on the termination of an interest rate swap. This compares to net income of $19.5 million, or $0.86 diluted earnings per share, for the third quarter of 2021. This also compares to net income of $8.3 million, or $0.36 diluted earnings per share, for the fourth quarter of 2020, which included $4.9 million in FHLB advance prepayment fees.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We continue to see an acceleration of our new business development efforts driven by the more productive commercial banking teams we have built over the past year and our increased presence in higher growth markets in Northern Illinois and St. Louis. We had a record quarter of loan production, resulting in 25% annualized growth in total loans, which we were able to fund with strong inflows of noninterest-bearing deposits. The strong balance sheet growth we are seeing is driving higher levels of revenue, increased operating leverage, and an improvement in our level of profitability.

“Based on our current commercial and commercial real estate lending pipelines and improving loan demand, we expect to deliver another year of strong loan growth in 2022. We also expect to keep expense levels relatively flat compared to 2021, despite continuing to increase our technology investment in order to further improve our revenue generation capabilities and enhance client service. In 2022, we will be focused on continuing to build relationship-based commercial and commercial real estate loans funded by low-cost deposits, which we combine with a growing wealth management business that provides a large, consistent source of non-interest income. We believe the improvements we have made to our business model and operations will enable us to generate a higher level of returns and consistently increase the value of our franchise in the years ahead,” said Mr. Ludwig.

Adjusted Earnings

Financial results for the fourth quarter of 2021 were impacted by $4.9 million FHLB advance prepayment fees and a $1.9 million gain on the termination of an interest rate swap. Excluding these amounts and certain other income and expenses, adjusted earnings were $25.4 million, or $1.12 per diluted share, for the fourth quarter of 2021, up from $19.6 million, or $0.86 per diluted share, for the prior quarter.

Financial results for the fourth quarter of 2020 were impacted by $4.9 million FHLB advance prepayment fees, a $0.6 million loss on residential mortgage servicing rights (“MSRs”) held-for sale, and $0.2 million in integration and acquisition expenses. Excluding these amounts and certain income items, adjusted earnings were $12.5 million, or $0.54 per diluted share, for the fourth quarter of 2020.

A reconciliation of adjusted earnings to net income according to accounting principles generally accepted in the United States (“GAAP”) is provided in the financial tables at the end of this press release.

Net Interest Margin

Net interest margin for the fourth quarter of 2021 was 3.25%, compared to 3.34% for the third quarter of 2021. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 4 and 7 basis points to net interest margin in the fourth and third quarters of 2021, respectively. Excluding the impact of accretion income, net interest margin decreased 6 basis points from the third quarter of 2021, due primarily to an increase in liquidity largely resulting from a significant increase in commercial FHA servicing deposits.

Relative to the fourth quarter of 2020, net interest margin decreased from 3.47%. Accretion income on purchased loan portfolios contributed 10 basis points to net interest margin in the fourth quarter of 2020. Excluding the impact of accretion income, net interest margin decreased 16 basis points from the fourth quarter of 2020, primarily due to an unfavorable shift in the mix of earning assets.  

Net Interest Income

Net interest income for the fourth quarter of 2021 was $54.3 million, an increase of 5.7% from $51.4 million for the third quarter of 2021. Excluding accretion income, net interest income increased $3.1 million from the prior quarter, which was primarily due to a higher average balance of interest-earning assets coupled with a decrease in funding costs. Accretion income associated with purchased loan portfolios totaled $0.8 million for the fourth quarter of 2021, compared to $1.0 million for the third quarter of 2021. PPP loan income totaled $1.6 million, including net loan origination fees of $1.4 million, in the fourth quarter of 2021, compared to $2.4 million, including net loan origination fees of $2.1 million, in the third quarter of 2021.

Relative to the fourth quarter of 2020, net interest income increased $0.8 million, or 1.5%. Accretion income for the fourth quarter of 2020 was $1.6 million. Excluding the impact of accretion income, net interest income increased primarily due to a decrease in funding costs.

Noninterest Income

Noninterest income for the fourth quarter of 2021 was $22.5 million, an increase of 48.7% from $15.1 million for the third quarter of 2021. Noninterest income for the fourth quarter of 2021 was positively impacted by $3.9 million in unrealized income on equity investments, a $1.9 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 MSRs negatively impacted noninterest income by $2.1 million and $3.0 million in the fourth quarter of 2021 and third quarter of 2021, respectively. Excluding the impairments, noninterest income increased 35.3% from the prior quarter.

Relative to the fourth quarter of 2020, noninterest income increased 57.1% from $14.3 million. The increase was attributable to higher levels of wealth management and interchange revenue, as well as the items mentioned above for the fourth quarter of 2021.

Wealth management revenue for the fourth quarter of 2021 was $7.2 million, unchanged from the third quarter of 2021. Compared to the fourth quarter of 2020, wealth management revenue increased 22.3%, primarily due to the increase in assets under administration over the past year and the acquisition of ATG Trust Company.

Noninterest Expense

Noninterest expense for the fourth quarter of 2021 was $45.8 million, compared with $41.3 million in the third quarter of 2021. 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 the FHLB advance prepayment fees and integration and acquisition expenses, noninterest expense decreased by $0.4 million.

Relative to the fourth quarter of 2020, noninterest expense decreased 2.7% from $47.0 million, which included $4.9 million in FHLB advance prepayment fees and a $0.6 million loss on residential MSRs held-for-sale. Excluding FHLB advance prepayment fees and losses on residential MSRs held-for-sale, noninterest expense decreased $0.6 million, primarily due to lower salaries and employee benefits expense.

Loan Portfolio

Total loans outstanding were $5.22 billion at December 31, 2021, compared with $4.92 billion at September 30, 2021, and $5.10 billion at December 31, 2020. The increase in total loans from September 30, 2021 was primarily attributable to higher balances of commercial real estate and consumer loans, partially offset by declines in commercial FHA warehouse lines and forgiveness of PPP loans.

Equipment finance balances increased $46.2 million from September 30, 2021 to $945.3 million at December 31, 2021.  

Compared to loan balances at December 31, 2020, growth in equipment finance balances, commercial real estate, construction, and consumer loans was offset by declines in commercial FHA warehouse lines, PPP loans and residential real estate loans.

Deposits

Total deposits were $6.11 billion at December 31, 2021, compared with $5.60 billion at September 30, 2021, and $5.10 billion at December 31, 2020. The increase in total deposits from the end of the prior quarter was primarily attributable to an increase in commercial FHA servicing deposits and inflows of other commercial deposits.

Asset Quality

Nonperforming loans totaled $42.6 million, or 0.81% of total loans, at December 31, 2021, compared with $54.6 million, or 1.11% of total loans, at September 30, 2021. The decrease in nonperforming loans was primarily attributable to the payoff of two nonaccrual loans totaling $5.6 million and the charge-off of a third nonaccrual loan of $1.8 million. At December 31, 2020, nonperforming loans totaled $54.1 million, or 1.06% of total loans.

Net charge-offs for the fourth quarter of 2021 were $4.6 million, or 0.37% of average loans on an annualized basis, compared to net charge-offs of $3.0 million, or 0.25% of average loans on an annualized basis, for the third quarter of 2021, and $2.3 million, or 0.19% of average loans on an annualized basis, for the fourth quarter of 2020.  

The Company recorded a provision for credit losses of $0.5 million for the fourth quarter of 2021. No provision for credit losses on loans was recorded, due to improvements in asset quality and economic forecasts. Provisions of $0.4 million and $0.1 million were recorded for credit losses on unfunded commitments and available-for-sale securities, respectively.

The Company’s allowance for credit losses on loans was 0.98% of total loans and 119.9% of nonperforming loans at December 31, 2021, compared with 1.13% of total loans and 101.9% of nonperforming loans at September 30, 2021. Approximately 94% of the allowance for credit losses on loans at December 31, 2021 was allocated to general reserves.

Capital

At December 31, 2021, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

  Bank Level Ratios as of
Dec. 31, 2021
Consolidated Ratios as of Dec. 31, 2021 Minimum Regulatory Requirements (2)
Total capital to risk-weighted assets 11.21% 12.19% 10.50%
Tier 1 capital to risk-weighted assets 10.49% 9.16% 8.50%
Tier 1 leverage ratio 8.89% 7.75% 4.00%
Common equity Tier 1 capital 10.49% 8.08% 7.00%
Tangible common equity to tangible assets (1) NA 6.58% NA

(1) A non-GAAP financial measure. Refer to page 15 for a reconciliation to the comparable GAAP financial measure.
(2) Includes the capital conservation buffer of 2.5%.

Stock Repurchase Program

During the fourth quarter of 2021, the Company repurchased 205,015 shares of its common stock at a weighted average price of $25.58 under its stock repurchase program. As of December 31, 2021, the Company had $19.7 million remaining under the current stock repurchase authorization.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, January 28, 2022, to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 8339225. A recorded replay can be accessed through February 4, 2022, by dialing (855) 859-2056; conference ID: 8339225.

A slide presentation relating to the fourth quarter 2021 financial results will be accessible prior to the scheduled conference call. This earnings release should be read together with the slide presentation, which contains important information related to the impact of COVID-19. The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website at investors.midlandsb.com under the “News and Events” tab.

About Midland States Bancorp, Inc.

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of December 31, 2021, the Company had total assets of approximately $7.44 billion, and its Wealth Management Group had assets under administration of approximately $4.22 billion. Midland 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 Diluted Earnings Per Common Share,” “Adjusted Pre-Tax, Pre-Provision Earnings,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Adjusted Pre-Tax, Pre-Provision Return on Average Assets,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company’s plans, objectives, future performance, goals and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including the effects of the COVID-19 pandemic and its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; 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)   2021   2021   2021   2021   2020
Earnings Summary                                        
Net interest income   $ 54,301     $ 51,396     $ 50,110     $ 51,868     $ 53,516  
Provision for credit losses     467       (184 )     (455 )     3,565       10,058  
Noninterest income     22,523       15,143       17,417       14,816       14,336  
Noninterest expense     45,757       41,292       48,941       39,079       47,048  
Income before income taxes     30,600       25,431       19,041       24,040       10,746  
Income taxes     7,493       5,883       (1,083 )     5,502       2,413  
Net income   $ 23,107     $ 19,548     $ 20,124     $ 18,538     $ 8,333  
                                         
Diluted earnings per common share   $ 1.02     $ 0.86     $ 0.88     $ 0.81     $ 0.36  
Weighted average shares outstanding – diluted     22,350,771       22,577,880       22,677,515       22,578,553       22,656,343  
Return on average assets     1.26 %     1.15 %     1.20 %     1.11 %     0.49 %
Return on average shareholders’ equity     14.04 %     11.90 %     12.59 %     12.04 %     5.32 %
Return on average tangible common equity (1)     19.69 %     16.76 %     17.85 %     17.28 %     7.68 %
Net interest margin     3.25 %     3.34 %     3.29 %     3.45 %     3.47 %
Efficiency ratio (1)     52.61 %     58.78 %     60.19 %     57.14 %     58.55 %
                                         
Adjusted Earnings Performance Summary (1)                                        
Adjusted earnings   $ 25,416     $ 19,616     $ 19,755     $ 18,434     $ 12,471  
Adjusted diluted earnings per common share   $ 1.12     $ 0.86     $ 0.86     $ 0.81     $ 0.54  
Adjusted return on average assets     1.39 %     1.15 %     1.17 %     1.11 %     0.73 %
Adjusted return on average shareholders’ equity     15.44 %     11.94 %     12.36 %     11.97 %     7.97 %
Adjusted return on average tangible common equity     21.65 %     16.82 %     17.52 %     17.18 %     11.50 %
Adjusted pre-tax, pre-provision earnings   $ 36,324     $ 28,379     $ 26,967     $ 28,737     $ 28,855  
Adjusted pre-tax, pre-provision return on average assets     1.98 %     1.67 %     1.60 %     1.73 %     1.69 %
                                         
(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)   2021   2021   2021   2021   2020
Net interest income:                              
Interest income   $ 60,427     $ 58,490     $ 58,397     $ 60,503     $ 62,712  
Interest expense     6,126       7,094       8,287       8,635       9,196  
Net interest income     54,301       51,396       50,110       51,868       53,516  
Provision for credit losses:                              
Provision for credit losses on loans                       3,950       10,000  
Provision for credit losses on unfunded commitments     388             (265 )     (535 )      
Provision for other credit losses     79       (184 )     (190 )     150       58  
Total provision for credit losses     467       (184 )     (455 )     3,565       10,058  
Net interest income after provision for credit losses     53,834       51,580       50,565       48,303       43,458  
Noninterest income:                              
Wealth management revenue     7,176       7,175       6,529       5,931       5,868  
Commercial FHA revenue     369       411       342       292       400  
Residential mortgage banking revenue     1,103       1,287       1,562       1,574       2,285  
Service charges on deposit accounts     2,338       2,268       1,916       1,826       2,149  
Interchange revenue     3,677       3,651       3,797       3,375       3,137  
Gain on sales of investment securities, net           160       377              
Gain on termination of hedged interest swap     1,845                   314        
Impairment on commercial mortgage servicing rights     (2,072 )     (3,037 )     (1,148 )     (1,275 )     (2,344 )
Company-owned life insurance     1,904       869       863       860       893  
Other income     6,183       2,359       3,179       1,919       1,948  
Total noninterest income     22,523       15,143       17,417       14,816       14,336  
Noninterest expense:                              
Salaries and employee benefits     22,109       22,175       22,071       20,528       22,636  
Occupancy and equipment     3,429       3,701       3,796       3,940       3,531  
Data processing     5,819       6,495       6,288       5,993       5,987  
Professional     1,499       1,738       5,549       2,185       1,912  
Amortization of intangible assets     1,425       1,445       1,470       1,515       1,556  
Loss on mortgage servicing rights held for sale           79       143             617  
Impairment related to facilities optimization                             (10 )
FHLB advances prepayment fees     4,859             3,669       8       4,872  
Other expense     6,617       5,659       5,955       4,910       5,947  
Total noninterest expense     45,757       41,292       48,941       39,079       47,048  
Income before income taxes     30,600       25,431       19,041       24,040       10,746  
Income taxes     7,493       5,883       (1,083 )     5,502       2,413  
Net income   $ 23,107     $ 19,548     $ 20,124     $ 18,538     $ 8,333  
                               
Basic earnings per common share   $ 1.03     $ 0.86     $ 0.88     $ 0.81     $ 0.36  
Diluted earnings per common share   $ 1.02     $ 0.86     $ 0.88     $ 0.81     $ 0.36  
                               
                               
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                               
    As of
    December 31,   September 30,   June 30,   March 31,   December 31,
(in thousands)   2021   2021   2021   2021   2020
Assets                              
Cash and cash equivalents   $ 680,371     $ 662,643     $ 425,100     $ 631,219     $ 341,640  
Investment securities     916,132       900,319       756,831       690,390       686,135  
Loans     5,224,801       4,915,554       4,835,866       4,910,806       5,103,331  
Allowance for credit losses on loans     (51,062 )     (55,675 )     (58,664 )     (62,687 )     (60,443 )
Total loans, net     5,173,739       4,859,879       4,777,202       4,848,119       5,042,888  
Loans held for sale     32,045       26,621       12,187       55,174       138,090  
Premises and equipment, net     70,792       71,241       71,803       73,255       74,124  
Other real estate owned     12,059       11,931       12,768       20,304       20,247  
Loan servicing rights, at lower of cost or fair value     28,865       30,916       34,577       36,876       39,276  
Goodwill     161,904       161,904       161,904       161,904       161,904  
Other intangible assets, net     24,374       26,065       27,900       26,867       28,382  
Cash surrender value of life insurance policies     148,378       149,146       148,277       146,864       146,004  
Other assets     195,146       193,294       201,461       193,814       189,850  
Total assets   $ 7,443,805     $ 7,093,959     $ 6,630,010     $ 6,884,786     $ 6,868,540  
                               
Liabilities and Shareholders’ Equity                              
Noninterest-bearing deposits   $ 2,245,701     $ 1,672,901     $ 1,366,453     $ 1,522,433     $ 1,469,579  
Interest-bearing deposits     3,864,947       3,928,475       3,829,898       3,818,080       3,631,437  
Total deposits     6,110,648       5,601,376       5,196,351       5,340,513       5,101,016  
Short-term borrowings     76,803       66,666       75,985       71,728       68,957  
FHLB advances and other borrowings     310,171       440,171       440,171       529,171       779,171  
Subordinated debt     139,091       138,998       138,906       169,888       169,795  
Trust preferred debentures     49,374       49,235       49,094       48,954       48,814  
Other liabilities     93,881       139,669       81,317       89,065       79,396  
Total liabilities     6,779,968       6,436,115       5,981,824       6,249,319       6,247,149  
Total shareholders’ equity     663,837       657,844       648,186       635,467       621,391  
Total liabilities and shareholders’ equity   $ 7,443,805     $ 7,093,959     $ 6,630,010     $ 6,884,786     $ 6,868,540  
                               
                                         
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                                         
    As of
    December 31,   September 30,   June 30,   March 31,   December 31,
(in thousands)   2021   2021   2021   2021   2020
Loan Portfolio                                        
Equipment finance loans   $ 521,973     $ 486,623     $ 464,380     $ 456,059     $ 451,437  
Equipment finance leases     423,280       412,430       407,161       402,546       410,064  
Commercial FHA warehouse lines     91,927       180,248       129,607       205,115       273,298  
SBA PPP loans     52,477       82,410       146,728       211,564       184,401  
Other commercial loans     783,811       718,054       683,365       702,156       776,439  
Total commercial loans and leases     1,873,468       1,879,765       1,831,241       1,977,440       2,095,639  
Commercial real estate     1,816,828       1,562,013       1,540,489       1,494,031       1,525,973  
Construction and land development     193,749       200,792       212,508       191,870       172,737  
Residential real estate     338,151       344,414       366,612       398,501       442,880  
Consumer     1,002,605       928,570       885,016       848,964       866,102  
Total loans   $ 5,224,801     $ 4,915,554     $ 4,835,866     $ 4,910,806     $ 5,103,331  
                                         
Deposit Portfolio                                        
Noninterest-bearing demand   $ 2,245,701     $ 1,672,901     $ 1,366,453     $ 1,522,433     $ 1,469,579  
Interest-bearing:                                        
Checking     1,663,021       1,697,326       1,619,436       1,601,449       1,568,888  
Money market     869,067       852,836       787,688       819,455       785,871  
Savings     679,115       665,710       669,277       653,256       597,966  
Time     630,583       688,693       721,502       718,788       655,620  
Brokered time     23,161       23,910       31,995       25,132       23,092  
Total deposits   $ 6,110,648     $ 5,601,376     $ 5,196,351     $ 5,340,513     $ 5,101,016  
                                         
                                         
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)   2021   2021   2021   2021   2020
Average Balance Sheets                                        
Cash and cash equivalents   $ 685,655     $ 525,848     $ 509,886     $ 350,061     $ 415,686  
Investment securities     915,707       773,372       734,462       680,202       672,937  
Loans     4,995,794       4,800,063       4,826,234       4,992,802       4,998,912  
Loans held for sale     34,272       15,204       36,299       65,365       45,196  
Nonmarketable equity securities     39,203       43,873       49,388       55,935       51,906  
Total interest-earning assets     6,670,631       6,158,360       6,156,269       6,144,365       6,184,637  
Non-earning assets     605,060       597,153       589,336       602,017       602,716  
Total assets   $ 7,275,691     $ 6,755,513     $ 6,745,605     $ 6,746,382     $ 6,787,353  
                                         
Interest-bearing deposits   $ 3,913,475     $ 3,895,970     $ 3,815,179     $ 3,757,108     $ 3,680,645  
Short-term borrowings     66,677       68,103       65,727       75,544       62,432  
FHLB advances and other borrowings     319,954       440,171       519,490       617,504       682,981  
Subordinated debt     139,046       138,954       165,155       169,844       169,751  
Trust preferred debentures     49,307       49,167       49,026       48,887       48,751  
Total interest-bearing liabilities     4,488,459       4,592,365       4,614,577       4,668,887       4,644,560  
Noninterest-bearing deposits     2,049,802       1,434,193       1,411,428       1,370,604       1,446,359  
Other noninterest-bearing liabilities     84,538       77,204       78,521       82,230       73,840  
Shareholders’ equity     652,892       651,751       641,079       624,661       622,594  
Total liabilities and shareholders’ equity   $ 7,275,691     $ 6,755,513     $ 6,745,605     $ 6,746,382     $ 6,787,353  
                                         
Yields                                        
Earning Assets                                        
Cash and cash equivalents     0.16 %     0.16 %     0.11 %     0.11 %     0.12 %
Investment securities     2.12 %     2.34 %     2.43 %     2.51 %     2.65 %
Loans     4.36 %     4.42 %     4.43 %     4.50 %     4.58 %
Loans held for sale     3.53 %     2.79 %     2.88 %     2.74 %     3.14 %
Nonmarketable equity securities     5.07 %     5.05 %     4.94 %     4.93 %     5.22 %
Total interest-earning assets     3.62 %     3.79 %     3.83 %     4.02 %     4.06 %
                                         
Interest-Bearing Liabilities                                        
Interest-bearing deposits     0.22 %     0.26 %     0.31 %     0.34 %     0.36 %
Short-term borrowings     0.12 %     0.12 %     0.12 %     0.13 %     0.14 %
FHLB advances and other borrowings     1.75 %     1.80 %     1.91 %     1.69 %     1.71 %
Subordinated debt     5.78 %     5.79 %     5.61 %     5.57 %     5.60 %
Trust preferred debentures     3.90 %     3.92 %     4.00 %     4.08 %     4.03 %
Total interest-bearing liabilities     0.54 %     0.61 %     0.72 %     0.75 %     0.79 %
                                         
Cost of Deposits     0.15 %     0.19 %     0.23 %     0.25 %     0.26 %
                                         
Net Interest Margin     3.25 %     3.34 %     3.29 %     3.45 %     3.47 %
                                         
                                         
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)   2021   2021   2021   2021   2020
Asset Quality                                        
Loans 30-89 days past due   $ 17,514     $ 16,772     $ 20,224     $ 24,819     $ 31,460  
Nonperforming loans     42,580       54,620       61,363       52,826       54,070  
Nonperforming assets     57,069       69,261       76,926       75,004       75,432  
Net charge-offs     4,613       2,989       4,023       1,706       2,328  
Loans 30-89 days past due to total loans     0.34 %     0.34 %     0.42 %     0.51 %     0.62 %
Nonperforming loans to total loans     0.81 %     1.11 %     1.27 %     1.08 %     1.06 %
Nonperforming assets to total assets     0.77 %     0.98 %     1.16 %     1.09 %     1.10 %
Allowance for credit losses to total loans     0.98 %     1.13 %     1.21 %     1.28 %     1.18 %
Allowance for credit losses to nonperforming loans     119.92 %     101.93 %     95.60 %     118.67 %     111.79 %
Net charge-offs to average loans     0.37 %     0.25 %     0.33 %     0.14 %     0.19 %
                                         
Wealth Management                                        
Trust assets under administration   $ 4,217,412     $ 4,058,168     $ 4,077,581     $ 3,560,427     $ 3,480,759  
                                         
Market Data                                        
Book value per share at period end   $ 30.11     $ 29.64     $ 28.96     $ 28.43     $ 27.83  
Tangible book value per share at period end (1)   $ 21.66     $ 21.17     $ 20.48     $ 19.98     $ 19.31  
Market price at period end   $ 24.79     $ 24.73     $ 26.27     $ 27.74     $ 17.87  
Shares outstanding at period end     22,050,537       22,193,141       22,380,492       22,351,740       22,325,471  
                                         
Capital                                        
Total capital to risk-weighted assets     12.19 %     13.10 %     13.11 %     13.73 %     13.24 %
Tier 1 capital to risk-weighted assets     9.16 %     9.73 %     9.64 %     9.62 %     9.20 %
Tier 1 common capital to risk-weighted assets     8.08 %     8.55 %     8.44 %     8.39 %     7.99 %
Tier 1 leverage ratio     7.75 %     8.16 %     8.00 %     7.79 %     7.50 %
Tangible common equity to tangible assets (1)     6.58 %     6.80 %     7.12 %     6.67 %     6.46 %
                                         
(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)   2021   2021   2021   2021   2020
Income before income taxes – GAAP   $ 30,600     $ 25,431     $ 19,041     $ 24,040     $ 10,746  
Adjustments to noninterest income:                                        
Gain on sales of investment securities, net           160       377              
Gain on termination of hedged interest rate swap     1,845                   314        
Other income                 (27 )     75       3  
Total adjustments to noninterest income     1,845       160       350       389       3  
Adjustments to noninterest expense:                                        
Loss on mortgage servicing rights held for sale           79       143             617  
Impairment related to facilities optimization                             (10 )
FHLB advances prepayment fees     4,859             3,669       8       4,872  
Integration and acquisition expenses     171       176       3,771       238       231  
Total adjustments to noninterest expense     5,030       255       7,583       246       5,710  
Adjusted earnings pre tax     33,785       25,526       26,274       23,897       16,453  
Adjusted earnings tax     8,369       5,910       6,519       5,463       3,982  
Adjusted earnings – non-GAAP   $ 25,416     $ 19,616     $ 19,755     $ 18,434     $ 12,471  
Adjusted diluted earnings per common share   $ 1.12     $ 0.86     $ 0.86     $ 0.81     $ 0.54  
Adjusted return on average assets     1.39 %     1.15 %     1.17 %     1.11 %     0.73 %
Adjusted return on average shareholders’ equity     15.44 %     11.94 %     12.36 %     11.97 %     7.97 %
Adjusted return on average tangible common equity     21.65 %     16.82 %     17.52 %     17.18 %     11.50 %
                                         
                                         
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
                                         
    For the Quarter Ended
    December 31,   September 30,   June 30,   March 31,   December 31,
(dollars in thousands)   2021   2021   2021   2021   2020
Adjusted earnings pre tax – non- GAAP   $ 33,785     $ 25,526     $ 26,274     $ 23,897     $ 16,453  
Provision for credit losses     467       (184 )     (455 )     3,565       10,058  
Impairment on commercial mortgage servicing rights     2,072       3,037       1,148       1,275       2,344  
Adjusted pre-tax, pre-provision earnings – non-GAAP   $ 36,324     $ 28,379     $ 26,967     $ 28,737     $ 28,855  
Adjusted pre-tax, pre-provision return on average assets     1.98 %     1.67 %     1.60 %     1.73 %     1.69 %
                                         
                                         
MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
                                         
                                         
Efficiency Ratio Reconciliation
                                         
    For the Quarter Ended
    December 31,   September 30,   June 30,   March 31,   December 31,
(dollars in thousands)   2021   2021   2021   2021   2020
Noninterest expense – GAAP   $ 45,757     $ 41,292     $ 48,941     $ 39,079     $ 47,048  
Loss on mortgage servicing rights held for sale           (79 )     (143 )           (617 )
Impairment related to facilities optimization                             10  
FHLB advances prepayment fees     (4,859 )           (3,669 )     (8 )     (4,872 )
Integration and acquisition expenses     (171 )     (176 )     (3,771 )     (238 )     (231 )
Adjusted noninterest expense   $ 40,727     $ 41,037     $ 41,358     $ 38,833     $ 41,338  
                                         
Net interest income – GAAP   $ 54,301     $ 51,396     $ 50,110     $ 51,868     $ 53,516  
Effect of tax-exempt income     372       402       383       386       413  
Adjusted net interest income     54,673       51,798       50,493       52,254       53,929  
                                         
Noninterest income – GAAP     22,523       15,143       17,417       14,816       14,336  
Impairment on commercial mortgage servicing rights     2,072       3,037       1,148       1,275       2,344  
Gain on sales of investment securities, net           (160 )     (377 )            
Gain on termination of hedged interest rate swap     (1,845 )                 (314 )      
Other                 27       (75 )     (3 )
Adjusted noninterest income     22,750       18,020       18,215       15,702       16,677  
                                         
Adjusted total revenue   $ 77,423     $ 69,818     $ 68,708     $ 67,956     $ 70,606  
                                         
Efficiency ratio     52.61 %     58.78 %     60.19 %     57.14 %     58.55 %
                                         
                                         
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)   2021   2021   2021   2021   2020
Shareholders’ Equity to Tangible Common Equity                                        
Total shareholders’ equity—GAAP   $ 663,837     $ 657,844     $ 648,186     $ 635,467     $ 621,391  
Adjustments:                                        
Goodwill     (161,904 )     (161,904 )     (161,904 )     (161,904 )     (161,904 )
Other intangible assets, net     (24,374 )     (26,065 )     (27,900 )     (26,867 )     (28,382 )
Tangible common equity   $ 477,558     $ 469,875     $ 458,382     $ 446,696     $ 431,105  
                                         
Total Assets to Tangible Assets:                                        
Total assets—GAAP   $ 7,443,805     $ 7,093,959     $ 6,630,010     $ 6,884,786     $ 6,868,540  
Adjustments:                                        
Goodwill     (161,904 )     (161,904 )     (161,904 )     (161,904 )     (161,904 )
Other intangible assets, net     (24,374 )     (26,065 )     (27,900 )     (26,867 )     (28,382 )
Tangible assets   $ 7,257,527     $ 6,905,990     $ 6,440,206     $ 6,696,015     $ 6,678,254  
                                         
Common Shares Outstanding     22,050,537       22,193,141       22,380,492       22,351,740       22,325,471  
                                         
Tangible Common Equity to Tangible Assets     6.58 %     6.80 %     7.12 %     6.67 %     6.46 %
Tangible Book Value Per Share   $ 21.66     $ 21.17     $ 20.48     $ 19.98     $ 19.31  
                                         
Return on Average Tangible Common Equity (ROATCE)
                                         
    For the Quarter Ended
    December 31,   September 30,   June 30,   March 31,   December 31,
(dollars in thousands)   2021   2021   2021   2021   2020
Net income available to common shareholders   $ 23,107     $ 19,548     $ 20,124     $ 18,538     $ 8,333  
                                         
Average total shareholders’ equity—GAAP   $ 652,892     $ 651,751     $ 641,079     $ 624,661     $ 622,594  
Adjustments:                                        
Goodwill     (161,904 )     (161,904 )     (161,904 )     (161,904 )     (161,904 )
Other intangible assets, net     (25,311 )     (27,132 )     (26,931 )     (27,578 )     (29,123 )
Average tangible common equity   $ 465,677     $ 462,715     $ 452,244     $ 435,179     $ 431,567  
ROATCE     19.69 %     16.76 %     17.85 %     17.28 %     7.68 %
                                         

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