Highlights
- Acquisition of Centrue Financial Corporation completed on June 9, 2017, increasing total assets to $4.5 billion
- Net income of $3.5 million, or $0.20 diluted earnings per share, for the second quarter of 2017
- Tangible book value per share increased to $17.47 at June 30, 2017
- Non-performing loans decline $1.3 million to $27.6 million at June 30, 2017
EFFINGHAM, Ill., July 27, 2017 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the “Company”) today reported financial results for the second quarter of 2017, which included $7.5 million, or $0.31 per diluted share, in integration and acquisition expenses largely related to the acquisition of Centrue Financial Corporation on June 9, 2017, and $1.7 million, or $0.07 per diluted share, in impairment of mortgage servicing rights (“MSR”). Inclusive of these expenses and impairment, Midland reported net income of $3.5 million, or $0.20 diluted earnings per share for the second quarter of 2017, compared with net income of $8.5 million, or $0.52 diluted earnings per share for the first quarter of 2017, and net income of $6.8 million, or $0.50 diluted earnings per share for the second quarter of 2016.
“The highlight of the second quarter was the completion of our acquisition of Centrue Financial Corporation,” said Leon J. Holschbach, President and Chief Executive Officer of the Company. “Through this acquisition, we have increased our scale and deepened our presence in northern Illinois. We expect to complete the integration and system conversion in September and begin realizing the majority of the synergies we projected for this transaction in the fourth quarter of 2017.
“Through the first half of 2017, we have generated annualized loan growth of 15% with meaningful contributions coming from all of our major lending areas. The strong growth we are seeing in net interest income helped to offset lighter than expected results in commercial FHA and residential mortgage banking revenue in the second quarter. Over the second half of the year, we will be focused on continuing to generate organic growth, integrating the Centrue acquisition, and executing on our strategic initiatives,” said Mr. Holschbach.
Adjusted Earnings
Financial results for the first and second quarters of 2017 included $1.3 million and $7.5 million in integration and acquisition-related expenses, respectively. Excluding these expenses, adjusted earnings were $9.4 million, or $0.57 diluted earnings per share, for the first quarter of 2017, compared with adjusted earnings of $8.9 million, or $0.51 diluted earnings per share, for the second quarter of 2017. The decline in adjusted earnings is primarily attributable to lower commercial FHA and residential mortgage banking revenue. 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.
Net Interest Income
Net interest income for the second quarter of 2017 was $29.4 million, an increase of 7.1% from $27.5 million for the first quarter of 2017. The increase in net interest income was primarily attributable to higher interest income on loans due to a 10.2% increase in the average balance of loans, largely due to the Centrue acquisition.
The Company’s net interest income benefits from accretion income associated with purchased loan portfolios. Accretion income totaled $1.3 million for the second quarter of 2017, compared with $2.7 million for the first quarter of 2017.
Relative to the second quarter of 2016, net interest income increased $1.4 million, or 5.0%. Excluding the impact of a $3.6 million decrease in accretion income, net interest income increased $5.0 million. This increase resulted from a $6.9 million increase in interest income on loans (excluding the effect of accretion income) due to growth in the average balance of loans. This increase was offset in part by a $1.1 million decline in interest income on investment securities due to the sale of the portfolio of CMOs.
Net Interest Margin
Net interest margin for the second quarter of 2017 was 3.70%, compared to 3.87% for the first quarter of 2017. The Company’s net interest margin benefits from accretion income on purchased loan portfolios. Excluding accretion income, net interest margin was 3.57% for the second quarter of 2017, compared with 3.52% for the first quarter of 2017. The increase in net interest margin excluding accretion income was primarily attributable to an increase in average yields on loans and investments.
Relative to the second quarter of 2016, the net interest margin decreased from 4.20%, primarily due to a decrease in accretion income. Excluding accretion income, the net interest margin increased from 3.52%, which was primarily attributable to higher average yields on loans.
Noninterest Income
Noninterest income for the second quarter of 2017 was $13.6 million, a decrease of 16.6% from $16.3 million for the first quarter of 2017. The decline was primarily attributable to lower commercial FHA and residential mortgage banking revenue, partially due to MSR impairment.
Commercial FHA revenue for the second quarter of 2017 was $4.2 million, a decrease of 38.0% from $6.7 million in the first quarter of 2017. Commercial FHA revenue was negatively impacted in the second quarter of 2017 by a $0.9 million MSR impairment charge. The Company originated $151.6 million in rate lock commitments during the second quarter of 2017, compared to $216.9 million in the prior quarter. Compared to the second quarter of 2016, commercial FHA revenue decreased 51.4%.
Residential mortgage banking revenue for the second quarter of 2017 was $2.3 million, a decrease of 20.1% from $2.9 million in the first quarter of 2017. Residential mortgage banking revenue was negatively impacted in the second quarter of 2017 by a $0.8 million MSR impairment charge. Compared to the second quarter of 2016, residential mortgage banking revenue increased 124.7%, primarily due to higher MSR impairment charges recorded in the prior year period.
Wealth management revenue for the second quarter of 2017 was $3.4 million, an increase of 18.6% from $2.9 million in the first quarter of 2017. The increase was primarily attributable to the growth in assets under administration resulting from the acquisition of CedarPoint Investment Advisors in March 2017. Compared to the second quarter of 2016, wealth management revenue increased 82.1%, which was attributable to 12.2% organic growth in assets under management and the acquisitions of Sterling Trust in November 2016 and CedarPoint Investment Advisors in March 2017.
Relative to the second quarter of 2016, noninterest income decreased 2.8% from $14.0 million. The decrease was primarily due to lower commercial FHA revenue, partially due to MSR impairment charges.
Noninterest Expense
Noninterest expense for the second quarter of 2017 was $37.6 million, compared with $30.8 million for the first quarter of 2017. Noninterest expense for the first and second quarters of 2017 included $1.3 million and $7.5 million in integration and acquisition related expenses, respectively. Excluding these expenses, noninterest expense increased $0.7 million or 2.2% from the prior quarter. The increase was attributable to $1.6 million in expenses related to the partial quarter impact of the Centrue acquisition, which was partially offset by a decline in operating expense related to the rest of Midland’s operations.
Relative to the second quarter of 2016, noninterest expense excluding integration and acquisition-related expenses and expenses associated with the payoff of subordinated debt increased 0.7% from $30.0 million. The increase was primarily due to personnel and facilities added in the three acquisitions completed over the past year, partially offset by cost savings resulting from the Company’s Operational Excellence initiative.
Income Tax Expense
Income tax expense was $1.4 million for the second quarter of 2017, compared to $3.0 million for the first quarter of 2017. The effective tax rate for the second quarter of 2017 was 28.0%, compared to 26.0% in the prior quarter. The increase in effective tax rate reflects a reduction in the level of tax benefits recorded in the second quarter of 2017 related to the exercise of employee stock options.
Loan Portfolio
Total loans outstanding were $3.18 billion at June 30, 2017, compared with $2.45 billion at March 31, 2017. The increase in total loans reflects the addition of $688.1 million in loans from the Centrue acquisition and $41.0 million in organic loan growth. Over the 12 month period ending June 30, 2017, total loans increased 47.3% from $2.16 billion at June 30, 2016. The $41.0 million of organic loan growth recorded in the second quarter of 2017 was primarily driven by increases in the residential real estate and equipment leasing portfolios.
Deposits
Total deposits were $3.33 billion at June 30, 2017, compared with $2.53 billion at March 31, 2017, and $2.35 billion at June 30, 2016. The increase in total deposits reflects the addition of $741.8 million in deposits from the Centrue acquisition.
Asset Quality
Non-performing loans totaled $27.6 million, or 0.87% of total loans, at June 30, 2017, compared with $28.9 million, or 1.18% of total loans, at March 31, 2017, and $18.4 million, or 0.85% of total loans, at June 30, 2016.
Net charge-offs for the second quarter of 2017 were $0.8 million, or 0.13% of average loans on an annualized basis.
The Company recorded a provision for loan losses of $0.5 million for the second quarter of 2017, primarily related to the growth in the loan portfolio.
The Company’s allowance for loan losses was 0.48% of total loans and 55.8% of non-performing loans at June 30, 2017, compared with 0.64% and 54.6%, respectively, at March 31, 2017. Including the fair market value discounts recorded in connection with acquired loan portfolios, the allowance for loan losses to total loans ratio was 0.98% at June 30, 2017, compared with 0.92% at March 31, 2017.
Capital
At June 30, 2017, 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:
| June 30, 2017 | Well Capitalized Regulatory Requirements | |||
| Total capital to risk-weighted assets | 12.34 | % | 10.00 | % |
| Tier 1 capital to risk-weighted assets | 10.45 | % | 8.00 | % |
| Tier 1 leverage ratio | 11.04 | % | 5.00 | % |
| Common equity Tier 1 capital | 8.68 | % | 6.50 | % |
| Tangible common equity to tangible assets | 7.62 | % | 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, July 28, 2017 to discuss its financial results. The call can be accessed via telephone at (877) 516-3531 (passcode: 51055156). A recorded replay can be accessed through August 4, 2017 by dialing (855) 859-2056; passcode: 51055156.
A slide presentation relating to the second quarter 2017 results 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. As of June 30, 2017, the Company had total assets of $4.5 billion and its Wealth Management Group had assets under administration of approximately $1.9 billion. 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. 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. 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 | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2017 | 2017 | 2016 | 2016 | 2016 | |||||||||||||||
| Earnings Summary | ||||||||||||||||||||
| Net interest income | $ | 29,400 | $ | 27,461 | $ | 25,959 | $ | 27,265 | $ | 27,989 | ||||||||||
| Provision for loan losses | 458 | 1,533 | 2,445 | 1,392 | 629 | |||||||||||||||
| Noninterest income | 13,619 | 16,330 | 30,486 | 14,937 | 14,016 | |||||||||||||||
| Noninterest expense | 37,645 | 30,785 | 34,090 | 28,657 | 30,904 | |||||||||||||||
| Income before income taxes | 4,916 | 11,473 | 19,910 | 12,153 | 10,472 | |||||||||||||||
| Income taxes | 1,377 | 2,983 | 8,327 | 4,102 | 3,683 | |||||||||||||||
| Net income | $ | 3,539 | $ | 8,490 | $ | 11,583 | $ | 8,051 | $ | 6,789 | ||||||||||
| Diluted earnings per common share | $ | 0.20 | $ | 0.52 | $ | 0.72 | $ | 0.51 | $ | 0.50 | ||||||||||
| Weighted average shares outstanding - diluted | 17,320,089 | 16,351,637 | 16,032,016 | 15,858,273 | 13,635,074 | |||||||||||||||
| Return on average assets | 0.39 | % | 1.05 | % | 1.44 | % | 1.03 | % | 0.89 | % | ||||||||||
| Return on average shareholders' equity | 3.93 | % | 10.58 | % | 14.05 | % | 10.04 | % | 10.20 | % | ||||||||||
| Return on average tangible common shareholders' equity | 4.91 | % | 12.78 | % | 16.84 | % | 12.01 | % | 12.70 | % | ||||||||||
| Net interest margin | 3.70 | % | 3.87 | % | 3.70 | % | 4.00 | % | 4.20 | % | ||||||||||
| Efficiency ratio | 66.54 | % | 66.34 | % | 76.64 | % | 64.54 | % | 66.46 | % | ||||||||||
| Adjusted Earnings Performance Summary | ||||||||||||||||||||
| Adjusted earnings | $ | 8,929 | $ | 9,409 | $ | 6,302 | $ | 8,277 | $ | 7,106 | ||||||||||
| Adjusted diluted earnings per common share | $ | 0.51 | $ | 0.57 | $ | 0.39 | $ | 0.52 | $ | 0.52 | ||||||||||
| Adjusted return on average assets | 0.99 | % | 1.16 | % | 0.78 | % | 1.06 | % | 0.93 | % | ||||||||||
| Adjusted return on average shareholders' equity | 9.91 | % | 11.73 | % | 7.64 | % | 10.33 | % | 10.66 | % | ||||||||||
| Adjusted return on average tangible common shareholders' equity | 12.39 | % | 14.16 | % | 9.16 | % | 12.35 | % | 13.27 | % | ||||||||||
| Net interest margin excluding accretion income | 3.57 | % | 3.52 | % | 3.42 | % | 3.66 | % | 3.52 | % | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in thousands, except per share data) | 2017 | 2017 | 2016 | 2016 | 2016 | |||||||||||||||
| Net interest income: | ||||||||||||||||||||
| Total interest income | $ | 34,528 | $ | 31,839 | $ | 29,981 | $ | 31,186 | $ | 32,115 | ||||||||||
| Total interest expense | 5,128 | 4,378 | 4,022 | 3,921 | 4,126 | |||||||||||||||
| Net interest income | 29,400 | 27,461 | 25,959 | 27,265 | 27,989 | |||||||||||||||
| Provision for loan losses | 458 | 1,533 | 2,445 | 1,392 | 629 | |||||||||||||||
| Net interest income after provision for loan losses | 28,942 | 25,928 | 23,514 | 25,873 | 27,360 | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Commercial FHA revenue | 4,153 | 6,695 | 3,704 | 3,260 | 8,538 | |||||||||||||||
| Residential mortgage banking revenue | 2,330 | 2,916 | 6,241 | 4,990 | 1,037 | |||||||||||||||
| Wealth management revenue | 3,406 | 2,872 | 2,495 | 1,941 | 1,870 | |||||||||||||||
| Service charges on deposit accounts | 1,122 | 892 | 988 | 1,044 | 965 | |||||||||||||||
| Interchange revenue | 1,114 | 977 | 921 | 920 | 945 | |||||||||||||||
| FDIC loss sharing expense | - | - | - | - | (1,608 | ) | ||||||||||||||
| Gain on sales of investment securities, net | 55 | 67 | 14,387 | 39 | 72 | |||||||||||||||
| Other-than-temporary impairment on investment securities | - | - | - | - | - | |||||||||||||||
| Other income | 1,439 | 1,911 | 1,750 | 2,743 | 2,197 | |||||||||||||||
| Total noninterest income | 13,619 | 16,330 | 30,486 | 14,937 | 14,016 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Salaries and employee benefits | 21,842 | 17,115 | 17,326 | 16,568 | 17,012 | |||||||||||||||
| Occupancy and equipment | 3,472 | 3,184 | 3,266 | 3,271 | 3,233 | |||||||||||||||
| Data processing | 2,949 | 2,796 | 2,828 | 2,586 | 2,624 | |||||||||||||||
| Professional | 3,142 | 2,992 | 2,898 | 1,877 | 1,573 | |||||||||||||||
| Amortization of intangible assets | 579 | 525 | 534 | 514 | 519 | |||||||||||||||
| Other | 5,661 | 4,173 | 7,238 | 3,841 | 5,943 | |||||||||||||||
| Total noninterest expense | 37,645 | 30,785 | 34,090 | 28,657 | 30,904 | |||||||||||||||
| Income before income taxes | 4,916 | 11,473 | 19,910 | 12,153 | 10,472 | |||||||||||||||
| Income taxes | 1,377 | 2,983 | 8,327 | 4,102 | 3,683 | |||||||||||||||
| Net income | $ | 3,539 | $ | 8,490 | $ | 11,583 | $ | 8,051 | $ | 6,789 | ||||||||||
| Basic earnings per common share | $ | 0.21 | $ | 0.54 | $ | 0.74 | $ | 0.51 | $ | 0.51 | ||||||||||
| Diluted earnings per common share | $ | 0.20 | $ | 0.52 | $ | 0.72 | $ | 0.51 | $ | 0.50 | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||||||
| At Quarter Ended | ||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||
| (in thousands) | 2017 | 2017 | 2016 | 2016 | 2016 | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 334,356 | $ | 218,096 | $ | 190,716 | $ | 228,030 | $ | 123,366 | ||||||||||||||
| Investment securities available-for-sale at fair value | 385,340 | 259,332 | 246,339 | 252,212 | 238,781 | |||||||||||||||||||
| Investment securities held to maturity at amortized cost | 75,371 | 76,276 | 78,672 | 82,941 | 84,756 | |||||||||||||||||||
| Loans | 3,184,063 | 2,454,950 | 2,319,976 | 2,312,778 | 2,161,041 | |||||||||||||||||||
| Allowance for loan losses | (15,424 | ) | (15,805 | ) | (14,862 | ) | (15,559 | ) | (14,752 | ) | ||||||||||||||
| Total loans, net | 3,168,639 | 2,439,145 | 2,305,114 | 2,297,219 | 2,146,289 | |||||||||||||||||||
| Loans held for sale at fair value | 41,689 | 39,900 | 70,565 | 61,363 | 101,782 | |||||||||||||||||||
| Premises and equipment, net | 76,598 | 66,914 | 66,692 | 70,727 | 72,147 | |||||||||||||||||||
| Other real estate owned | 7,036 | 3,680 | 3,560 | 4,828 | 3,540 | |||||||||||||||||||
| Mortgage servicing rights at lower of cost or market | 70,277 | 68,557 | 68,008 | 64,689 | 62,808 | |||||||||||||||||||
| Intangible assets | 18,459 | 8,633 | 7,187 | 5,391 | 5,905 | |||||||||||||||||||
| Goodwill | 96,940 | 50,807 | 48,836 | 46,519 | 46,519 | |||||||||||||||||||
| Cash surrender value of life insurance policies | 111,802 | 74,806 | 74,226 | 74,276 | 73,665 | |||||||||||||||||||
| Other assets | 105,135 | 67,431 | 73,808 | 59,532 | 62,226 | |||||||||||||||||||
| Total assets | $ | 4,491,642 | $ | 3,373,577 | $ | 3,233,723 | $ | 3,247,727 | $ | 3,021,784 | ||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||||
| Noninterest bearing deposits | $ | 780,803 | $ | 528,021 | $ | 562,333 | $ | 629,113 | $ | 528,966 | ||||||||||||||
| Interest bearing deposits | 2,552,228 | 1,999,455 | 1,842,033 | 1,790,919 | 1,825,586 | |||||||||||||||||||
| Total deposits | 3,333,031 | 2,527,476 | 2,404,366 | 2,420,032 | 2,354,552 | |||||||||||||||||||
| Short-term borrowings | 170,629 | 124,035 | 131,557 | 138,289 | 125,014 | |||||||||||||||||||
| FHLB advances and other borrowings | 400,304 | 250,353 | 237,518 | 237,543 | 97,588 | |||||||||||||||||||
| Subordinated debt | 54,556 | 54,532 | 54,508 | 54,484 | 54,459 | |||||||||||||||||||
| Trust preferred debentures | 45,156 | 37,496 | 37,405 | 37,316 | 37,229 | |||||||||||||||||||
| Other liabilities | 36,014 | 45,352 | 46,599 | 38,314 | 36,674 | |||||||||||||||||||
| Total liabilities | 4,039,690 | 3,039,244 | 2,911,953 | 2,925,978 | 2,705,516 | |||||||||||||||||||
| Total shareholders’ equity | 451,952 | 334,333 | 321,770 | 321,749 | 316,268 | |||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 4,491,642 | $ | 3,373,577 | $ | 3,233,723 | $ | 3,247,727 | $ | 3,021,784 | ||||||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||
| As of | |||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
| (in thousands) | 2017 | 2017 | 2016 | 2016 | 2016 | ||||||||||||||
| Loan Portfolio | |||||||||||||||||||
| Commercial loans | $ | 571,111 | $ | 475,408 | $ | 457,827 | $ | 545,069 | $ | 489,228 | |||||||||
| Commercial real estate loans | 1,470,487 | 997,200 | 969,615 | 956,298 | 929,399 | ||||||||||||||
| Construction and land development loans | 176,098 | 171,047 | 177,325 | 163,900 | 181,667 | ||||||||||||||
| Residential real estate loans | 428,464 | 277,402 | 253,713 | 216,935 | 179,184 | ||||||||||||||
| Consumer loans | 335,902 | 337,081 | 270,017 | 248,131 | 205,060 | ||||||||||||||
| Lease financing loans | 202,001 | 196,812 | 191,479 | 182,445 | 176,503 | ||||||||||||||
| Total loans | $ | 3,184,063 | $ | 2,454,950 | $ | 2,319,976 | $ | 2,312,778 | $ | 2,161,041 | |||||||||
| Deposit Portfolio | |||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 780,803 | $ | 528,021 | $ | 562,333 | $ | 629,113 | $ | 528,966 | |||||||||
| Checking accounts | 841,640 | 751,193 | 656,248 | 658,021 | 627,003 | ||||||||||||||
| Money market accounts | 578,077 | 415,322 | 399,851 | 366,193 | 374,537 | ||||||||||||||
| Savings accounts | 291,912 | 169,715 | 166,910 | 162,742 | 164,792 | ||||||||||||||
| Time deposits | 525,647 | 394,508 | 400,304 | 420,779 | 431,173 | ||||||||||||||
| Brokered deposits | 314,952 | 268,717 | 218,720 | 183,184 | 228,081 | ||||||||||||||
| Total deposits | $ | 3,333,031 | $ | 2,527,476 | $ | 2,404,366 | $ | 2,420,032 | $ | 2,354,552 | |||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in thousands) | 2017 | 2017 | 2016 | 2016 | 2016 | |||||||||||||||
| Average Balance Sheets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 192,483 | $ | 163,595 | $ | 140,439 | $ | 154,764 | $ | 232,362 | ||||||||||
| Investment securities | 362,268 | 328,880 | 315,511 | 329,900 | 321,424 | |||||||||||||||
| Loans | 2,620,875 | 2,361,380 | 2,299,115 | 2,177,517 | 2,092,248 | |||||||||||||||
| Loans held for sale | 61,759 | 73,914 | 86,665 | 90,661 | 79,566 | |||||||||||||||
| Nonmarketable equity securities | 22,246 | 20,047 | 18,927 | 18,365 | 16,800 | |||||||||||||||
| Total interest-earning assets | 3,259,631 | 2,947,816 | 2,860,657 | 2,771,207 | 2,742,400 | |||||||||||||||
| Non-earning assets | 372,525 | 336,761 | 337,566 | 329,504 | 324,880 | |||||||||||||||
| Total assets | $ | 3,632,156 | $ | 3,284,577 | $ | 3,198,223 | $ | 3,100,711 | $ | 3,067,280 | ||||||||||
| Interest-bearing deposits | $ | 2,116,564 | $ | 1,896,569 | $ | 1,838,760 | $ | 1,803,189 | $ | 1,844,493 | ||||||||||
| Short-term borrowings | 146,144 | 143,583 | 151,191 | 134,052 | 114,651 | |||||||||||||||
| FHLB advances and other borrowings | 290,401 | 248,045 | 183,614 | 165,774 | 185,195 | |||||||||||||||
| Subordinated debt | 54,542 | 54,518 | 54,495 | 54,470 | 61,677 | |||||||||||||||
| Trust preferred debentures | 39,179 | 37,443 | 37,357 | 37,266 | 37,182 | |||||||||||||||
| Total interest-bearing liabilities | 2,646,830 | 2,380,158 | 2,265,417 | 2,194,751 | 2,243,198 | |||||||||||||||
| Noninterest-bearing deposits | 579,977 | 525,868 | 562,958 | 550,816 | 522,632 | |||||||||||||||
| Other noninterest-bearing liabilities | 44,014 | 53,109 | 41,962 | 36,284 | 33,309 | |||||||||||||||
| Shareholders' equity | 361,335 | 325,442 | 327,886 | 318,860 | 268,141 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,632,156 | $ | 3,284,577 | $ | 3,198,223 | $ | 3,100,711 | $ | 3,067,280 | ||||||||||
| Yields | ||||||||||||||||||||
| Cash and cash equivalents | 1.02 | % | 0.77 | % | 0.53 | % | 0.50 | % | 0.50 | % | ||||||||||
| Investment securities | 3.33 | % | 3.21 | % | 3.10 | % | 5.02 | % | 5.15 | % | ||||||||||
| Loans | 4.71 | % | 4.91 | % | 4.65 | % | 4.83 | % | 5.24 | % | ||||||||||
| Loans held for sale | 4.67 | % | 4.22 | % | 4.22 | % | 3.77 | % | 4.65 | % | ||||||||||
| Nonmarketable equity securities | 4.31 | % | 4.41 | % | 3.85 | % | 3.77 | % | 4.16 | % | ||||||||||
| Total interest-earning assets | 4.33 | % | 4.47 | % | 4.26 | % | 4.57 | % | 4.81 | % | ||||||||||
| Interest-bearing deposits | 0.53 | % | 0.51 | % | 0.48 | % | 0.48 | % | 0.50 | % | ||||||||||
| Short-term borrowings | 0.23 | % | 0.23 | % | 0.22 | % | 0.24 | % | 0.24 | % | ||||||||||
| FHLB advances and other borrowings | 1.16 | % | 0.93 | % | 0.78 | % | 0.73 | % | 0.56 | % | ||||||||||
| Subordinated debt | 6.40 | % | 6.40 | % | 6.41 | % | 6.41 | % | 6.84 | % | ||||||||||
| Trust preferred debentures | 5.37 | % | 5.12 | % | 4.99 | % | 5.03 | % | 4.95 | % | ||||||||||
| Total interest-bearing liabilities | 0.78 | % | 0.75 | % | 0.71 | % | 0.71 | % | 0.74 | % | ||||||||||
| Net interest margin | 3.70 | % | 3.87 | % | 3.70 | % | 4.00 | % | 4.20 | % | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| As of and for the Quarter Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2017 | 2017 | 2016 | 2016 | 2016 | |||||||||||||||
| Asset Quality | ||||||||||||||||||||
| Loans 30-89 days past due | $ | 13,566 | $ | 14,075 | $ | 10,767 | $ | 10,318 | $ | 10,453 | ||||||||||
| Nonperforming loans | 27,615 | 28,933 | 31,603 | 29,926 | 18,430 | |||||||||||||||
| Nonperforming assets | 33,150 | 31,684 | 34,550 | 34,304 | 21,469 | |||||||||||||||
| Net charge-offs | 839 | 590 | 3,142 | 585 | 448 | |||||||||||||||
| Loans 30-89 days past due to total loans | 0.43 | % | 0.57 | % | 0.46 | % | 0.45 | % | 0.48 | % | ||||||||||
| Nonperforming loans to total loans | 0.87 | % | 1.18 | % | 1.36 | % | 1.29 | % | 0.85 | % | ||||||||||
| Nonperforming assets to total assets | 0.74 | % | 0.94 | % | 1.07 | % | 1.06 | % | 0.71 | % | ||||||||||
| Allowance for loan losses to total loans | 0.48 | % | 0.64 | % | 0.64 | % | 0.67 | % | 0.68 | % | ||||||||||
| Allowance for loan losses to nonperforming loans | 55.81 | % | 54.62 | % | 47.03 | % | 51.99 | % | 80.04 | % | ||||||||||
| Net charge-offs to average loans | 0.13 | % | 0.10 | % | 0.54 | % | 0.11 | % | 0.09 | % | ||||||||||
| Wealth Management | ||||||||||||||||||||
| Trust assets under administration | $ | 1,929,513 | $ | 1,869,314 | $ | 1,658,235 | $ | 1,235,132 | $ | 1,198,044 | ||||||||||
| Market Data | ||||||||||||||||||||
| Book value per share at period end | $ | 23.51 | $ | 21.19 | $ | 20.78 | $ | 20.89 | $ | 20.53 | ||||||||||
| Tangible book value per share at period end | $ | 17.47 | $ | 17.42 | $ | 17.16 | $ | 17.52 | $ | 17.13 | ||||||||||
| Market price at period end | $ | 33.52 | $ | 34.39 | $ | 36.18 | $ | 25.34 | $ | 21.69 | ||||||||||
| Shares outstanding at period end | 19,087,409 | 15,780,651 | 15,483,499 | 15,404,423 | 15,402,946 | |||||||||||||||
| Capital | ||||||||||||||||||||
| Total capital to risk-weighted assets | 12.34 | % | 13.48 | % | 13.85 | % | 13.53 | % | 13.91 | % | ||||||||||
| Tier 1 capital to risk-weighted assets | 10.45 | % | 10.97 | % | 11.27 | % | 10.94 | % | 11.23 | % | ||||||||||
| Tier 1 leverage ratio | 11.04 | % | 9.61 | % | 9.76 | % | 9.82 | % | 9.77 | % | ||||||||||
| Common equity Tier 1 capital ratio | 8.68 | % | 9.10 | % | 9.35 | % | 9.03 | % | 9.24 | % | ||||||||||
| Tangible common equity to tangible assets | 7.62 | % | 8.29 | % | 8.36 | % | 8.44 | % | 8.89 | % | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in thousands, except per share data) | 2017 | 2017 | 2016 | 2016 | 2016 | |||||||||||||||
| Adjusted Earnings Reconciliation | ||||||||||||||||||||
| Income before income taxes - GAAP | $ | 4,916 | $ | 11,473 | $ | 19,910 | $ | 12,153 | $ | 10,472 | ||||||||||
| Adjustments to other income: | ||||||||||||||||||||
| Gain on sales of investment securities, net | 55 | 67 | 14,387 | 39 | 72 | |||||||||||||||
| Reversal of contingent consideration accrual | - | - | - | - | 350 | |||||||||||||||
| Gain (loss) on sale of other assets | (91 | ) | (58 | ) | - | - | - | |||||||||||||
| Total adjusted other income | (36 | ) | 9 | 14,387 | 39 | 422 | ||||||||||||||
| 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 | 7,450 | 1,251 | 1,200 | 352 | 406 | |||||||||||||||
| Total adjusted other expense | 7,450 | 1,251 | 3,650 | 352 | 917 | |||||||||||||||
| Adjusted earnings pre tax | 12,402 | 12,715 | 9,173 | 12,466 | 10,967 | |||||||||||||||
| Adjusted earnings tax | 3,473 | 3,306 | 2,871 | 4,189 | 3,861 | |||||||||||||||
| Adjusted earnings - non-GAAP | $ | 8,929 | $ | 9,409 | $ | 6,302 | $ | 8,277 | $ | 7,106 | ||||||||||
| Adjusted diluted EPS | $ | 0.51 | $ | 0.57 | $ | 0.39 | $ | 0.52 | $ | 0.52 | ||||||||||
| Adjusted return on average assets | 0.99 | % | 1.16 | % | 0.78 | % | 1.06 | % | 0.93 | % | ||||||||||
| Adjusted return on average shareholders' equity | 9.91 | % | 11.73 | % | 7.64 | % | 10.33 | % | 10.66 | % | ||||||||||
| Adjusted return on average tangible common equity | 12.39 | % | 14.16 | % | 9.16 | % | 12.35 | % | 13.27 | % | ||||||||||
| Yield on Loans | ||||||||||||||||||||
| Reported yield on loans | 4.71 | % | 4.91 | % | 4.65 | % | 4.83 | % | 5.24 | % | ||||||||||
| Effect of accretion income on acquired loans | (0.17 | )% | (0.43 | )% | (0.33 | )% | (0.43 | )% | (0.88 | )% | ||||||||||
| Yield on loans excluding accretion income | 4.54 | % | 4.48 | % | 4.32 | % | 4.40 | % | 4.36 | % | ||||||||||
| Net Interest Margin | ||||||||||||||||||||
| Reported net interest margin | 3.70 | % | 3.87 | % | 3.70 | % | 4.00 | % | 4.20 | % | ||||||||||
| Effect of accretion income on acquired loans | (0.13 | )% | (0.35 | )% | (0.28 | )% | (0.34 | )% | (0.68 | )% | ||||||||||
| Net interest margin excluding accretion income | 3.57 | % | 3.52 | % | 3.42 | % | 3.66 | % | 3.52 | % | ||||||||||
| 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 | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2017 | 2017 | 2016 | 2016 | 2016 | |||||||||||||||
| Shareholders' Equity to Tangible Common Equity | ||||||||||||||||||||
| Total shareholders' equity—GAAP | $ | 451,952 | $ | 334,333 | $ | 321,770 | $ | 321,749 | $ | 316,268 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Preferred stock | (3,134 | ) | - | - | - | - | ||||||||||||||
| Goodwill | (96,940 | ) | (50,807 | ) | (48,836 | ) | (46,519 | ) | (46,519 | ) | ||||||||||
| Other intangibles | (18,459 | ) | (8,633 | ) | (7,187 | ) | (5,391 | ) | (5,905 | ) | ||||||||||
| Tangible common equity | $ | 333,419 | $ | 274,893 | $ | 265,747 | $ | 269,839 | $ | 263,844 | ||||||||||
| Total Assets to Tangible Assets: | ||||||||||||||||||||
| Total assets—GAAP | 4,491,642 | 3,373,577 | 3,233,723 | 3,247,727 | 3,021,784 | |||||||||||||||
| Adjustments: | ||||||||||||||||||||
| Goodwill | (96,940 | ) | (50,807 | ) | (48,836 | ) | (46,519 | ) | (46,519 | ) | ||||||||||
| Other intangibles | (18,459 | ) | (8,633 | ) | (7,187 | ) | (5,391 | ) | (5,905 | ) | ||||||||||
| Tangible assets | $ | 4,376,243 | $ | 3,314,137 | $ | 3,177,700 | $ | 3,195,817 | $ | 2,969,360 | ||||||||||
| Common Shares Outstanding | 19,087,409 | 15,780,651 | 15,483,499 | 15,404,423 | 15,402,946 | |||||||||||||||
| Tangible Common Equity to Tangible Assets | 7.62 | % | 8.29 | % | 8.36 | % | 8.44 | % | 8.89 | % | ||||||||||
| Tangible Book Value Per Share | $ | 17.47 | $ | 17.42 | $ | 17.16 | $ | 17.52 | $ | 17.13 | ||||||||||
| Return on Average Tangible Common Equity (ROATCE) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in thousands) | 2017 | 2017 | 2016 | 2016 | 2016 | |||||||||||||||
| Net Income | $ | 3,539 | $ | 8,490 | $ | 11,583 | $ | 8,051 | $ | 6,789 | ||||||||||
| Average total shareholders' equity—GAAP | $ | 361,335 | $ | 325,442 | $ | 327,886 | $ | 318,860 | $ | 268,141 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Goodwill | (61,424 | ) | (48,836 | ) | (46,594 | ) | (46,519 | ) | (46,519 | ) | ||||||||||
| Other intangibles | (10,812 | ) | (7,144 | ) | (7,718 | ) | (5,656 | ) | (6,184 | ) | ||||||||||
| Average tangible common equity | $ | 289,099 | $ | 269,462 | $ | 273,574 | $ | 266,685 | $ | 215,438 | ||||||||||
| ROATCE | 4.91 | % | 12.78 | % | 16.84 | % | 12.01 | % | 12.67 | % | ||||||||||