Highlights
- Definitive agreement to acquire Alpine Bancorporation announced on October 16, 2017
- Integration of Centrue acquisition completed
- Net income of $2.0 million, or $0.10 diluted earnings per share, for the third quarter of 2017
- Pending sale of residential mortgage servicing rights expected to reduce earnings volatility and enable redeployment of capital for the Alpine acquisition
EFFINGHAM, Ill., Oct. 26, 2017 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the “Company”) today reported financial results for the third quarter of 2017, which included $8.3 million, or $0.27 per diluted share, in integration and acquisition expenses largely related to the integration of Centrue Financial Corporation (“Centrue”), and a $3.6 million loss, or $0.12 per diluted share, on mortgage servicing rights (“MSRs”) held for sale. Inclusive of these expenses, Midland reported net income of $2.0 million, or $0.10 diluted earnings per share, for the third quarter of 2017, compared with net income of $3.5 million, or $0.20 diluted earnings per share, for the second quarter of 2017, and net income of $8.1 million, or $0.51 diluted earnings per share for the third quarter of 2016.
“We continue to transform Midland into a stronger, more profitable institution through our strategic initiatives and ongoing M&A activity,” said Leon J. Holschbach, President and Chief Executive Officer of the Company. “The integration of Centrue has gone well and we are seeing the positive impact of the synergies we projected for this transaction. With the recent announcement of our pending acquisition of Alpine Bancorporation, we have positioned Midland to be more focused on the core community bank and wealth management businesses, which we anticipate generating steady growth in the coming years. As our community bank and wealth management businesses increase in scale, we anticipate that the commercial FHA and residential mortgage banking businesses will continue to be meaningful contributors to our financial results, although smaller components of our overall revenue mix.
“During the third quarter, we made the decision to exit most of our residential mortgage servicing business and take a charge against our MSRs in anticipation of their sale. Although the charge had a negative impact on our third quarter results, we believe disposing of the MSRs will reduce our earnings volatility and free up capital that can be utilized to support the acquisition of Alpine. With the addition of Alpine, we will be well positioned as an even higher performing bank with a more consistent earnings stream,” said Mr. Holschbach.
Adjusted Earnings
Financial results for the third and second quarters of 2017 included $8.3 million and $7.5 million in integration and acquisition-related expenses, respectively. The third quarter of 2017 also included a $3.6 million loss on MSRs held for sale. Excluding these expenses, adjusted earnings were $9.7 million, or $0.49 diluted earnings per share, for the third 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 per share is primarily attributable to a higher weighted average diluted share count resulting from the shares issued in the Centrue acquisition. 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 third quarter of 2017 was $36.8 million, an increase of 25.1% from $29.4 million for the second quarter of 2017. The increase in net interest income was primarily attributable to higher interest income on loans due to a 21.1% increase in the average balance of loans, largely due to the full quarter impact of the Centrue acquisition.
The Company’s net interest income benefits from accretion income associated with purchased loan portfolios. Accretion income totaled $3.0 million for the third quarter of 2017, compared with $1.3 million for the second quarter of 2017.
Relative to the third quarter of 2016, net interest income increased $9.5 million, or 34.8%. Accretion income for the third quarter of 2016 was $2.6 million. The increase in net interest income resulted from a $12.7 million increase in interest income on loans due primarily to growth in the average balance of loans. This increase was offset in part by a $2.6 million increase in interest expense primarily due to interest-bearing deposits from Centrue combined with increased usage of FHLB advances.
Net Interest Margin
Net interest margin for the third quarter of 2017 was 3.78%, compared to 3.70% for the second quarter of 2017. The Company’s net interest margin benefits from accretion income on purchased loan portfolios. Excluding accretion income, net interest margin was 3.51% for the third quarter of 2017, compared with 3.57% for the second quarter of 2017. The decrease in net interest margin excluding accretion income was primarily attributable to a decline in the yield on investment securities resulting from the full quarter impact of the addition of Centrue’s lower-yielding investment portfolio, partially offset by an increase in average loan yields.
Relative to the third quarter of 2016, the net interest margin decreased from 4.00%. Excluding accretion income, the net interest margin decreased from 3.66%, which was primarily attributable to a decline in the yield on investment securities due to the addition of Centrue’s lower-yielding investment portfolio and the sale of collateralized mortgage obligations (“CMOs”) in October 2016, partially offset by an increase in average loan yields.
Noninterest Income
Noninterest income for the third quarter of 2017 was $15.4 million, an increase of 13.1% from $13.6 million for the second quarter of 2017. This increase was primarily attributable to higher service charges on deposits and interchange revenue resulting from the full quarter impact of Centrue.
Wealth management revenue for the third quarter of 2017 was $3.5 million, an increase of 2.0% from $3.4 million in the second quarter of 2017. Compared to the third quarter of 2016, wealth management revenue increased 79.0%, which was attributable to 14% organic growth in assets under management and the acquisitions of Sterling Trust in November 2016 and CedarPoint Investment Advisors in March 2017.
Commercial FHA revenue for the third quarter of 2017 was $3.8 million, a decrease of 9.1% from $4.2 million in the second quarter of 2017. The Company originated $112.5 million in rate lock commitments during the third quarter of 2017, compared to $151.6 million in the prior quarter. Compared to the third quarter of 2016, commercial FHA revenue increased 15.9%.
Residential mortgage banking revenue for the third quarter of 2017 was $2.3 million, unchanged from $2.3 million in the second quarter of 2017. Compared to the third quarter of 2016, residential mortgage banking revenue decreased 53.6%, primarily due to a decline in demand in the refinancing market and the departure of the Company’s Colorado production team during the second quarter of 2017.
Relative to the third quarter of 2016, noninterest income increased 3.1% from $14.9 million. The increase was due to increases across all of the Company’s major fee generating businesses with the exception of residential mortgage banking revenue.
Noninterest Expense
Noninterest expense for the third quarter of 2017 was $48.4 million, compared with $37.6 million for the second quarter of 2017. Noninterest expense for the third and second quarters of 2017 included $8.3 million and $7.5 million in integration and acquisition-related expenses, respectively. Third quarter 2017 expenses also included a $3.6 million loss on MSRs held for sale. Excluding these expenses, noninterest expense increased $6.2 million or 20.7% from the prior quarter. The increase was attributable to the full quarter impact of Centrue.
Relative to the third quarter of 2016, noninterest expense excluding integration and acquisition-related expenses and the loss on mortgage servicing rights held for sale increased 28.8% from $28.3 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 $0.3 million for the third quarter of 2017, compared to $1.4 million for the second quarter of 2017. The effective tax rate for the third quarter of 2017 was 12.1%, compared to 28.0% in the prior quarter. Adjustments to the current quarter tax expense upon finalizing the 2016 tax returns resulted in the decreased effective tax rate. The effect of this adjustment was amplified by the lower pre-tax income recorded in the quarter.
Loan Portfolio
Total loans outstanding were $3.16 billion at September 30, 2017, compared with $3.18 billion at June 30, 2017 and $2.31 billion at September 30, 2016. The decrease in total loans from June 30, 2017 was attributable to elevated payoffs in the commercial loan portfolio, which was partially offset by increases in the residential real estate, construction and consumer loan portfolios. The increase in total loans from September 30, 2016, was due to organic growth and the addition of $681.9 million of loans from Centrue.
Deposits
Total deposits were $3.11 billion at September 30, 2017, compared with $3.33 billion at June 30, 2017, and $2.42 billion at September 30, 2016. The decrease in total deposits from June 30, 2017 was primarily attributable to a return to more normalized end-of-period balances related to commercial FHA loan servicing, as well as a change in the mix of non-core funding sources from brokered deposits to lower cost FHLB advances.
Asset Quality
Non-performing loans totaled $33.4 million, or 1.06% of total loans, at September 30, 2017, compared with $27.6 million, or 0.87% of total loans, at June 30, 2017, and $29.9 million, or 1.29% of total loans, at September 30, 2016. The increase in non-performing loans during the third quarter of 2017 was related to the downgrade of one commercial real estate loan.
Net charge-offs for the third quarter of 2017 were $0.1 million, or 0.01% of average loans on an annualized basis. The Company recorded a provision for loan losses of $1.5 million for the third quarter of 2017, primarily related to specific reserves set against two non-performing loans. The Company’s allowance for loan losses was 0.53% of total loans and 50.4% of non-performing loans at September 30, 2017, compared with 0.48% and 55.8%, respectively, at June 30, 2017. Including the fair market value discounts recorded in connection with acquired loan portfolios, the allowance for loan losses to total loans ratio was 0.99% at September 30, 2017, compared with 0.98% at June 30, 2017.
Capital
At September 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:
| September 30, 2017 | Well Capitalized Regulatory Requirements | |||
| Total capital to risk-weighted assets | 12.21% | 10.00% | ||
| Tier 1 capital to risk-weighted assets | 10.20% | 8.00% | ||
| Tier 1 leverage ratio | 8.54% | 5.00% | ||
| Common equity Tier 1 capital | 8.50% | 6.50% | ||
| Tangible common equity to tangible assets | 7.85% | 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, October 27, 2017 to discuss its financial results. The call can be accessed via telephone at (877) 516-3531 (passcode: 91007841). A recorded replay can be accessed through November 3, 2017 by dialing (855) 859-2056; passcode: 91007841.
A slide presentation relating to the third 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 September 30, 2017, the Company had total assets of $4.3 billion and its Wealth Management Group had assets under administration of approximately $2.0 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. 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," 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.
CONTACTS:
Jeffrey G. Ludwig, Chief Financial Officer, at jludwig@midlandsb.com or (217) 342-7321
Douglas J. Tucker, Sr. V.P., Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||
| Earnings Summary | ||||||||||||||||||||
| Net interest income | $ | 36,765 | $ | 29,400 | $ | 27,461 | $ | 25,959 | $ | 27,265 | ||||||||||
| Provision for loan losses | 1,489 | 458 | 1,533 | 2,445 | 1,392 | |||||||||||||||
| Noninterest income | 15,403 | 13,619 | 16,330 | 30,486 | 14,937 | |||||||||||||||
| Noninterest expense | 48,363 | 37,645 | 30,785 | 34,090 | 28,657 | |||||||||||||||
| Income before income taxes | 2,316 | 4,916 | 11,473 | 19,910 | 12,153 | |||||||||||||||
| Income taxes | 280 | 1,377 | 2,983 | 8,327 | 4,102 | |||||||||||||||
| Net income | $ | 2,036 | $ | 3,539 | $ | 8,490 | $ | 11,583 | $ | 8,051 | ||||||||||
| Diluted earnings per common share | $ | 0.10 | $ | 0.20 | $ | 0.52 | $ | 0.72 | $ | 0.51 | ||||||||||
| Weighted average shares outstanding - diluted | 19,704,217 | 17,320,089 | 16,351,637 | 16,032,016 | 15,858,273 | |||||||||||||||
| Return on average assets | 0.18 | % | 0.39 | % | 1.05 | % | 1.44 | % | 1.03 | % | ||||||||||
| Return on average shareholders' equity | 1.78 | % | 3.93 | % | 10.58 | % | 14.05 | % | 10.04 | % | ||||||||||
| Return on average tangible common shareholders' equity | 2.39 | % | 4.91 | % | 12.78 | % | 16.84 | % | 12.01 | % | ||||||||||
| Net interest margin | 3.78 | % | 3.70 | % | 3.87 | % | 3.70 | % | 4.00 | % | ||||||||||
| Efficiency ratio | 69.00 | % | 66.54 | % | 66.34 | % | 76.64 | % | 64.54 | % | ||||||||||
| Adjusted Earnings Performance Summary | ||||||||||||||||||||
| Adjusted earnings | $ | 9,738 | $ | 8,929 | $ | 9,409 | $ | 6,302 | $ | 8,277 | ||||||||||
| Adjusted diluted earnings per common share | $ | 0.49 | $ | 0.51 | $ | 0.57 | $ | 0.39 | $ | 0.52 | ||||||||||
| Adjusted return on average assets | 0.87 | % | 0.99 | % | 1.16 | % | 0.78 | % | 1.06 | % | ||||||||||
| Adjusted return on average shareholders' equity | 8.52 | % | 9.91 | % | 11.73 | % | 7.64 | % | 10.33 | % | ||||||||||
| Adjusted return on average tangible common shareholders' equity | 11.43 | % | 12.39 | % | 14.16 | % | 9.16 | % | 12.35 | % | ||||||||||
| Net interest margin excluding accretion income | 3.51 | % | 3.57 | % | 3.52 | % | 3.42 | % | 3.66 | % | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| (in thousands, except per share data) | 2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||
| Net interest income: | ||||||||||||||||||||
| Total interest income | $ | 43,246 | $ | 34,528 | $ | 31,839 | $ | 29,981 | $ | 31,186 | ||||||||||
| Total interest expense | 6,481 | 5,128 | 4,378 | 4,022 | 3,921 | |||||||||||||||
| Net interest income | 36,765 | 29,400 | 27,461 | 25,959 | 27,265 | |||||||||||||||
| Provision for loan losses | 1,489 | 458 | 1,533 | 2,445 | 1,392 | |||||||||||||||
| Net interest income after provision for loan losses | 35,276 | 28,942 | 25,928 | 23,514 | 25,873 | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Commercial FHA revenue | 3,777 | 4,153 | 6,695 | 3,704 | 3,260 | |||||||||||||||
| Residential mortgage banking revenue | 2,317 | 2,330 | 2,916 | 6,241 | 4,990 | |||||||||||||||
| Wealth management revenue | 3,475 | 3,406 | 2,872 | 2,495 | 1,941 | |||||||||||||||
| Service charges on deposit accounts | 2,133 | 1,122 | 892 | 988 | 1,044 | |||||||||||||||
| Interchange revenue | 1,724 | 1,114 | 977 | 921 | 920 | |||||||||||||||
| Gain on sales of investment securities, net | 98 | 55 | 67 | 14,387 | 39 | |||||||||||||||
| Other income | 1,879 | 1,439 | 1,911 | 1,750 | 2,743 | |||||||||||||||
| Total noninterest income | 15,403 | 13,619 | 16,330 | 30,486 | 14,937 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Salaries and employee benefits | 22,411 | 21,842 | 17,115 | 17,326 | 16,568 | |||||||||||||||
| Occupancy and equipment | 4,144 | 3,472 | 3,184 | 3,266 | 3,271 | |||||||||||||||
| Data processing | 5,786 | 2,949 | 2,796 | 2,828 | 2,586 | |||||||||||||||
| Professional | 4,151 | 3,142 | 2,992 | 2,898 | 1,877 | |||||||||||||||
| Amortization of intangible assets | 1,187 | 579 | 525 | 534 | 514 | |||||||||||||||
| Loss on mortgage servicing rights held for sale | 3,617 | - | - | - | - | |||||||||||||||
| Other | 7,067 | 5,661 | 4,173 | 7,238 | 3,841 | |||||||||||||||
| Total noninterest expense | 48,363 | 37,645 | 30,785 | 34,090 | 28,657 | |||||||||||||||
| Income before income taxes | 2,316 | 4,916 | 11,473 | 19,910 | 12,153 | |||||||||||||||
| Income taxes | 280 | 1,377 | 2,983 | 8,327 | 4,102 | |||||||||||||||
| Net income | $ | 2,036 | $ | 3,539 | $ | 8,490 | $ | 11,583 | $ | 8,051 | ||||||||||
| Basic earnings per common share | $ | 0.10 | $ | 0.21 | $ | 0.54 | $ | 0.74 | $ | 0.51 | ||||||||||
| Diluted earnings per common share | $ | 0.10 | $ | 0.20 | $ | 0.52 | $ | 0.72 | $ | 0.51 | ||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||||||||
| At Quarter Ended | |||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||||||
| (in thousands) | 2017 | 2017 | 2017 | 2016 | 2016 | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||||
| Cash and cash equivalents | $ | 183,572 | $ | 334,356 | $ | 218,096 | $ | 190,716 | $ | 228,030 | |||||||||||||||
| Investment securities available-for-sale at fair value | 396,985 | 385,340 | 259,332 | 246,339 | 252,212 | ||||||||||||||||||||
| Investment securities held to maturity at amortized cost | 70,867 | 75,371 | 76,276 | 78,672 | 82,941 | ||||||||||||||||||||
| Loans | 3,157,972 | 3,184,063 | 2,454,950 | 2,319,976 | 2,312,778 | ||||||||||||||||||||
| Allowance for loan losses | (16,861 | ) | (15,424 | ) | (15,805 | ) | (14,862 | ) | (15,559 | ) | |||||||||||||||
| Total loans, net | 3,141,111 | 3,168,639 | 2,439,145 | 2,305,114 | 2,297,219 | ||||||||||||||||||||
| Loans held for sale at fair value | 35,874 | 41,689 | 39,900 | 70,565 | 61,363 | ||||||||||||||||||||
| Premises and equipment, net | 80,941 | 76,598 | 66,914 | 66,692 | 70,727 | ||||||||||||||||||||
| Other real estate owned | 6,379 | 7,036 | 3,680 | 3,560 | 4,828 | ||||||||||||||||||||
| Mortgage servicing rights at lower of cost or market | 56,299 | 70,277 | 68,557 | 68,008 | 64,689 | ||||||||||||||||||||
| Mortgage servicing rights held for sale | 10,618 | - | - | - | - | ||||||||||||||||||||
| Intangible assets | 17,966 | 18,459 | 8,633 | 7,187 | 5,391 | ||||||||||||||||||||
| Goodwill | 97,351 | 96,940 | 50,807 | 48,836 | 46,519 | ||||||||||||||||||||
| Cash surrender value of life insurance policies | 112,591 | 111,802 | 74,806 | 74,226 | 74,276 | ||||||||||||||||||||
| Other assets | 137,207 | 105,135 | 67,431 | 73,808 | 59,532 | ||||||||||||||||||||
| Total assets | $ | 4,347,761 | $ | 4,491,642 | $ | 3,373,577 | $ | 3,233,723 | $ | 3,247,727 | |||||||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||||||||||
| Noninterest bearing deposits | $ | 674,118 | $ | 780,803 | $ | 528,021 | $ | 562,333 | $ | 629,113 | |||||||||||||||
| Interest bearing deposits | 2,440,349 | 2,552,228 | 1,999,455 | 1,842,033 | 1,790,919 | ||||||||||||||||||||
| Total deposits | 3,114,467 | 3,333,031 | 2,527,476 | 2,404,366 | 2,420,032 | ||||||||||||||||||||
| Short-term borrowings | 153,443 | 170,629 | 124,035 | 131,557 | 138,289 | ||||||||||||||||||||
| FHLB advances and other borrowings | 488,870 | 400,304 | 250,353 | 237,518 | 237,543 | ||||||||||||||||||||
| Subordinated debt | 54,581 | 54,556 | 54,532 | 54,508 | 54,484 | ||||||||||||||||||||
| Trust preferred debentures | 45,267 | 45,156 | 37,496 | 37,405 | 37,316 | ||||||||||||||||||||
| Other liabilities | 40,444 | 36,014 | 45,352 | 46,599 | 38,314 | ||||||||||||||||||||
| Total liabilities | 3,897,072 | 4,039,690 | 3,039,244 | 2,911,953 | 2,925,978 | ||||||||||||||||||||
| Total shareholders’ equity | 450,689 | 451,952 | 334,333 | 321,770 | 321,749 | ||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 4,347,761 | $ | 4,491,642 | $ | 3,373,577 | $ | 3,233,723 | $ | 3,247,727 | |||||||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| (in thousands) | 2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||
| Loan Portfolio | ||||||||||||||||||||
| Commercial loans | $ | 513,544 | $ | 571,111 | $ | 475,408 | $ | 457,827 | $ | 545,069 | ||||||||||
| Commercial real estate loans | 1,472,284 | 1,470,487 | 997,200 | 969,615 | 956,298 | |||||||||||||||
| Construction and land development loans | 182,513 | 176,098 | 171,047 | 177,325 | 163,900 | |||||||||||||||
| Residential real estate loans | 445,747 | 428,464 | 277,402 | 253,713 | 216,935 | |||||||||||||||
| Consumer loans | 343,038 | 335,902 | 337,081 | 270,017 | 248,131 | |||||||||||||||
| Lease financing loans | 200,846 | 202,001 | 196,812 | 191,479 | 182,445 | |||||||||||||||
| Total loans | $ | 3,157,972 | $ | 3,184,063 | $ | 2,454,950 | $ | 2,319,976 | $ | 2,312,778 | ||||||||||
| Deposit Portfolio | ||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 674,118 | $ | 780,803 | $ | 528,021 | $ | 562,333 | $ | 629,113 | ||||||||||
| Checking accounts | 800,649 | 841,640 | 751,193 | 656,248 | 658,021 | |||||||||||||||
| Money market accounts | 633,844 | 578,077 | 415,322 | 399,851 | 366,193 | |||||||||||||||
| Savings accounts | 278,977 | 291,912 | 169,715 | 166,910 | 162,742 | |||||||||||||||
| Time deposits | 493,777 | 525,647 | 394,508 | 400,304 | 420,779 | |||||||||||||||
| Brokered deposits | 233,102 | 314,952 | 268,717 | 218,720 | 183,184 | |||||||||||||||
| Total deposits | $ | 3,114,467 | $ | 3,333,031 | $ | 2,527,476 | $ | 2,404,366 | $ | 2,420,032 | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| (in thousands) | 2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||
| Average Balance Sheets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 202,407 | $ | 192,483 | $ | 163,595 | $ | 140,439 | $ | 154,764 | ||||||||||
| Investment securities | 474,216 | 362,268 | 328,880 | 315,511 | 329,900 | |||||||||||||||
| Loans | 3,173,027 | 2,620,875 | 2,361,380 | 2,299,115 | 2,177,517 | |||||||||||||||
| Loans held for sale | 46,441 | 61,759 | 73,914 | 86,665 | 90,661 | |||||||||||||||
| Nonmarketable equity securities | 31,224 | 22,246 | 20,047 | 18,927 | 18,365 | |||||||||||||||
| Total interest-earning assets | 3,927,315 | 3,259,631 | 2,947,816 | 2,860,657 | 2,771,207 | |||||||||||||||
| Non-earning assets | 498,364 | 372,525 | 336,761 | 337,566 | 330,036 | |||||||||||||||
| Total assets | $ | 4,425,679 | $ | 3,632,156 | $ | 3,284,577 | $ | 3,198,223 | $ | 3,101,243 | ||||||||||
| Interest-bearing deposits | $ | 2,527,490 | $ | 2,116,564 | $ | 1,896,569 | $ | 1,838,760 | $ | 1,803,189 | ||||||||||
| Short-term borrowings | 182,015 | 146,144 | 143,583 | 151,191 | 134,052 | |||||||||||||||
| FHLB advances and other borrowings | 434,860 | 290,401 | 248,045 | 183,614 | 165,774 | |||||||||||||||
| Subordinated debt | 54,570 | 54,542 | 54,518 | 54,495 | 54,470 | |||||||||||||||
| Trust preferred debentures | 45,201 | 39,179 | 37,443 | 37,357 | 37,266 | |||||||||||||||
| Total interest-bearing liabilities | 3,244,136 | 2,646,830 | 2,380,158 | 2,265,417 | 2,194,751 | |||||||||||||||
| Noninterest-bearing deposits | 688,986 | 579,977 | 525,868 | 562,958 | 550,816 | |||||||||||||||
| Other noninterest-bearing liabilities | 39,240 | 44,014 | 53,109 | 41,962 | 36,816 | |||||||||||||||
| Shareholders' equity | 453,317 | 361,335 | 325,442 | 327,886 | 318,860 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 4,425,679 | $ | 3,632,156 | $ | 3,284,577 | $ | 3,198,223 | $ | 3,101,243 | ||||||||||
| Yields | ||||||||||||||||||||
| Cash and cash equivalents | 1.19 | % | 1.02 | % | 0.77 | % | 0.53 | % | 0.50 | % | ||||||||||
| Investment securities | 2.86 | % | 3.33 | % | 3.21 | % | 3.10 | % | 5.02 | % | ||||||||||
| Loans | 4.90 | % | 4.71 | % | 4.91 | % | 4.65 | % | 4.83 | % | ||||||||||
| Loans held for sale | 3.74 | % | 4.67 | % | 4.22 | % | 4.22 | % | 3.77 | % | ||||||||||
| Nonmarketable equity securities | 4.20 | % | 4.31 | % | 4.41 | % | 3.85 | % | 3.77 | % | ||||||||||
| Total interest-earning assets | 4.44 | % | 4.33 | % | 4.47 | % | 4.26 | % | 4.57 | % | ||||||||||
| Interest-bearing deposits | 0.53 | % | 0.53 | % | 0.51 | % | 0.48 | % | 0.48 | % | ||||||||||
| Short-term borrowings | 0.22 | % | 0.23 | % | 0.23 | % | 0.22 | % | 0.24 | % | ||||||||||
| FHLB advances and other borrowings | 1.36 | % | 1.16 | % | 0.93 | % | 0.78 | % | 0.73 | % | ||||||||||
| Subordinated debt | 6.40 | % | 6.40 | % | 6.40 | % | 6.41 | % | 6.41 | % | ||||||||||
| Trust preferred debentures | 5.60 | % | 5.37 | % | 5.12 | % | 4.99 | % | 5.03 | % | ||||||||||
| Total interest-bearing liabilities | 0.79 | % | 0.78 | % | 0.75 | % | 0.71 | % | 0.71 | % | ||||||||||
| Net interest margin | 3.78 | % | 3.70 | % | 3.87 | % | 3.70 | % | 4.00 | % | ||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| As of and for the Quarter Ended | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||
| Asset Quality | ||||||||||||||||||||
| Loans 30-89 days past due | $ | 13,526 | $ | 13,566 | $ | 14,075 | $ | 10,767 | $ | 10,318 | ||||||||||
| Nonperforming loans | 33,431 | 27,615 | 28,933 | 31,603 | 29,926 | |||||||||||||||
| Nonperforming assets | 38,109 | 33,150 | 31,684 | 34,550 | 34,304 | |||||||||||||||
| Net charge-offs | 52 | 839 | 590 | 3,142 | 585 | |||||||||||||||
| Loans 30-89 days past due to total loans | 0.43 | % | 0.43 | % | 0.57 | % | 0.46 | % | 0.45 | % | ||||||||||
| Nonperforming loans to total loans | 1.06 | % | 0.87 | % | 1.18 | % | 1.36 | % | 1.29 | % | ||||||||||
| Nonperforming assets to total assets | 0.88 | % | 0.74 | % | 0.94 | % | 1.07 | % | 1.06 | % | ||||||||||
| Allowance for loan losses to total loans | 0.53 | % | 0.48 | % | 0.64 | % | 0.64 | % | 0.67 | % | ||||||||||
| Allowance for loan losses to nonperforming loans | 50.43 | % | 55.81 | % | 54.62 | % | 47.03 | % | 51.99 | % | ||||||||||
| Net charge-offs to average loans | 0.01 | % | 0.13 | % | 0.10 | % | 0.54 | % | 0.11 | % | ||||||||||
| Wealth Management | ||||||||||||||||||||
| Trust assets under administration | $ | 2,001,106 | $ | 1,929,513 | $ | 1,869,314 | $ | 1,658,235 | $ | 1,235,132 | ||||||||||
| Market Data | ||||||||||||||||||||
| Book value per share at period end | $ | 23.45 | $ | 23.51 | $ | 21.19 | $ | 20.78 | $ | 20.89 | ||||||||||
| Tangible book value per share at period end | $ | 17.41 | $ | 17.47 | $ | 17.42 | $ | 17.16 | $ | 17.52 | ||||||||||
| Market price at period end | $ | 31.68 | $ | 33.52 | $ | 34.39 | $ | 36.18 | $ | 25.34 | ||||||||||
| Shares outstanding at period end | 19,093,153 | 19,087,409 | 15,780,651 | 15,483,499 | 15,404,423 | |||||||||||||||
| Capital | ||||||||||||||||||||
| Total capital to risk-weighted assets | 12.21 | % | 11.98 | % | 13.48 | % | 13.85 | % | 13.53 | % | ||||||||||
| Tier 1 capital to risk-weighted assets | 10.20 | % | 10.05 | % | 10.97 | % | 11.27 | % | 10.94 | % | ||||||||||
| Tier 1 leverage ratio | 8.54 | % | 10.45 | % | 9.61 | % | 9.76 | % | 9.82 | % | ||||||||||
| Common equity Tier 1 capital ratio | 8.50 | % | 8.36 | % | 9.10 | % | 9.35 | % | 9.03 | % | ||||||||||
| Tangible common equity to tangible assets | 7.85 | % | 7.62 | % | 8.29 | % | 8.36 | % | 8.44 | % | ||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||||||
| (in thousands, except per share data) | 2017 | 2017 | 2017 | 2016 | 2016 | ||||||||||||||||||||
| Adjusted Earnings Reconciliation | |||||||||||||||||||||||||
| Income before income taxes - GAAP | $ | 2,316 | $ | 4,916 | $ | 11,473 | $ | 19,910 | $ | 12,153 | |||||||||||||||
| Adjustments to other income: | |||||||||||||||||||||||||
| Gain on sales of investment securities, net | 98 | 55 | 67 | 14,387 | 39 | ||||||||||||||||||||
| Gain (loss) on sale of other assets | 45 | (91 | ) | (58 | ) | - | - | ||||||||||||||||||
| Total adjusted other income | 143 | (36 | ) | 9 | 14,387 | 39 | |||||||||||||||||||
| Adjustments to other expense: | |||||||||||||||||||||||||
| Net expense from loss share termination agreement | - | - | - | 351 | - | ||||||||||||||||||||
| Branch network optimization plan charges | 336 | 1,236 | 9 | 2,099 | - | ||||||||||||||||||||
| Loss on mortgage servicing rights held for sale | 3,617 | - | - | - | - | ||||||||||||||||||||
| Integration and acquisition expenses | 7,967 | 6,214 | 1,242 | 1,200 | 352 | ||||||||||||||||||||
| Total adjusted other expense | 11,920 | 7,450 | 1,251 | 3,650 | 352 | ||||||||||||||||||||
| Adjusted earnings pre tax | 14,093 | 12,402 | 12,715 | 9,173 | 12,466 | ||||||||||||||||||||
| Adjusted earnings tax | 4,355 | 3,473 | 3,306 | 2,871 | 4,189 | ||||||||||||||||||||
| Adjusted earnings - non-GAAP | $ | 9,738 | $ | 8,929 | $ | 9,409 | $ | 6,302 | $ | 8,277 | |||||||||||||||
| Adjusted diluted EPS | $ | 0.49 | $ | 0.51 | $ | 0.57 | $ | 0.39 | $ | 0.52 | |||||||||||||||
| Adjusted return on average assets | 0.87 | % | 0.99 | % | 1.16 | % | 0.78 | % | 1.06 | % | |||||||||||||||
| Adjusted return on average shareholders' equity | 8.52 | % | 9.91 | % | 11.73 | % | 7.64 | % | 10.33 | % | |||||||||||||||
| Adjusted return on average tangible common equity | 11.43 | % | 12.39 | % | 14.16 | % | 9.16 | % | 12.35 | % | |||||||||||||||
| Yield on Loans | |||||||||||||||||||||||||
| Reported yield on loans | 4.90 | % | 4.71 | % | 4.91 | % | 4.65 | % | 4.83 | % | |||||||||||||||
| Effect of accretion income on acquired loans | (0.33 | ) | % | (0.17 | ) | % | (0.43 | ) | % | (0.33 | ) | % | (0.43 | ) | % | ||||||||||
| Yield on loans excluding accretion income | 4.57 | % | 4.54 | % | 4.48 | % | 4.32 | % | 4.40 | % | |||||||||||||||
| Net Interest Margin | |||||||||||||||||||||||||
| Reported net interest margin | 3.78 | % | 3.70 | % | 3.87 | % | 3.70 | % | 4.00 | % | |||||||||||||||
| Effect of accretion income on acquired loans | (0.27 | ) | % | (0.13 | ) | % | (0.35 | ) | % | (0.28 | ) | % | (0.34 | ) | % | ||||||||||
| Net interest margin excluding accretion income | 3.51 | % | 3.57 | % | 3.52 | % | 3.42 | % | 3.66 | % | |||||||||||||||
| 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 | |||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||||||
| (dollars in thousands, except per share data) | 2017 | 2017 | 2017 | 2016 | 2016 | ||||||||||||||||||||
| Shareholders' Equity to Tangible Common Equity | |||||||||||||||||||||||||
| Total shareholders' equity—GAAP | $ | 450,689 | $ | 451,952 | $ | 334,333 | $ | 321,770 | $ | 321,749 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||||
| Preferred stock | (3,015 | ) | (3,134 | ) | - | - | - | ||||||||||||||||||
| Goodwill | (97,351 | ) | (96,940 | ) | (50,807 | ) | (48,836 | ) | (46,519 | ) | |||||||||||||||
| Other intangibles | (17,966 | ) | (18,459 | ) | (8,633 | ) | (7,187 | ) | (5,391 | ) | |||||||||||||||
| Tangible common equity | $ | 332,357 | $ | 333,419 | $ | 274,893 | $ | 265,747 | $ | 269,839 | |||||||||||||||
| Total Assets to Tangible Assets: | |||||||||||||||||||||||||
| Total assets—GAAP | 4,347,761 | 4,491,642 | 3,373,577 | 3,233,723 | 3,247,727 | ||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||
| Goodwill | (97,351 | ) | (96,940 | ) | (50,807 | ) | (48,836 | ) | (46,519 | ) | |||||||||||||||
| Other intangibles | (17,966 | ) | (18,459 | ) | (8,633 | ) | (7,187 | ) | (5,391 | ) | |||||||||||||||
| Tangible assets | $ | 4,232,444 | $ | 4,376,243 | $ | 3,314,137 | $ | 3,177,700 | $ | 3,195,817 | |||||||||||||||
| Common Shares Outstanding | 19,093,153 | 19,087,409 | 15,780,651 | 15,483,499 | 15,404,423 | ||||||||||||||||||||
| Tangible Common Equity to Tangible Assets | 7.85 | % | 7.62 | % | 8.29 | % | 8.36 | % | 8.44 | % | |||||||||||||||
| Tangible Book Value Per Share | $ | 17.41 | $ | 17.47 | $ | 17.42 | $ | 17.16 | $ | 17.52 | |||||||||||||||
| Return on Average Tangible Common Equity (ROATCE) | |||||||||||||||||||||||||
| As of | |||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||||||
| (in thousands) | 2017 | 2017 | 2017 | 2016 | 2016 | ||||||||||||||||||||
| Net Income | $ | 2,036 | $ | 3,539 | $ | 8,490 | $ | 11,583 | $ | 8,051 | |||||||||||||||
| Average total shareholders' equity—GAAP | $ | 453,317 | $ | 361,335 | $ | 325,442 | $ | 327,886 | $ | 318,860 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||||
| Goodwill | (97,129 | ) | (61,424 | ) | (48,836 | ) | (46,594 | ) | (46,519 | ) | |||||||||||||||
| Other intangibles | (18,153 | ) | (10,812 | ) | (7,144 | ) | (7,718 | ) | (5,656 | ) | |||||||||||||||
| Average tangible common equity | $ | 338,035 | $ | 289,099 | $ | 269,462 | $ | 273,574 | $ | 266,685 | |||||||||||||||
| ROATCE | 2.39 | % | 4.91 | % | 12.78 | % | 16.84 | % | 12.01 | % | |||||||||||||||