Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q1 2020 Earnings Presentation
23 slides from Midland States Bancorp's earnings presentation, Apr 23, 2020
Slide 1: Midland States Bancorp, Inc. First Quarter 2020 Earnings Call
1 Midland States Bancorp, Inc. NASDAQ: MSBI First Quarter 2020 Earnings Call
Slide 2: Forward-Looking Statements
2 Forward - Looking Statements. This presentation may contain forward - looking statements within the meaning of the federal securities laws. Forward - looking statements expressing management’s current expectations, forecasts of future events or long - te rm goals may be based upon beliefs, expecta
Slide 3: COVID-19 Response Overview
3 COVID - 19 RESPONSE OVERVIEW
Slide 4: Our COVID-19 Response: Employees
4 Our COVID - 19 Response: Employees • Regular meetings of Pandemic Response Team • Employee awareness campaign initiated based on CDC guidelines • All non - essential business travel suspended • Free COVID - 19 testing added to health care plans and sick time benefits expanded • 9 temporary branch
Slide 5: Our COVID-19 Response: Clients
5 Our COVID - 19 Response: Clients • $263 million in PPP loans approved through April 16, 2020 • $665 million in loan payment deferral requests received, including equipment finance loans and leases • Credit line utilization rates remained steady at 66 - 68% throughout March • New consumer deposit a
Slide 6: Loan Portfolio Overview
6 ▪ Broadly diversified loan portfolio by type of customer and loan type ▪ 67% of portfolio is fixed; 33% is floating ▪ Portfolio is 72% Commercial Loans and 28% Consumer Loans as of 3/31/20 Loan Portfolio Overview Loan Portfolio Mix Non - Owner Occupied CRE $810M 18% Owner - Occupied CRE $698M 16%
Slide 7: Commercial Loans and Leases by Industry
7 Commercial Loans and Leases by Industry 7 RE / Rental & Leasing 25% All Others 12% Manufacturing 8% Retail Trade 8% Accommodation & Food Svcs 7% Social Services 7% Construction - General 6% Health Care 5% Ag., Forestry, & Fishing 5% Trucking 5% Finance and Insurance 4% Trans. / Warehousing 3% Othe
Slide 8: Commercial Real Estate Portfolio by Collateral Type
8 Commercial Real Estate Portfolio by Collateral Type 8 Retail 18% All Others 10% Elder Care Facility 10% Hotel / Restaurant 10% Industrial / Warehouse 10% Multi - Family 9% Office 7% Residential 1 - 4 Family 6% Farmland 5% Medical Building 4% C - Store / Gas Station 4% Car Dealerships 3% Arts, Ente
Slide 9: CECL Adoption – Drivers of Change from ALLL
9 CECL Adoption – Drivers of Change from ALLL ALLL 12/31/19 ACL 3/31/20 Day 1 Adjustment Specific Reserves Portfolio Changes Economic Factors ▪ CECL Day 1 Adjustment ▪ Includes ACL for loans and leases ▪ $7.2 million impact to capital ▪ Changes to specific reserves from 12/31/19 ▪ New loans ▪ Change
Slide 10: Net Interest Margin
10 Net Interest Margin • Normalized net interest margin was stable from prior quarter, down 1 bp • Overall cost of deposits decreased 6 bps in 1Q20 • Average rate on new and renewed loans in 1Q20 declined to 4.59% from 4.86% in 4Q19 • $193.8 million in time deposits scheduled to mature in 2Q20 with
Slide 11: Capital and Liquidity Overview
11 Capital and Liquidity Overview Capital Ratios (as of 3/31/20) Liquidity Sources (as of 3/31/20) 7.08% 8.47% 8.39% 9.76% 13.73% 11.76% 10.12% 11.76% 12.38% 0.00% 5.00% 10.00% 15.00% TCE/TA Tier 1 Common Tier 1 Leverage Tier 1 RBC Total RBC Consolidated Bank Level ($ in millions) Cash and Cash Equi
Slide 12: First Quarter 2020 Financial Review
12 FIRST QUARTER 2020 FINANCIAL REVIEW
Slide 13: Loan Portfolio
13 1Q 2020 4Q 2019 1Q 2019 Commercial loans and leases $ 1,439 $ 1,388 $ 1,123 Commercial real estate 1,508 1,526 1,560 Construction and land development 208 209 239 Residential real estate 548 568 569 Consumer 673 710 601 Total Loans $ 4,376 $ 4,401 $ 4,092 Loan Portfolio Total Loans and Average Lo
Slide 14: Total Deposits
14 1Q 2020 4Q 2019 1Q 2019 Noninterest - bearing demand $ 1,053 $ 1,019 $ 941 Interest - bearing: Checking 1,425 1,343 969 Money market 850 788 802 Savings 534 522 457 Time 766 822 686 Brokered time 23 50 181 Total Deposits $4,651 $ 4,544 $ 4,036 Total Deposits Total Deposits and Cost of Deposits •
Slide 15: Net Interest Income/Margin
15 $2.5 $3.4 $3.1 $3.6 $2.2 $45.6 $46.1 $49.5 $48.7 $46.7 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 NII Accretion Income 0.17% 0.25% 0.20% 0.23% 0.16% 3.73% 3.76% 3.70% 3.56% 3.48% 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 NIM Accretion Income • Net interest income decreased 4.2% • Excluding the impact
Slide 16: Wealth Management
16 $4.95 $5.50 $6.00 $5.38 $5.68 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 $3,097 $3,126 $3,281 $3,410 $2,968 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 • During 1Q20, assets under administration decreased $442.5 million, primarily due to market performance • Total Wealth Management revenue increased 5.6
Slide 17: Noninterest Income
17 Noninterest Income • Noninterest income decreased 54.8% from prior quarter • Decline primarily related to $8.5 million impairment of commercial mortgage servicing rights and lower commercial FHA revenue • Wealth management and residential mortgage banking revenue increased from the prior quarter
Slide 18: Noninterest Expense and Operating Efficiency
18 Noninterest Expense and Operating Efficiency • Efficiency Ratio (1) was 63.8% in 1Q20 vs. 59.5% in 4Q19 • Adjustments to non - interest expense: • Excluding these adjustments, noninterest expense was essentially unchanged on a linked - quarter basis • 1Q20 noninterest expense included $0.9 millio
Slide 19: Asset Quality
19 Asset Quality NCO / Average Loans • Adoption of new CECL accounting standard resulted in approximately $12.8 million increase in ACL, relative to ALLL as of 12/31/19 • $12.8 million in net charge - offs in 1Q20, of which approximately $10.2 million related to three NPLs with specific reserves est
Slide 20: Appendix
APPENDIX Midland [2]
Slide 21: Adjusted Earnings Reconciliation
21 21 Adjusted Earnings Reconciliation (dollars in thousands, except per share data) Income before income taxes - GAAP $ 2,005 $ 16,071 $ 16,670 $ 21,394 $ 18,336 Adjustments to noninterest income: Gain on sales of investment securities, net - 635 25 14 - Other (13) (6) - (23) - Total adjustments to
Slide 22: Efficiency Ratio Reconciliation
22 22 Efficiency Ratio Reconciliation (dollars in thousands) Noninterest expense - GAAP $ 42,675 $ 46,325 $ 48,025 $ 40,194 $ 41,097 (Loss) gain on mortgage servicing rights held for sale (496) (95) 70 515 - Loss on repurchase of subordinated debt (193) (1,778) - - - Integration and acquisition expe
Slide 23: Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share
23 23 Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share (dollars in thousands, except per share data) Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 631,160 $ 661,911 $ 655,522 $ 639,888 $ 624,168 Adjustments: Preferred stock - - - (2
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