Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Investor Presentation (July 2024)
52 slides from Midland States Bancorp's investor presentation, July 2024
Slide 1: Midland States Bancorp, Inc. Investor Presentation July 2024
Midland States Bancorp, Inc. NASDAQ: MSBI Investor Presentation July 2024 1
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
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-term goals may be based upon beliefs, expectations and a
Slide 3: Company Snapshot
Company Snapshot Founded in 1881, this Illinois state- chartered community bank focuses on in-market relationships while having national diversification through equipment finance. • 53 Branches in Illinois and Missouri • 16 successful acquisitions since 2008 Financial Highlights as of June 30, 2024
Slide 4: Financial Services & Banking Center Footprint
Financial Services & Banking Center Footprint Headquartered in Effingham, Illinois 43 Illinois Banking Centers 11 Missouri Banking Centers Our Community Bank is organized into four regions: • Northern • Eastern • Southern • St. Louis Services Include: • Wealth Management • Residential Mortgage • Com
Slide 5: Business and Corporate Strategy
Business and Corporate Strategy We are a community bank focused on developing deep customer relationships and building strong communities. 55
Slide 6: Business and Corporate Strategy
Business and Corporate Strategy We are a community bank focused on developing deep customer relationships and building strong communities. 66
Slide 7: MSBI's Five Strategic Elements
Business and Corporate Strategy MSBI's Five Strategic Elements Superior Customer Experience We value the customer in everything we do, and we find satisfaction in knowing our contributions make a difference. High-Tech, High-Touch Process Excellence We blend cutting-edge technology We are continuousl
Slide 8: Operating Model
Operating Model Key Business Units (dollars in millions, as of quarter-end) Community Bank Midland Business Equipment Other Total Unit Eastern Northern Southern St. Louis Wealth Finance Region Region Region Region Management Branches 16 17 9 11 53 Loans & Leases $884 $725 $700 $825 $890 $2,712 $5,85
Slide 9: Experienced Senior Management Team
Experienced Senior Management Team Jeffrey G. Ludwig Jeffrey S. Mefford President and CEO of Midland States Bancorp President of Midland States Bank and EVP of Midland States Bancorp ▪ Assumed Company CEO role in Jan. 2019 after serving as Bank CEO ▪ Joined Midland in 2003 ▪ More than 10 years servi
Slide 10: Investment Summary and Strategic Initiatives
Investment Summary and Strategic Initiatives • Profitable growth and improved efficiencies resulting in higher EPS and increased returns over the past few years • Strengthened commercial banking team and increased presence in faster growing markets driving high quality in-market loan production and
Slide 11: Successful Execution of Strategic Plan...
Successful Execution of Strategic Plan... Total Assets (at period-end in billions) CAGR: 14% : 12% 6 IPO $7.9 201 $7.8 c e $7.4 R sin $6.9 CAG $6.1 $5.6 $4.4 $3.2 $2.9 $2.7 $1.6 $1.6 $1.7 $1.5 $1.1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Selected Acquisitions Selec
Slide 12: ...Leads to Creation of Shareholder Value
...Leads to Creation of Shareholder Value 23 Consecutive Years of Dividend Increases Tangible Book Value Per Share(1) Dividends Declared Per Share TBV/Share ex. AOCI CAGR: 7.4% CAGR: 5.0% $26.91 $27.22 $1.24 $24.72 $1.20 $1.16 $1.12 $1.07 $0.97 $21.42 $0.88 $18.80 $18.34 $17.09 $23.35 $23.36 $21.66
Slide 13: ...And Increased Profitability
...And Increased Profitability Adjusted Diluted EPS(1) Adjusted ROATCE(1) & ROAA(1) CAGR: 6.2% $3.79 $3.65 18.33% 18.59% $3.42 15.98% 15.00% 14.44% $2.54 1.21% $2.39 1.18% 1.08% 1.08% 1.04% 9.24% $1.70 6.51% 0.62% 0.53% 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 YTD 2024 Adj ROATCE
Slide 14: Strategic Initiatives Strengthening Franchise
Strategic Initiatives Strengthening Franchise ...Have Produced Improved Growth and Profitability Adjusted Pre-Tax Pre-Provision Earnings(1) Total Loans (in millions) (in millions, as of year-end) Adjusted PTPP Adjusted PTPP / Avg Assets CAGR: 14.9% $6,306 $6,131 Adjusted PTPP CAGR: 15.4% $137.5 $136
Slide 15: High Tech High Touch - Technology Roadmap
High Tech High Touch - Technology Roadmap Midland’s technology investments are enhancing efficiencies, improving client experience, and positively impacting retail deposit gathering and commercial/consumer loan production Consumer Small Business Commercial Wealth Flexible Overdrafts Commercial Onlin
Slide 16: Successful Acquisition History
Successful Acquisition History ▪ Midland States has completed 16 transactions since 2008, including FDIC-assisted, branch, whole bank, asset purchase and business line acquisitions, and a New York trust asset acquisition ▪ Demonstrated history of earnings expansion ▪ Deliberate diversification of ge
Slide 17: Loan Portfolio and Asset Quality
Loan Portfolio 2009 and Asset Quality 17 17
Slide 18: Commercial Loans and Leases by Industry
Commercial Loans and Leases by Industry Other Services Health Care Retail Trade Wholesale Trade $102.9 $67.8 Industries as a percentage of ($s in millions) $178.9 $59.2 2.2% 1.4% Commercial, CRE and Equipment 3.8% 1.3% Finance Loans and Leases with outstanding balances of $4.73 billion General Freig
Slide 19: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type ($s in millions) Mixed Use/Other Restaurant Medical Building Raw Land Collateral type as a percentage of $112.8 $30.9 $95.6 $21.9 the Commercial Real Estate and C-Store/Gas Station 3.9% 1.1% 3.3% 0.8% Construction Portfolio with $79.2 outstanding b
Slide 20: Commercial Loan Growth
Commercial Loan Growth More conservative approach to new loan production in light of economic uncertainty has impacted production levels since mid-2022 • New hires and an increase in productivity of the Commercial and CRE Loan Production commercial banking group without increasing (in millions) the
Slide 21: Midland Equipment Finance Portfolio Overview
Midland Equipment Finance Portfolio Overview Portfolio Characteristics (as of June 30, 2024) Nationwide portfolio providing financing solutions to equipment vendors and end-users Total Outstanding $890.1 million Loans and Leases (15.2% of total loans) Number of Loans and Leases 8,204 Average Loan/Le
Slide 22: GreenSky Consumer Loan Portfolio Overview
GreenSky Consumer Loan Portfolio Overview Portfolio Characteristics Plan with GreenSky to Wind Down Portfolio (as of June 30, 2024) ■ Notice provided to officially terminate the $538.3 million Total Outstanding GreenSky program in October 2023 (9.2% of total loans) Weighted Average Rate 5.48% ■ Redu
Slide 23: LendingPoint Loan Portfolio Overview
LendingPoint Loan Portfolio Overview Portfolio Characteristics Plan with LendingPoint to Wind Down Portfolio (as of June 30, 2024) ■ Notice provided to stop new originations in the $114.2 million Total Outstanding LendingPoint program in Oct. 2023 (2.0% of total loans) Weighted Average Rate 5.45% ■
Slide 24: Asset Quality
Asset Quality • Nonperforming loans increased due to equipment financing loans and one $3.5 million commercial loan placed on non-accrual • Past due loans and substandard loans declined during the second quarter • Net charge-offs to average loans was 0.20% primarily driven by equipment finance with
Slide 25: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) $(1,331) ▪ Change to macro- economic variables and forecasts $15,264 ▪ Changes to other economic qualitative factors $193 ▪ Changes to specific ▪ Changes in Loans reserves ▪ Changes in Credit quality $92,183 including risk rating ▪ Changes in p
Slide 26: ACL by Portfolio
ACL by Portfolio ($ in thousands) June 30, 2024 March 31, 2024 % of Total % of Total Portfolio Loans ACL Loans ACL Loans Loans Commercial $ 829,888 $ 8,821 1.06 % $ 813,963 $ 9,135 1.12 % Commercial Other 570,979 15,426 2.70 % 601,704 12,194 2.03 % Equipment Finance Loans 461,409 11,839 2.57 % 494,0
Slide 27: Recent Financial Trends
Recent Financial Trends 2009 27 27
Slide 28: Overview of 2Q24
Overview of 2Q24 • Net income available to common shareholders of $4.5 million, or $0.20 diluted EPS • Pre-tax, pre-provision earnings(1) of $25.2 million Financial • Strong noninterest income of $17.7 million Performance • Strengthened ACL to 1.58% of total loans Continued Success • Increases in ca
Slide 29: Loan Portfolio
Loan Portfolio • Total loans decreased $106.5 million from prior quarter to $5.85 billion • Decrease primarily driven by decline in equipment finance portfolio of $59.9 million and continued runoff of GreenSky portfolio of $67.7 million • Decrease in non-core portfolios partially offset by new loan
Slide 30: Loan Segments
Loan Segments • Total loans in our Community Bank increased $91 million from prior quarter to $3.13 billion • Loans in St. Louis region increased $59 million or 31% annualized in 2Q24 • Focused on core, in-market loan relationships • Continuing to add talent in faster growing markets to drive qualit
Slide 31: Total Deposits
Total Deposits • Total deposits decreased $206.0 million from end of prior quarter, primarily due to decreases in noninterest-bearing demand and brokered time • Deposit outflows primarily related to some larger commercial depositors moving funds into higher interest account including Midland's Wealt
Slide 32: Deposit Summary as of June 30, 2024
Deposit Summary as of June 30, 2024 • Commercial deposits decreased $171 million over prior quarter • Four large commercial customers decreased deposit balances by $120 million in 2Q24 with approximately $88 million moving to our Wealth business line • Retail deposit balances decreased $26 million i
Slide 33: Investment Portfolio
Investment Portfolio Fair Value of Investments by Type As of June 30, 2024 9.1% 4.6% 0.3% 7.8% • All Investments are classified as Treasuries Available for Sale 6.0% US GSE & US Agency MBS - agency • Average T/E Yield is 4.69% for 2Q24 $1.10 billion MBS - non agency 7.9% State & Muni • Average Durat
Slide 34: Liquidity Overview
Liquidity Overview Liquidity Sources (in millions) June 30, 2024 March 31, 2024 Cash and Cash Equivalents $ 124.6 $ 167.3 Unpledged Securities 527.3 506.2 FHLB Committed Liquidity 797.1 1,167.4 FRB Discount Window Availability 610.3 613.3 Total Estimated Liquidity $ 2,059.4 $ 2,454.1 Conditional Fun
Slide 35: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income down slightly from prior quarter due to higher average FHLB borrowings • Net interest margin decreased 6bp to 3.12% as the increase in the cost of deposits exceeded the increase in the average yield on earning assets, as well as the impact of interest
Slide 36: Loans & Securities - Repricing and Maturity
Loans & Securities - Repricing and Maturity Total Loans and Leases (net of unearned income)(1) (in millions) As of June 30, 2024 Repricing Term Rate Structure 3 mos or 3-12 1-3 3-5 5-10 10-15 Over 15 Floating Adjustable Fixed less mos years years years years years Total Rate Rate Rate Commercial loa
Slide 37: Wealth Management
Wealth Management • Assets under administration increased $212 million mainly due to new accounts • New accounts include commercial customers moving funds of approximately $88 million to Wealth for higher rate and other options • Wealth Management fees decreased from prior quarter due to seasonal im
Slide 38: Noninterest Income
Noninterest Income • Noninterest income decreased from prior quarter primarily due to 1Q24 incremental servicing revenues of $3.7 million related to the Greensky portfolio • 2Q24 noninterest income included a $0.2 million gain on the repurchase of subordinated debt, offset by $0.2 million of losses
Slide 39: Noninterest Expense and Operating Efficiency
Noninterest Expense and Operating Efficiency Noninterest Expense and Efficiency Ratio (1) (Noninterest expense in millions) $47.5 • Efficiency Ratio (1) was 65.2% in 2Q $44.5 $44.9 2024 vs. 58.0% in 1Q 2024 $42.9 65.2% $42.0 • Increase in noninterest expense from prior quarter primarily attributable
Slide 40: Capital Ratios and Strategy
Capital Ratios and Strategy Capital Ratios Capital Strategy (as of June 30, 2024) • Capital initiatives increased CET1 to 8.63% from 7.77% at December 31, 2022 with limited buybacks below TBV 13.94% • Internal capital generated from strong 13.06% profitability and slower balance sheet 11.69% 11.69%
Slide 41: Building Capital
Building Capital • CET1 Increased 23 bps to 8.63% from 4Q23 despite credit headwinds • Balance sheet and capital strategy reduced risk weighted assets $204 million from 4Q23 • Support organic growth needs of new and existing core relationships • Opportunistic share repurchases at or below TBV and co
Slide 42: Outlook
Outlook 2009 42 42
Slide 43: 2024 Outlook and Priorities
2024 Outlook and Priorities • Well positioned with increased levels of capital, liquidity, and reserves • Prudent risk management will remain top priority while economic uncertainty remains with business development efforts focused on adding new commercial and retail deposit relationships throughout
Slide 44: Long-Term Formula for Enhancing Shareholder Value
Long-Term Formula for Enhancing Shareholder Value Strategic Enhanced Operational Balance Sheet Efficiencies Expansion Sustained Earnings Growth Superior Returns Elevated Franchise Value Recurring Revenue Value-Add M&A Streams 44 44
Slide 45: Appendix
APPENDIX Midland [=] States Bancorp, Inc.
Slide 46: ESG: A Framework for Sustainability
ESG: A Framework for Sustainability Financial Education • In 2023, we provided over 600 volunteer hours specific to financial empowerment seminars in our communities. Environmental • Since 2015 we have held more than 450 financial literacy seminars benefiting Facilities low to moderate income or min
Slide 47: Reconciliations of Non-GAAP Financial Measures: Tangible Book Value Per Share
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Tangible Book Value Per Share For the Year Ended (dollars in thousands, except per share data) 2018 2019 2020 2021 2022 2023 Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 608,52
Slide 48: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For The Year Ended (dollars in thousands, except per share data) 2018 2019 2020 2021 2022 2023 Income before income taxes - GAAP $ 50,805 $ 72,471 $ 32,014 $ 99,112 $ 129,838 $ 10
Slide 49: Reconciliations of Non-GAAP Financial Measures: Efficiency Ratio
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Efficiency Ratio Reconciliation For the Year Ended 2016 2017 2018 2019 2020 2021 2022 2023 (dollars in thousands) Noninterest expense - GAAP $ 121,289 $ 152,997 $ 191,643 $ 175,641 $ 184,010 $ 175,069 $ 175,662 $
Slide 50: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For the Six For The Quarter Ended Months Ended June 30, March 31, December 31, September 30, June 30, June 30, (dollars in thousands, except per share data) 2024 2024 2023 2023 20
Slide 51: Reconciliations of Non-GAAP Financial Measures: Efficiency Ratio (continued)
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) Efficiency Ratio Reconciliation For the Quarter Ended June 30, March 31, December 31, September 30, June 30, 2024 2024 2023 2023 2023 (dollars in thousands) Noninterest expense - GAAP $ 47,479 $ 44,86
Slide 52: Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share
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 June 30, March 31, December 31, September 30, June 30, (dollars in thousands, except per share data) 2024 2023(1
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