Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Investor Presentation (March 2022)
45 slides from Midland States Bancorp's investor presentation, March 2022
Slide 1: Midland States Bancorp, Inc. Investor Presentation March 2022
Midland States Bancorp, Inc. NASDAQ: MSBI Investor Presentation March 2022 1
Slide 2: Forward-Looking Statements
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 $7.4 billion asset community bank established in 1881 and headquartered in Effingham, Illinois Largest Illinois-based community bank1 $4.2 billion Wealth Management business Commercial bank focused on in-market relationships with national diversification in equipment finance
Slide 4: Financial Services & Banking Center Footprint
Financial Services & Banking Center Footprint 4
Slide 5: Investment Summary
Investment Summary Consistent track record of driving Proven track record of successful compelling shareholder returns acquisitions with a focus on enhancing through disciplined strategic shareholder value while building a expansion and earnings growth platform for scalability Organization‐wide focu
Slide 6: Business and Corporate Strategy
Business and Corporate Strategy Customer‐Centric Culture Accretive Acquisitions Drive organic growth by focusing on customer Maintain experienced acquisition team capable service and accountability to our clients and of identifying and executing transactions that colleagues; seek to develop bankers
Slide 7: Experienced Senior Management Team
Experienced Senior Management Team Jeffrey G. Ludwig | President and CEO of Midland States Bancorp Assumed Company CEO role in Jan. 2019 after serving as Bank CEO More than 10 years serving as CFO Joined Midland in 2006; 16+ years in banking industry Douglas J. Tucker | SVP, Corporate Counsel
Slide 8: Successful Acquisition History
Successful Acquisition History Midland States has completed 15 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 9: Overview of Pending FNBC Branch Acquisition
Overview of Pending FNBC Branch Acquisition Key Highlights Extends Footprint Closer to Chicago Acquiring one branch and the deposits and certain loans from two FNBC Bank & Trust locations Adds branch in Mokena, IL Increases Midland’s exposure to faster growing markets in Northern Illinois Im
Slide 10: Successful Execution of Strategic Plan
Successful Execution of Strategic Plan… Total Assets (at period‐end in Billions) CAGR: 17% $7.4 $6.9 $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 Selected Acquisitions Selected Acquisitions: Total Assets at Time of Acquisitio
Slide 11: Leads to Creation of Shareholder Value
…Leads to Creation of Shareholder Value 22 Consecutive Years of Dividend Increases Tangible Book Value Per Share(1) Dividends Declared Per Share (at period‐end) $21.66 $1.16 $1.12 CAGR: 6.6% CAGR: 8.8% $1.07 $19.31 $0.97 $18.64 $0.88 $17.16 $17.31 $0.80 $17.00 $0.72 $0.65 $15.20 $0.59 $13.82 2014 20
Slide 12: Strategic Initiatives Strengthening Franchise
Strategic Initiatives Strengthening Franchise Significant Corporate Actions Since Coming Public in 2016… Action Strategic Rationale Financial Impact 2016 2021 Three whole bank acquisitions • Low‐cost deposits Total Assets $3.2B $7.4B Scale Four Wealth Management acquisitions • Recurring revenue AUA
Slide 13: Improved Growth and Profitability
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) $120.4 $5,103 $5,225 $108.9 $101.3 $4,401 $83.7 $4,138 $61.9 $50.1 $3,227 $2,320 2016 2017 2018 2019 2020
Slide 14: Foundational Technology Roadmap
Technology Roadmap Midland’s technology investments are enhancing efficiencies, improving client experience, and positively impacting retail deposit gathering and commercial/consumer loan production Consumer Small Business Commercial Wealth Flexible Overdrafts (Q1 2022) Commercial Online Account Ope
Slide 15: Loan Portfolio and Asset Quality
Loan Portfolio and Asset Quality 15
Slide 16: Commercial Loans and Leases by Industry
Commercial Loans and Leases by Industry Industries as a percentage of Commercial, Wholesale Trade Health Care CRE and Equipment Finance Loans and Leases Other Services as of 12/31/21 2.8% 2.4% 2.9% General Freight Trucking 4.1% RE / Rental & Leasing 21.9% Retail Trade 4.1% Trans. / Ground Passenger
Slide 17: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type Collateral type as a percentage of the Commercial Real Estate and Construction Industrial / Warehouse Office Portfolio as of 12/31/21 7.8% 6.6% All Others Hotel/Motel 5.1% 8.3% Residential 1‐4 Family 4.0% Farmland 3.4% C‐Store / Gas Station Assiste
Slide 18: Accelerating Commercial Loan Growth
Accelerating Commercial Loan Growth 23% Annualized Loan Growth in Second Half of 2021(1) New hires and an increase in productivity of the Commercial and CRE Loan Production commercial banking group without increasing the size of the business development team ($ in millions) $858 Addition of expe
Slide 19: Midland Equipment Finance Portfolio Overview
Midland Equipment Finance Portfolio Overview Portfolio Characteristics (as of 12/31/21) Nationwide portfolio providing financing solutions to equipment vendors and end‐users Total Outstanding $945.2 million Loans and Leases (18.1% of total loans) Number of Loans and Leases 7,896 Average Loan/Lease S
Slide 20: GreenSky Consumer Loan Portfolio Overview
GreenSky Consumer Loan Portfolio Overview Portfolio Characteristics Prime Credit (as of 12/31/21) Average FICO score of 771 $874.5 million Total Outstanding (16.7% of total loans) No losses to MSBI in 10 year history of portfolio Number of Loans 412,663 Average Loan Size $2,119 Credit Enhancemen
Slide 21: Asset Quality
Asset Quality • Nonperforming loans decreased $12.0 million primarily due to the payoff of two non-accrual loans and the charge-off of a third non-accrual loan • Net charge-offs of $4.6 million, or 0.37% of average loans • Charge-offs primarily related to one acquired loan and equipment finance cred
Slide 22: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) Specific Portfolio Economic Reserves Changes Factors Changes to specific reserves New loans Changes to macro- economic variables Changes in credit and forecasts quality including risk ratings and Changes to other deferrals economic qu
Slide 23: ACL by Portfolio
ACL by Portfolio ($ in thousands) Total Loans at % of Total Loans at % of Portfolio ACL ACL 12/31/21 Total Loans 9/30/21 Total Loans Commercial $ 770,670 $ 5,783 0.75% $ 799,189 $ 6,360 0.80% Warehouse Lines 91,927 ‐ 0.00% 180,248 ‐ 0.00% Commercial Other 679,518 8,592 1.26% 668,146 8,231 1.23% Equi
Slide 24: Recent Financial Trends
Recent Financial Trends 24 Midland io States Bancorp, Inc.
Slide 25: Overview of 4Q21
Overview of 4Q21 • Net income of $23.1 million, or $1.02 diluted EPS • 4Q21 results included a $4.9 million FHLB advance prepayment penalty and a $1.8 million gain on 4Q21 Earnings termination of interest rate swap • Adjusted pre-tax, pre-provision earnings(1) of $36.3 million, up from $28.4 million
Slide 26: Loan Portfolio
Loan Portfolio • Total loans increased $309.2 million from prior quarter to $5.22 billion • Growth in CRE loans, conventional commercial loans, and consumer loans offset lower end of period balances on commercial FHA warehouse credit lines and lower PPP loans • Equipment finance balances increased $
Slide 27: Total Deposits
Total Deposits • Total deposits increased $509.3 million, or 9.1% from prior quarter, to $6.11 billion • Increase in deposits largely attributable to increase in commercial FHA servicing deposits and other commercial deposits • Noninterest-bearing deposits increased to 36.8% of total deposits at Dec
Slide 28: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income increased 5.7% from the prior quarter due primarily to higher average earning assets • Net interest margin, excluding accretion income, decreased 6 bps from prior quarter due primarily to an increase in liquidity resulting from growth in commercial FH
Slide 29: Wealth Management
Wealth Management • During 4Q21, assets under administration increased $159.2 million, primarily due to market performance • Wealth Management revenue was consistent with prior quarter, as a decrease in estate and guardianship fees offset the increase in AUA Assets Under Administration Wealth Manage
Slide 30: Noninterest Income
Noninterest Income • Noninterest income increased 48.7% from prior quarter • Impairment on commercial MSRs impacted noninterest income by $2.1 million and $3.0 million in 4Q21 and 3Q21, respectively • Excluding the impact of the impairment of commercial MSRs, noninterest income increased 35.3% prima
Slide 31: Noninterest Expense and Operating Efficiency
Noninterest Expense and Operating Efficiency Noninterest Expense and Efficiency Ratio (1) • Efficiency Ratio (1) was 52.6% in 4Q21 vs. 58.8% in 3Q21 (Noninterest expense in millions) • Adjustments to non-interest expense: $55.0 70.0% ($ in millions) 4Q21 3Q21 $50.0 $48.9 Integration and ($0.2) ($0.2
Slide 32: Outlook
Outlook 32 Midland [=] States Bancorp, Inc.
Slide 33: 2022 Outlook and Priorities
2022 Outlook and Priorities • Current expectation is to now continue participation in GreenSky partnership through at least 2023 New fintech partnership should provide $200-$250 million in loans over next 2-3 years • High-single-digit loan growth expected in 2022 Continued momentum of more produ
Slide 34: Long-Term Formula for Enhancing Shareholder Value
Long‐Term Formula for Enhancing Shareholder Value Disciplined Balance Sheet Growth Improving Operating Efficiencies Stable Sources of Recurring Income Accretive M&A Transactions Earnings Growth, Improving Returns and Enhanced Franchise Value 34
Slide 35: Appendix
APPENDIX 35 Midland [=] States Bancorp, Inc.
Slide 36: ESG: A Framework for Sustainability
Financial Education ESG: A Framework for Sustainability • Since 2015 we have held more than 240 financial literacy seminars in LMI/minority neighborhoods in our footprint. Environmental Facilities CRA, Community Development and Financial Inclusion • Our Corporate HQ, built in 2011, is LEED (Silver)
Slide 37: Paycheck Protection Program Overview
Paycheck Protection Program Overview Paycheck Protection Program Paycheck Protection Program (as of 12/31/21) Loan Forgiveness Loans Outstanding $52.5 million As of 9/30/21 As of 12/31/21 Round 1 $5.3 million Loans Submitted to SBA $313.9 million $342.4 million Round 2 $47.2 million Loans Forgiven b
Slide 38: Loan Deferral Overview
Loan Deferral Overview Total Loan Deferrals Deferral Type (as of December 31, 2021) As of As of As of Jun. 30, 2021 Sep. 30, 2021 Dec. 31, 2021 Full Payment Deferral $1.4 million Total Loans Deferred $107.3 million $34.3 million $13.3 million Deferred Loans Making $11.9 million % of Total Loans 2.2%
Slide 39: Capital and Liquidity Overview
Capital and Liquidity Overview Capital Ratios Liquidity Sources (as of 12/31/21) (as of 12/31/21) 15.00% ($ in millions) Cash and Cash Equivalents $ 673.3 12.19% Unpledged Securities 409.1 FHLB Committed Liquidity 863.7 11.21% FRB Discount Window Availability 55.9 10.49% 10.49% Total Estimated Liqui
Slide 40: Appendix: Reconciliation of TBV Per Share
Appendix: Reconciliation of TBV Per Share As of Decem ber 31, (do llars in tho usands, except per share data) 2021 2020 2019 2018 2017 2016 2015 2014 Shareholders' Equity to Tangible Common Equity: Total shareholders' equity—GAAP $ 663,837 $ 621,391 $ 661,911 $ 608,525 $ 449,545 $ 321,770 $ 232,880
Slide 41: Adjusted Earnings Reconciliation
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For the Years Ended December 31, (dollars in thousands, except per share data) 2021 2020 2019 2018 2017 2016 Income before income taxes - GAAP $ 99,112 $ 32,014 $ 72,471 $ 50,805
Slide 42: Efficiency Ratio Reconciliation
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Update Efficiency Ratio Reconciliation For the Years Ended December 31, (dollars in thousands) 2021 2020 2019 2018 2017 2016 Noninterest expense - GAAP $ 175,069 $ 184,010 $ 175,641 $ 191,643 $ 152,997 $ 121,289
Slide 43: Adjusted Earnings Reconciliation (Quarterly)
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For the Quarter Ended December 31, September 30, June 30, March 31, December 31, (dollars in thousands, except per share data) 2021 2021 2021 2021 2020 Income before income taxes
Slide 44: Efficiency Ratio Reconciliation (Quarterly)
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) Efficiency Ratio Reconciliation For the Quarter Ended December 31, September 30, June 30, March 31, December 31, (dollars in thousands) 2021 2021 2021 2021 2020 Noninterest expense - GAAP $ 45,757 $ 4
Slide 45: Tangible Common Equity 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 December 31, September 30, June 30, March 31, December 31, (dollars in thousands, except per share data) 2021 20
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