Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q4 2017 Earnings Presentation
16 slides from Midland States Bancorp's earnings presentation, Jan 25, 2018
Slide 1: Midland States Bancorp, Inc. Fourth Quarter 2017 Earnings Call
Midland States Bancorp, Inc. NASDAQ: MSBI Fourth Quarter 2017 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 express management’s current expectations, forecasts of future events or long - term goals, and may be based upon beliefs, expect
Slide 3: Overview of 4Q17
Overview of 4Q17 3 Improved Efficiency Ratio 4Q17 Earnings Strong Loan Growth Net income of $2.0 million, or $ 0.10 diluted EPS • Two charge - offs drive $4.6 million increase in provision expense from 3Q17, impacting EPS by $0.14 per diluted share • Adjusted pre - tax pre - provision earnings 1 inc
Slide 4: Net Interest Income/Margin
0.28% 0.35% 0.13% 0.27% 0.26% 3.70% 3.87% 3.70% 3.78% 3.73% 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 NIM Accretion Income • Net interest income decreased due to lower net interest margin • Net interest margin declined due to $40 million of subordinated debt added in preparation for acquisition of Alp
Slide 5: Non-Interest Income
Non - Interest Income 5 • Fee generating businesses accounted for 28% of total revenue in 4Q17 • Continued increase in wealth management revenue • Soft quarters in commercial FHA and residential mortgage banking Non - Interest Income (in millions) $30.5 $16.3 $13.6 $15.4 $14.0 4Q 2016 1Q 2017 2Q 201
Slide 6: Wealth Management
$2.50 $2.87 $3.41 $3.48 $3.59 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 $1,658 $1,869 $1,930 $2,001 $2,051 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 • Wealth Management group offers Trust and Estate services, Investment Management, Financial Planning and Employer Sponsored Retirement Plans • Total reven
Slide 7: Love Funding – Commercial FHA
$3.9 $6.4 $4.5 $3.4 $3.0 $0.3 $0.1 $3.7 $6.7 $4.2 $3.8 $3.1 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 Gain Servicing $0.4 $159 $217 $152 $113 $99 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 Loan Rate Locks Business Overview • Commercial FHA origination and servicing business for multifamily and healthcare
Slide 8: Non-Interest Expense and Operating Efficiency
Non - Interest Expense and Operating Efficiency 8 • Efficiency Ratio 1 was 64.6% in 4Q17 vs. 69.0% in 3Q17 • Integration and acquisition related expenses » $2.7 million in 4Q17 » $8.3 million in 3Q17 • Loss on MSRs held - for - sale » $0.4 million in 4Q17 » $3.6 million in 3Q17 • Excluding these cha
Slide 9: Loan Portfolio
Loan Portfolio Total Loans 9 • Total loans increased $69 million, or 9% annualized, during 4Q17 • Increases in all major lending areas except commercial real estate • Strongest growth in commercial, construction and consumer portfolios Loan Portfolio Mix (in millions, as of quarter - end) (in millio
Slide 10: Total Deposits
Total Deposits Total Deposits 10 • Total deposits increased $17 million in 4Q17 • Strong inflows of core deposits partially offset by continued reduction of brokered CDs • Excluding brokered CDs, total deposits increased by $60 million in 4Q17 Deposit Mix (in millions, as of quarter - end) (in milli
Slide 11: Asset Quality
Asset Quality NCO / Average Loans 11 • Net charge - offs primarily comprised of two retail CRE properties • NCOs drive reduction in NPLs to 0.83% of total loans • Provision for loan losses of $6.1 million in 4Q17 reflects growth in loan portfolio and NCOs • ALL/total loans of 0.51% and credit marks/
Slide 12: Outlook
Outlook • Alpine acquisition expected to close by end of February 2018 • 2018 will see a significant shift in Midland’s business mix » Core community banking and wealth management becoming larger percentage of revenue mix » Commercial FHA and residential mortgage businesses becoming lower percentage
Slide 13: Appendix
APPENDIX
Slide 14: Adjusted Earnings Reconciliation
14 Adjusted Earnings Reconciliation (in thousands, except per share data) Income before income taxes - GAAP $ 7,766 $ 2,316 $ 4,916 $ 11,473 $ 19,910 Adjustments to noninterest income: Gain on sales of investment securities, net 2 98 55 67 14,387 Gain (loss) on sale of other assets 37 45 (91) (58) -
Slide 15: Efficiency Ratio Reconciliation
15 Efficiency Ratio Reconciliation (in thousands) Noninterest expense - GAAP $ 36,192 $ 48,364 $ 37,644 $ 30,798 $ 34,090 Net expense from loss-share termination agreement - - - - (351) Branch network optimization plan charges (371) (336) (1,236) (9) (2,099) Loss on mortgage servicing rights held fo
Slide 16: Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share
16 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 $ 449,545 $ 450,689 $ 451,952 $ 334,333 $ 321,770 Adjustments: Preferred stock (2,970) (3,
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