Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Investor Presentation (November 2024)
49 slides from Midland States Bancorp's investor presentation, November 2024
Slide 1: Investor Presentation November 2024
Midland States Bancorp, Inc. NASDAQ: MSBI Investor Presentation November 2024 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 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 September 30,
Slide 4: Financial Services & Banking Center Footprint
Financial Services & Banking Center Footprint Headquartered in Effingham, Illinois 42 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: Operating Model
Operating Model Key Business Units (dollars in millions, as of 9/30/24) 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 $903 $731 $695 $850 $860 $2,613 $5,749 De
Slide 7: 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 8: 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 9: Successful Execution of Strategic Plan...
Successful Execution of Strategic Plan... Total Assets (at period-end in billions) CAGR: 14% : 12% 6 IPO $7.9 $7.9 e 201 $7.4 c 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 10: ...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% $27.74 $26.91 $1.24 $1.20 $1.16 $24.72 $1.12 $1.07 $0.97 $21.42 $0.88 $18.80 $18.34 $24.90 $17.09 $23.35 $21.66
Slide 11: ...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 8.61% 0.67% 0.62% 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 YTD 2024 Adj ROATCE
Slide 12: 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 13: 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 14: 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 15: Loan Portfolio and Asset Quality
Loan Portfolio 2009 and Asset Quality 15 15
Slide 16: Commercial Loans and Leases by Industry
Commercial Loans and Leases by Industry Other Services Health Care Retail Trade Wholesale Trade $102.2 $68.0 Industries as a percentage of ($s in millions) $174.1 $63.7 2.2% 1.4% Commercial, CRE and Equipment 3.7% 1.4% Finance Loans and Leases with outstanding balances of $4.71 billion General Freig
Slide 17: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type ($s in millions) Mixed Use/Other Restaurant Medical Building Raw Land Collateral type as a percentage of $118.4 $30.1 $93.2 $22.3 the Commercial Real Estate and C-Store/Gas Station 4.0% 1.0% 3.2% 0.8% Construction Portfolio with $79.8 outstanding b
Slide 18: 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 19: Midland Equipment Finance Portfolio Overview
Midland Equipment Finance Portfolio Overview Portfolio Characteristics (as of September 30, 2024) Nationwide portfolio providing financing solutions to equipment vendors and end-users Total Outstanding $860.1 million Loans and Leases (15.0% of total loans) Number of Loans and Leases 8,161 Average Lo
Slide 20: GreenSky Consumer Loan Portfolio Overview
GreenSky Consumer Loan Portfolio Overview Portfolio Characteristics Plan with GreenSky to Wind Down Portfolio (as of September 30, 2024) ■ Notice provided to officially terminate the $475.3 million Total Outstanding GreenSky program in October 2023 (8.3% of total loans) Weighted Average Rate 5.70% ■
Slide 21: LendingPoint Loan Portfolio Overview
LendingPoint Loan Portfolio Overview Portfolio Characteristics Plan with LendingPoint to Wind Down Portfolio (as of September 30, 2024) ■ Notice provided to stop new originations in the $96.5 million Total Outstanding LendingPoint program in Oct. 2023 (1.8% of total loans) Weighted Average Rate 5.45
Slide 22: Asset Quality
Asset Quality • Nonperforming loans increased from prior quarter • Net charge-offs to average loans was 0.78% driven by equipment finance and $6.2 million of charge offs in the Lending Point portfolio • General stability in asset quality resulted in lower provision for credit losses than prior quart
Slide 23: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) $92,183 $(1,120) $85,804 $(4,320) $(938) ▪ Changes to ▪ Changes in Loans ▪ Change to macro- specific reserves economic ▪ Changes in Credit variables and quality including forecasts risk rating ▪ Changes to other ▪ Changes in economic portfolio
Slide 24: ACL by Portfolio
ACL by Portfolio ($ in thousands) September 30, 2024 June 30, 2024 % of Total % of Total Portfolio Loans ACL Loans ACL Loans Loans Commercial $ 797,318 $ 9,263 1.16 % $ 829,888 $ 8,821 1.06 % Commercial Other 559,354 14,844 2.65 % 570,979 15,426 2.70 % Equipment Finance Loans 442,552 11,236 2.54 % 4
Slide 25: Recent Financial Trends
Recent Financial Trends 2009 25 25
Slide 26: Overview of 3Q24
Overview of 3Q24 • Net income available to common shareholders of $16.2 million, or $0.74 diluted EPS • Pre-tax, pre-provision earnings(1) of $27.5 million Financial • Strong noninterest income of $19.3 million Performance • Net interest margin stable at 3.10% Continued Success • Tangible book value
Slide 27: Loan Portfolio
Loan Portfolio • Total loans decreased $103.2 million from prior quarter to $5.75 billion • Decrease primarily driven by decline in equipment finance portfolio of $30.0 million and continued runoff of GreenSky portfolio of $63.0 million • Decrease in non-core portfolios partially offset by new loan
Slide 28: Loan Segments
Loan Segments • Total loans in our Community Bank increased $45 million from prior quarter to $3.18 billion • Loans in St. Louis region increased $25 million or 12% annualized in 3Q24 • Focused on core, in-market loan relationships • Continuing to add talent in faster growing markets to drive qualit
Slide 29: Total Deposits
Total Deposits • Total deposits increased $138.8 million from end of prior quarter, primarily due to increases in brokered time • Average balances of non-interest bearing demand deposits declined $57 million compared to prior quarter primarily due to seasonal outflows and lower average balances • Br
Slide 30: Deposit Summary
Deposit Summary • Deposits excluding brokered remained relatively stable from prior quarter • Total brokered deposits increased $152 million in 3Q24 • Interest rates will decrease for servicing and brokered deposits reducing pressure on cost of funds Deposits by Channel Trend of Deposit Channel Mix
Slide 31: Investment Portfolio
Investment Portfolio Fair Value of Investments by Type As of September 30, 2024 7.4% 3.5% 7.3% • All Investments are classified as Available for Sale 5.8% US GSE & US Agency • Average T/E Yield is 4.71% for 3Q24 MBS - agency Average Duration is 4.87 years 7.1% MBS - non agency $1.21 billion State &
Slide 32: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income down slightly from prior quarter due to higher interest-bearing deposit rates and average short-term borrowings • Net interest margin decreased 2 bp to 3.10% as the increase in the cost of deposits exceeded the increase in the average yield on earning
Slide 33: Loans & Securities - Repricing and Maturity
Loans & Securities - Repricing and Maturity Total Loans and Leases (net of unearned income)(1) (in millions) As of September 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 Commercia
Slide 34: Wealth Management
Wealth Management • Assets under administration increased $273 million mainly due to $178 million in new assets and market performance • Wealth Management fees increased due to higher AUA and net new accounts • New technology that integrates Wealth Management data into mobile banking app that is exp
Slide 35: Noninterest Income
Noninterest Income • Noninterest income increased from prior quarter primarily due to higher Wealth Management revenue resulting from increased AUA and higher deposit service charges • 3Q24 noninterest income includes $0.2 million gain on sale of SBA loans and $0.4 million of earnings on limited par
Slide 36: Noninterest Expense and Operating Efficiency
Noninterest Expense and Operating Efficiency Noninterest Expense and Efficiency Ratio (1) (Noninterest expense in millions) $47.5 $46.7 • Efficiency Ratio (1) was 62.8% in 3Q $44.5 $44.9 2024 vs. 65.2% in 2Q 2024 65.2% $42.0 • Compensation and benefits increased $1.5 million due to new 62.8% staff a
Slide 37: Capital Ratios and Strategy
Capital Ratios and Strategy Capital Ratios Capital Strategy (as of September 30, 2024) • Capital initiatives increased CET1 to 9.00% from 7.77% at December 31, 2022 with limited buybacks below TBV 13.98% 13.34% • Internal capital generated from strong profitability and slower balance sheet 12.09% 12
Slide 38: Building Capital
Building Capital • CET1 Increased 60 bps to 9.00% from 4Q23 despite credit headwinds • Balance sheet and capital strategy reduced risk weighted assets $367 million from 4Q23 • Support organic growth needs of new and existing core relationships • Opportunistic share repurchases at or below TBV and co
Slide 39: Outlook
Outlook 2009 39 39
Slide 40: 2024 Outlook and Priorities
2024 Outlook and Priorities • Well positioned with increased levels of capital, liquidity, and reserves • Continuing to focus on improving credit quality through core relationship lending and tightened credit • Prudent risk management will remain top priority while economic uncertainty remains with
Slide 41: 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 41 41
Slide 42: Appendix
APPENDIX Midland [=] States Bancorp, Inc.
Slide 43: 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 44: 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 45: 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 46: 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 47: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For the Nine For The Quarter Ended Months Ended September 30, June 30, March 31, December 31, September 30, September 30, (dollars in thousands, except per share data) 2024 2024 2
Slide 48: 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 September 30, June 30, March 31, December 31, September 30, 2024 2024 2024 2023 2023 (dollars in thousands) Adjusted noninterest expense $ 46,733
Slide 49: Reconciliations of Non-GAAP Financial Measures: TCE to Tangible Assets
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 September 30, June 30, March 31, December 31, September 30, (dollars in thousands, except per share data) 2024 2
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