Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q2 2023 Earnings Presentation
32 slides from Midland States Bancorp's earnings presentation, 2023
Slide 1: Second Quarter 2023 Earnings Presentation
Midland States Bancorp, Inc. NASDAQ: MSBI Second Quarter 2023 Earnings Presentation 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 • Illinois state-chartered community bank founded in 1881 • $8.0 billion in assets • $3.6 Wealth Management business • Commercial bank focused on in-market relationships with national diversification in equipment finance • 53 branches in Illinois and Missouri • 16 successful acquisi
Slide 4: 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 of service and accountability to our clients and identifying and executing transactions that build colleagues; seek to develop ba
Slide 5: Successful Execution of Strategic Plan...
Successful Execution of Strategic Plan... Total Assets (at period-end in billions) CAGR: 16% : 15% IPO $8.0 016 $7.9 e2 inc $7.4 G Rs $6.9 CA $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 2Q 2023 Selected Acquisitions Sel
Slide 6: ...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 TBV/Share ex. AOCI CAGR: 7.9% $26.11 CAGR: 7.0% $24.72 $1.20 $21.42 $1.16 $1.12 $1.07 $0.97 $18.80 $18.34 $0.88 $17.22 $17.09 $0.80 $21.66 $22.24 $20.94
Slide 7: ...And Increased Profitability
...And Increased Profitability Adjusted Diluted EPS(1) Adjusted ROATCE(1) CAGR: 14.9% $3.79 18.59% $3.65 18.33% 16.60% 15.00% 14.44% $2.54 $2.39 11.32% $1.89 9.24% $1.70 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 YTD 2023 Adjusted Diluted EPS data and CAGR through 2022 77 Notes: (1)
Slide 8: Overview of 2Q23
Overview of 2Q23 • Net income available to common shareholders of $19.3 million, or $0.86 diluted EPS Strong Financial • Pre-tax, pre-provision earnings(1) increased 8% from prior quarter to $34.9 million Performance • ROAA of 1.09% and ROTCE of 15.99% Stable • Total deposits up slightly from end of
Slide 9: Loan Portfolio
Loan Portfolio • Total loans increased $13.1 million from prior quarter to $6.37 billion • Growth primarily driven by increases in commercial loans and leases and construction and land development loans, partially offset by decline in consumer loans resulting from planned reduction of loans originat
Slide 10: Total Deposits
Total Deposits • Total deposits increased $1.3 million from end of prior quarter • Noninterest-bearing deposits decline primarily attributable to commercial depositors moving excess liquidity into interest-bearing accounts and other seasonal outflows • Managing rates on deposits in order to continue
Slide 11: Deposit Type Trend
Deposit Type Trend Deposits by Type Trend (in millions) GR 11% CA $6,365 $6,427 $6,111 $5,101 $4,544 $4,074 2018 2019 2020 2021 2022 2Q 2023 Non Int Bearing Demand Interest Bearing Checking Money Market Savings Time Brokered Time 11 11
Slide 12: Deposit Summary as of June 30, 2023
Deposit Summary as of June 30, 2023 Deposits by Channel Commercial Deposits by NAICS Code (in millions) (in millions) Finance & Insurance RE, Rental & Leasing $481 2.9% 8.1% Manufacturing 7.5% 9.4% $600 Other Services 9.3% Skilled/Memory Care 14.0% Construction $270 Retail Deposits Admin, Support, 4
Slide 13: Uninsured Deposits
Uninsured Deposits Uninsured Deposits (in millions) June 30, 2023 March 31, 2023 Call Report Uninsured Estimate* $ 1,654 $ 1,793 Call Report Estimated Uninsured Deposits to Total Deposits 26 % 28 % Less: Affiliate Deposits (MSB owned funds) (30) (32) Less: Additional structured FDIC coverage (50) (5
Slide 14: Investment Portfolio
Investment Portfolio Fair Value of Investments by Type As of June 30, 2023 9.3% 4.8% 8.3% 2.6% 6.5% • All Investments are classified as Treasuries Available for Sale US GSE & US Agency 7.5% MBS - agency • Average T/E Yield is 3.39% $883 million MBS - non agency State & Muni • Average Duration is 5.4
Slide 15: Liquidity Overview
Liquidity Overview Liquidity Sources (in millions) June 30, 2023 March 31, 2023 Cash and Cash Equivalents $ 160.7 $ 138.3 Unpledged Securities 343.5 310.3 FHLB Committed Liquidity 857.2 932.8 FRB Discount Window Availability 184.1 207.7 Total Estimated Liquidity $ 1,545.5 $ 1,589.1 Conditional Fundi
Slide 16: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income down slightly from prior quarter as higher average balance of interest-earning assets was offset by an increase in cost of interest-bearing liabilities • Net interest margin decreased 16 bps from prior quarter as the increase in cost of deposits excee
Slide 17: Wealth Management
Wealth Management • Assets under administration up slightly in 2Q23 • 1Q23 increase in Wealth Management fees included seasonal tax preparation fees • Increase in AUA resulted in slight increase in Wealth Management revenue compared to the prior quarter excluding the seasonal tax preparation fees As
Slide 18: Noninterest Income
Noninterest Income • Noninterest income increased $3.0 million from prior quarter primarily due to gains on the redemption of subordinated debt and sales of other real estate owned • 2Q23 noninterest income included $0.9 million loss on sale of investment securities as part of repositioning of portf
Slide 19: Noninterest Expense and Operating Efficiency
Noninterest Expense and Operating Efficiency Noninterest Expense and Efficiency Ratio (1) (Noninterest expense in millions) • Efficiency Ratio (1) was 55.0% in 2Q 2023 vs. 57.6% in 1Q 2023 • Noninterest expense decreased primarily due to: $49.9 $3.3 ◦ Decreased commissions and incentive compensation
Slide 20: Asset Quality
Asset Quality • Nonperforming loans increased $4.1 million primarily due to one commercial loan as well as increases in the equipment finance portfolio • Delinquencies in consumer portfolio remain low • Net charge-offs to average loans was 0.19% • Provision for credit losses on loans of $5.9 million
Slide 21: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) $353 $810 $1,720 ▪ Changes to ▪ New Loans ▪ Change to macro- specific reserves economic variables ▪ Changes in Credit quality including risk and forecasts $64,950 rating ▪ Changes to other ▪ Changes in portfolio economic qualitative factors $62
Slide 22: ACL by Portfolio
ACL by Portfolio ($ in thousands) June 30, 2023 March 31, 2023 % of Total % of Total Portfolio Loans ACL Loans ACL Loans Loans Commercial $ 875,295 $ 5,180 0.59 % $ 823,847 $ 5,365 0.65 % Warehouse Lines 30,522 — —% 10,275 — —% Commercial Other 732,616 10,110 1.38 % 756,553 10,397 1.37 % Equipment F
Slide 23: Outlook
Outlook • Prudent risk management will remain top priority while economic uncertainty remains • Continue generating strong financial performance while maintaining conservative approach to new loan production to build capital and liquidity • Planned reduction in the consumer portfolio will continue t
Slide 24: Appendix
APPENDIX Midland [=] States Bancorp, Inc.
Slide 25: Commercial Loans and Leases by Industry
Commercial Loans and Leases by Industry Other Services Health Care Retail Trade Wholesale Trade $100.3 $74.0 Industries as a percentage of Commercial, ($s in millions) $172.6 $98.3 2.0% 1.5% CRE and Equipment Finance Loans and Leases 3.5% 2.0% with outstanding balances of $4.92 billion as of 6/30/20
Slide 26: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type ($s in millions) Mixed Use/Other Restaurant Medical Building Raw Land $70.6 $38.7 Collateral type as a percentage of the $110.3 $17.1 C-Store/Gas Station 2.5% 1.4% Commercial Real Estate and Construction 3.9% 0.6% $68.5 Portfolio with outstanding b
Slide 27: Capital Ratios and Strategy
Capital Ratios and Strategy Capital Ratios Capital Strategy (as of June 30, 2023) • Capital initiatives increased CET1 to 8.03% from 7.77% at 12/31/22 with limited 12.65% buybacks below TBV 11.89% 11.01% 11.01% 10.47% • Internal capital generated from strong 10.07% 9.57% profitability and slower bal
Slide 28: 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) 2017 2018 2019 2020 2021 2022 Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 449,54
Slide 29: Adjusted Earnings Reconciliation (Annual)
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) 2017 2018 2019 2020 2021 2022 Income before income taxes - GAAP $ 26,471 $ 50,805 $ 72,471 $ 32,014 $ 99,112 $ 129
Slide 30: Adjusted Earnings Reconciliation (Quarterly)
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For The Quarter Ended June 30, March 31, December 31, September 30, June 30, (dollars in thousands, except per share data) 2023 2023 2022 2022 2022 Income before income taxes - GA
Slide 31: Efficiency Ratio Reconciliation
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, 2023 2023 2022 2022 2022 (dollars in thousands) Noninterest expense - GAAP $ 42,894 $ 44,48
Slide 32: Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value
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) 2023 2023 2
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