Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q3 2020 Earnings Presentation
26 slides from Midland States Bancorp's earnings presentation, 2020
Slide 1: Third Quarter 2020 Earnings Call
Midland States Bancorp, Inc. NASDAQ: MSBI Third Quarter 2020 Earnings Call 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: Overview of 3Q20
Overview of 3Q20 • Net income of $86 thousand, or $0.00 diluted EPS, reflect $13.9 million in one-time charges 3Q20 Earnings primarily related to branch and facilities optimization plan • Adjusted earnings(1) of $12.0 million, or $0.52 diluted EPS, excluding charges primarily related to branch and f
Slide 4: 2020 Optimization and Efficiency Initiatives
2020 Optimization and Efficiency Initiatives FY 2021 Initiative Details Expected Financial Impact • Sale of origination platform to • Ongoing commercial FHA revenue of Dwight Capital $1.2 million for servicing • No significant gain on sale (reduced • $8-$9 million expense reduction goodwill by $10.9
Slide 5: Paycheck Protection Program Overview
Paycheck Protection Program Overview Paycheck Protection Program Paycheck Protection Program Loan Forgiveness (as of 9/30/20) (as of 10/9/20) Loans Outstanding $277.6 million Loans Submitted to SBA $71.6 million Number of Loans 2,295 Loans Forgiven by SBA $3.1 million Average Loan Size $120,938 Esti
Slide 6: Loan Deferral Overview
Loan Deferral Overview Total Loan Deferrals Deferral Type (as of September 30, 2020) As of As of Percentage June 30, 2020 September 30, 2020 Change Full Payment Deferral $237.9 million Total Loans Deferred $898.4 million $279.3 million (68.9%) Interest Only Deferral $41.4 million % of Total Loans 18
Slide 7: Loan Portfolio
Loan Portfolio • Total loans increased $102.0 million, or 2.1% from prior quarter, to $4.94 billion • Increase primarily attributable to growth in commercial and consumer portfolios, partially offset by decrease in residential real estate loans • PPP loans totaled $277.6 million at September 30, 202
Slide 8: Midland Equipment Finance Portfolio Overview
Midland Equipment Finance Portfolio Overview Portfolio Characteristics Total Deferred (as of 9/30/20) Loans and Leases Nationwide portfolio providing financing solutions As of As of Percentage to equipment vendors and end-users June 30, 2020 September 30, 2020 Change Total Outstanding $815.5 million
Slide 9: Hotel/Motel Portfolio Overview
Hotel/Motel Portfolio Overview Portfolio Characteristics (CRE & C&I) (as of 9/30/20) Total Outstanding $187.6 million (3.8% of total loans) Number of Loans 61 Average Loan Size $2.2 million Largest Loan $11.1 million Average LTV 58% Total Deferred Loans as of 6/30/20 $146.2 million (84.8% of portfol
Slide 10: GreenSky Consumer Loan Portfolio Overview
GreenSky Consumer Loan Portfolio Overview Portfolio Characteristics Prime Credit (as of 9/30/20) Average FICO score of 763 $768.6 million Total Outstanding (15.6% of total loans) No losses to MSBI in 9 year history of the portfolio Number of Loans 330,751 Portfolio can be sold to provide liqui
Slide 11: Total Deposits
Total Deposits • Total deposits increased $85.6 million, or 1.7% from prior quarter, to $5.03 billion • Growth in deposits attributable to increase in commercial FHA servicing deposits • Continued intentional run-off of higher-cost time deposits, replaced with lower-cost core deposits Deposit Mix To
Slide 12: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income increased 2.0% from the prior quarter due to higher average loan balances • Net interest margin remained stable as decline in average yield on earning assets was largely offset by decline in cost of deposits • 11 basis point decline in cost of deposit
Slide 13: Wealth Management
Wealth Management • During 3Q20, assets under administration increased $7.1 million, primarily due to market performance • Wealth Management revenue remains a consistent source of noninterest income • Slight variation in quarter-to-quarter revenue primarily relates to seasonal fees related to tax pr
Slide 14: Noninterest Income
Noninterest Income • Noninterest income reduced 2.5% from prior quarter, due to lower Commercial FHA revenue resulting from the sale of the origination platform at the end of August and a $1.4 million impairment of commercial mortgage servicing rights (“MSRs”) • Excluding the impact of the impairmen
Slide 15: Noninterest Expense and Operating Efficiency
Noninterest Expense and Operating Efficiency Noninterest Expense and Efficiency Ratio (1) • Efficiency Ratio (1) was 58.8% in 3Q20 vs. 58.5% in 2Q20 (Noninterest expense in millions) • Adjustments to non-interest expense: ($ in millions) 3Q20 2Q20 Integration and $54.7 acquisition related ($13.9) ($
Slide 16: Asset Quality
Asset Quality • Nonperforming loans/total loans increased to 1.36% from 1.25% at the end of the prior quarter, primarily due to the addition of three CRE loans • Net charge-offs of $5.3 million, or 0.44% of average loans, reflects charge-offs taken against the three CRE loans moved into NPL in 3Q20
Slide 17: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) Specific Portfolio Economic Reserves Changes Factors Changes to macro- economic variables and forecasts Changes to other economic qualitative factors Changes to specific New loans reserves Changes in credit quality including risk down
Slide 18: ACL by Portfolio
ACL by Portfolio ($ in thousands) Total Loans at % of Total Loans at % of Portfolio ACL ACL 9/30/20 Total Loans 6/30/20 Total Loans Commercial $ 729,745 $ 7,846 1.08% $ 715,206 $ 4,916 0.69% Warehouse Lines 136,761 - 0.00% 127,568 - 0.00% Commercial Other 813,412 10,014 1.23% 767,175 7,297 0.95% Equ
Slide 19: Outlook and Near-Term Priorities
Outlook and Near-Term Priorities • Maintain strong capital and liquidity positions to continue supporting clients and communities through the duration of the COVID-19 pandemic • Continue capitalizing on areas of near-term demand to drive additional loan growth • Implement branch network and corporat
Slide 20: Appendix
APPENDIX Midland [=] States Bancorp, Inc.
Slide 21: Commercial Loans and Leases by Industry
Commercial Loans and Leases by Industry Industries as a percentage of Commercial, Other Services Wholesale Trade CRE and Equipment Finance Loans and Leases Trans. / Ground Passenger 3.5% 2.4% as of 9/30/20 3.6% Health Care RE / Rental & Leasing 4.8% 21.3% General Freight Trucking 5.0% Ag., Forestry,
Slide 22: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type Collateral type as a percentage of the Office Commercial Real Estate and Construction All Others 6.8% Portfolio as of 9/30/20 9.0% Residential 1-4 Family 6.2% Hotel/Motel C-Store / Gas Station 9.4% 4.1% Farmland 4.0% Medical Building Multi-Family 3
Slide 23: Capital and Liquidity Overview
Capital and Liquidity Overview Capital Ratios Liquidity Sources (as of 9/30/20) (as of 9/30/20) 15.00% ($ in millions) 13.34% Cash and Cash Equivalents $ 416.2 Unpledged Securities 188.7 11.82% FHLB Committed Liquidity 451.2 10.96% 10.96% FRB Discount Window Availability 52.7 Primary Liquidity 1,153
Slide 24: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For the Quarter Ended September 30, June 30, March 31, December 31, September 30, (dollars in thousands, except per share data) 2020 2020 2020 2019 2019 Income before income taxes
Slide 25: Reconciliations of Non-GAAP Measures: Efficiency Ratio
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, (dollars in thousands) 2020 2020 2020 2019 2019 Noninterest expense - GAAP $ 54,659 $
Slide 26: Tangible Common Equity and Tangible Book Value Per Share
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (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) 2020 2020 2020 201
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