Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q2 2016 Earnings Presentation
19 slides from Midland States Bancorp's earnings presentation, 2016
Slide 1: Midland States Bancorp, Inc. Second Quarter 2016 Earnings Call
Midland States Bancorp, Inc. NASDAQ: MSBI Second Quarter 2016 Earnings Call
Slide 2: Forward-Looking Statements
Forward-Looking Statements. This presentation contains 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, by their nature, are subject to assumptions, r
Slide 3: Business and Corporate Strategy
Business and Corporate Strategy • In conjunction with a new leadership team, MSBI’s corporate initiative-driven strategic plan was adopted in late 2007 to build a diversified financial services company anchored by a strong community bank • Five core strategic initiatives: Revenue Generate a diversif
Slide 4: Second Quarter 2016 Summary
Second Quarter 2016 Summary Successful IPO Successful initial public offering raises net proceeds of $71.7 million Strong Earnings Net income of $6.8 million or $0.50 per diluted share $3.0 million impairment charge to residential mortgage servicing rights negatively MSR Impairment impacted earnings
Slide 5: Business Unit Review - Love Funding
Business Unit Review - Love Funding • Commercial FHA origination and servicing business focused on multifamily and healthcare facilities • Long-term replacement reserve deposits for maintenance/capex of properties and escrow deposits are low-cost sources of funds • Average deposits related to servic
Slide 6: Business Unit Review - Residential Mortgage
Business Unit Review - Residential Mortgage • Residential mortgage loan origination and servicing • Strong quarter of loan production with $133 million in originations; $29 million retained in portfolio • Gain on sale income of $3.6 million largely offset by $3 million in MSR impairment Net Gain on
Slide 7: Business Unit Review - Heartland Business Credit
Business Unit Review - Heartland Business Credit • Equipment leasing sourced from a network of equipment manufacturers and brokers • Strong growth trajectory generating nearly $33 million in originations • Attractive yields - average rate on new loan originations was 5.56% in quarter • 46% year-over
Slide 8: Business Unit Review – Wealth Management
Business Unit Review – Wealth Management • Wealth Management group offers Trust and Estate services, Investment Management, Financial Planning and Employer Sponsored Retirement Plans • Revenue grew 4.8% in 2Q16 from 1Q16 • Expect to close on Sterling Trust company acquisition in late 3Q16 which will
Slide 9: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income up 16% in 2Q16 vs. 1Q16 • $3 million increase in accretion income on acquired portfolios and increase in average loan balances from strong loan growth • 40 bps increase in net interest margin due to the impact of accretion income Net Interest Income N
Slide 10: Impact of Purchase Accounting Accretion
Impact of Purchase Accounting Accretion • $6.6 million or 19% decrease in PCI loans in 2Q16, including $5.9 million in payoffs • $4.9 million in accretion income in 2Q16, up from $1.9 million in 1Q16 • One of the payoffs was related to an FDIC loss-share loan, which impacted three income statement l
Slide 11: Non-Interest Income
Non-Interest Income • Non-interest income up 11% in 2Q16 vs. 1Q16 • $8.5 million in Commercial FHA revenue, an increase of 30% in 2Q16 vs. 1Q16 • $1.5 million FDIC loss sharing expense reduced non-interest income in 2Q16 • $3 million residential MSR impairment in 2Q16, compared to $2 million in 1Q16
Slide 12: Non-Interest Expense and Operating Efficiency
Non-Interest Expense and Operating Efficiency Non-Interest Expense and Efficiency Ratio1 • Efficiency Ratio1 declined despite increased (Non-Interest expense in millions) expenses in 2Q16 • Non-interest expense was 12% higher in $31 2Q16 vs. 1Q16 due to: $31 • Annual salary increases of $0.4 million
Slide 13: Loan Portfolio
Loan Portfolio • Total loans at quarter-end increased by $145 million in 2Q16 vs. 1Q16 • Robust pipeline in 1Q16 materialized into growth across loan portfolio in 2Q16 aided by targeted sales and product development efforts • Pipelines look strong Loan Portfolio Mix Total Loans (in millions, as of q
Slide 14: Total Deposits
Total Deposits • Following three successive quarters of increases, total deposits ticked downward in 2Q16 primarily in demand and money market, partially offset by NOW • Decrease in DDA primarily due to fluctuations in Commercial FHA servicing driven by timing of loan payoffs • Decline in money mark
Slide 15: Asset Quality
Asset Quality • Asset quality continues to improve • Net charge-offs declined to $0.4 million in 2Q16 Non-performing Loans / Total Loans NCO / Average Loans (Total Loans as of quarter-end) 1.89% 1.57% 1.23% 1.25% 0.93% 0.85% 0.51% 0.09% 0.04% -0.14% 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 2Q 2015 3Q
Slide 16: Outlook
Outlook • Economic conditions in our markets remain healthy • Loan pipeline is robust as borrowers want to take advantage of historically low interest rates • Expecting low- to mid-teen loan growth • Business mix creates fluctuations in sequential quarter trends • Favorable environment for M&A • Str
Slide 17: Appendix
APPENDIX
Slide 18: Reconciliations of Non-GAAP Financial Measures
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES For the Quarter Ended June 30, March 31, December 31, September 30, June 30, (in thousands, except per share data) 2016 2016 2015 2015 2015 Adjusted Earnings Reconciliation Income before income taxes - GAAP $ 10,473 $ 7,895
Slide 19: Reconciliations of Non-GAAP Financial Measures: Tangible Common Equity
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES 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, (in thousands, except per share data) 2016 2016 2015 2015 2015 Shareholders' Equi
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