Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Investor Presentation (February 2024)
50 slides from Midland States Bancorp's investor presentation, February 2024
Slide 1: Midland States Bancorp, Inc. Investor Presentation
Midland States Bancorp, Inc. NASDAQ: MSBI Investor Presentation February 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 • Illinois state-chartered community bank founded in 1881 • $7.9 billion in assets • $3.7 billion Wealth Management business • Commercial bank focused on in-market relationships with national diversification in equipment finance • 53 branches in Illinois and Missouri • 16 successful
Slide 4: Recent Trends and Operational Highlights
Recent Trends and Operational Highlights • 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 significant organic loan growth and consistent
Slide 5: Financial Services & Banking Center Footprint
Financial Services & Banking Center Footprint 55
Slide 6: Investment Summary
Investment Summary Consistent track record of driving Proven track record of successful compelling shareholder returns acquisitions with a focus on enhancing through disciplined strategic shareholder value while building a expansion and earnings growth platform of scalability Organization-wide focus
Slide 7: 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 8: Experienced Senior Management Team
Experienced Senior Management Team Jeffrey G. Ludwig | President and CEO of Midland States Bancorp ▪ Assumed Company CEO role in Jan. 2019 after serving as Bank CEO ▪ More than 10 years serving as CFO ▪ Joined Midland in 2006; 16+ years in banking industry Jeffrey S. Mefford | President of Midland S
Slide 9: 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 10: Strategic Initiatives Strengthening Franchise
Strategic Initiatives Strengthening Franchise Significant Corporate Actions Since Coming Public in 2016... Action Strategic Rationale Financial Impact 2016 2023 Three whole bank acquisitions ▪ Low-cost deposits Total Assets $3.2B $7.9B Scale Four Wealth Management acquisitions ▪ Recurring revenue AU
Slide 11: 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 12: Successful Execution of Strategic Plan...
Successful Execution of Strategic Plan... Total Assets (at period-end in billions) CAGR: 15% : 14% 6 IPO $7.9 $7.9 e 201 $7.4 c R sin CAG $6.9 $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 13: ...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: 7.7% CAGR: 7.0% $26.91 $24.72 $1.20 $1.16 $1.12 $21.42 $1.07 $0.97 $18.80 $0.88 $18.34 $0.80 $17.22 $17.09 $23.35 $21.66 $20.94
Slide 14: ...And Increased Profitability
...And Increased Profitability Adjusted Diluted EPS(1) Adjusted ROATCE(1) CAGR: 10.4% $3.79 18.59% $3.65 18.33% $3.42 15.98% 15.00% 14.44% $2.54 $2.39 11.32% $1.89 9.24% $1.70 2017 2018 2019 2020 2021 2022 2023 2017 2018 2019 2020 2021 2022 2023 14 14 Notes: (1) Represents a non-GAAP financial measu
Slide 15: Foundational Technology Roadmap
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 (Q1 2022) Commercial Online Account Ope
Slide 16: Loan Portfolio and Asset Quality
Loan Portfolio 2009 and Asset Quality 16 16
Slide 17: Commercial Loans and Leases by Industry
Commercial Loans and Leases by Industry Other Services Health Care Retail Trade Wholesale Trade $102.6 $70.5 Industries as a percentage of Commercial, ($s in millions) $180.6 $67.0 2.1% 1.5% CRE and Equipment Finance Loans and Leases 3.8% 1.4% with outstanding balances of $4.82 billion as of Decembe
Slide 18: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type ($s in millions) Mixed Use/Other Restaurant Medical Building Raw Land $93.6 $30.8 Collateral type as a percentage of the $103.8 $16.0 C-Store/Gas Station 3.3% 1.1% Commercial Real Estate and Construction 3.6% 0.6% $76.7 Portfolio with outstanding b
Slide 19: 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 20: Midland Equipment Finance Portfolio Overview
Midland Equipment Finance Portfolio Overview Portfolio Characteristics (as of December 31, 2023) Nationwide portfolio providing financing solutions to equipment vendors and end-users Total Outstanding $1,004.5 million Loans and Leases (16.4% of total loans) Number of Loans and Leases 9,067 Average L
Slide 21: GreenSky Consumer Loan Portfolio Overview
GreenSky Consumer Loan Portfolio Overview Portfolio Characteristics Plan with GreenSky to Wind Down Portfolio (as of December 31, 2023) ▪ Notice provided to officially terminate the $683.6 million Total Outstanding GreenSky program in October 2023 (11.2% of total loans) Weighted Average Rate 5.49% ▪
Slide 22: Asset Quality
Asset Quality • Nonperforming loans relatively flat with small increase of $0.4 million, of which equipment finance increased $2.1 million in the current quarter • Net charge-offs to average loans was 0.33% primarily driven by equipment finance • Provision for credit losses on loans of $7.0 million,
Slide 23: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) $448 $715 $670 ▪ Changes to ▪ New Loans ▪ Change to macro- specific reserves economic variables ▪ Changes in Credit quality including risk and forecasts rating ▪ Changes to other ▪ Changes in portfolio economic qualitative $68,502 mix factors $
Slide 24: ACL by Portfolio
ACL by Portfolio ($ in thousands) December 31, 2023 September 30, 2023 % of Total % of Total Portfolio Loans ACL Loans ACL Loans Loans Commercial $ 825,938 $ 8,897 1.08 % $ 874,004 $ 7,563 0.87 % Warehouse Lines — — —% 48,547 — —% Commercial Other 656,592 12,950 1.97 % 697,235 11,847 1.70 % Equipmen
Slide 25: Recent Financial Trends
Recent Financial Trends 2009 25 25
Slide 26: Overview of 4Q23
Overview of 4Q23 • Net income and level of returns increased from the prior quarter Strong Financial • Net income available to common shareholders of $18.5 million, or $0.84 diluted EPS Performance • Pre-tax, pre-provision earnings(1) of $35.9 million • ROAA of 1.04% and ROTCE of 15.41% • Strong fin
Slide 27: Loan Portfolio
Loan Portfolio • Total loans decreased $149.8 million from prior quarter to $6.13 billion • Decrease primarily driven by decline in equipment finance portfolio of $59.9 million and continued runoff of GreenSky portfolio of $70.4 million, and lower balances on commercial FHA warehouse lines • Decreas
Slide 28: Total Deposits
Total Deposits • Total deposits decreased $95.5 million from end of prior quarter, primarily due to seasonal outflows from public funds and servicing deposits • Noninterest-bearing deposits relatively stable as continued movement of funds into interest-bearing accounts was offset by new commercial a
Slide 29: Deposit Type Trend
Deposit Type Trend Deposits by Type Trend (in millions) R 9% CAG $6,111 $6,365 $6,310 $5,101 $4,544 $4,074 2018 2019 2020 2021 2022 2023 Non Int Bearing Demand Interest Bearing Checking Money Market Savings Time Brokered Time 29 29
Slide 30: Deposit Summary as of December 31, 2023
Deposit Summary as of December 31, 2023 Deposits by Channel Commercial Deposits by NAICS Code (in millions) (in millions) Finance & Insurance RE, Rental & Leasing $296 9.5% Manufacturing 4.7% $780 2.2% 20.4% Other Services 12.4% Skilled/Memory Care Construction $210 Retail Deposits 12.3% Admin, Supp
Slide 31: Uninsured Deposits
Uninsured Deposits Uninsured Deposits (in millions) December 31, 2023 September 30, 2023 Call Report Uninsured Estimate $ 1,642 $ 1,737 Call Report Estimated Uninsured Deposits to Total Deposits 26 % 27 % Less: Affiliate Deposits (MSB owned funds) (38) (44) Less: Additional structured FDIC coverage
Slide 32: Investment Portfolio
Investment Portfolio Fair Value of Investments by Type As of December 31, 2023 0.1% 7.9% 10.9% • All Investments are classified as 3.0% Available for Sale 6.3% Treasuries • Average T/E Yield is 4.16% for 4Q23 US GSE & US Agency MBS - agency • Average Duration is 4.97 years 9.1% $916 million MBS - no
Slide 33: Liquidity Overview
Liquidity Overview Liquidity Sources (in millions) December 31, 2023 September 30, 2023 Cash and Cash Equivalents $ 135.1 $ 132.1 Unpledged Securities 346.8 258.1 FHLB Committed Liquidity 936.0 883.9 FRB Discount Window Availability 699.9 759.8 Total Estimated Liquidity $ 2,117.8 $ 2,033.9 Condition
Slide 34: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income down slightly from prior quarter due to lower average earning assets • Net interest margin increased 1bp to 3.21% as the increase in the average yield on earning assets exceeded the increase in the cost of deposits • Average rate on new and renewed lo
Slide 35: Loans & Securities - Repricing and Maturity
Loans & Securities - Repricing and Maturity Total Loans and Leases (net of unearned income)(1) (in millions) As of December 31, 2023 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 Commercial
Slide 36: Wealth Management
Wealth Management • Assets under administration increased mainly due to $106 million of new accounts won and positive market performance • Wealth Management fees increased from prior quarter due to increases in estate and trust fees from new business development efforts • New technology planned to l
Slide 37: Noninterest Income
Noninterest Income • Noninterest income increased from prior quarter • 4Q23 noninterest income included one-time servicing revenues of $3.8 million and $1.1 million gain from the sale of Visa B stock • One-time increases were offset by $2.9 million of losses on the sale of investment securities as p
Slide 38: Noninterest Expense and Operating Efficiency
Noninterest Expense and Operating Efficiency Noninterest Expense and Efficiency Ratio (1) (Noninterest expense in millions) • Efficiency Ratio (1) was 55.2% in 4Q 2023 vs. 55.8% in 3Q 2023 $49.9 • Noninterest expense increased from $3.3 prior quarter primarily due to increased incentive and performa
Slide 39: Capital Ratios and Strategy
Capital Ratios and Strategy Capital Ratios Capital Strategy (as of December 31, 2023) • Capital initiatives increased CET1 to 8.40% 13.20% from 7.77% at 12/31/22 with limited 12.40% buybacks below TBV 11.44% 11.44% 10.91% 10.18% • Internal capital generated from strong 9.71% profitability and slower
Slide 40: Outlook
Outlook 2009 40 40
Slide 41: Outlook
Outlook • Well positioned to start 2024 with increased levels of capital, liquidity, and reserves • Prudent risk management will remain top priority while economic uncertainty remains with business development efforts focused on adding new commercial and retail deposit relationships throughout our m
Slide 42: Long-Term Formula for Enhancing Shareholder Value
Long-Term Formula for Enhancing Shareholder Value Disciplined Balance Sheet Growth + Improving Operating Efficiencies + Stable Sources of Recurring Income + Accretive M&A Transactions = Earnings Growth, Improving Returns and Enhanced Franchise Value 42 42
Slide 43: Appendix
APPENDIX Midland [=] States Bancorp, Inc.
Slide 44: 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 45: 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 2023 Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 4
Slide 46: 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) 2017 2018 2019 2020 2021 2022 2023 Income before income taxes - GAAP $ 26,471 $ 50,805 $ 72,471 $ 32,014 $ 99,112
Slide 47: 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 48: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings (Quarterly)
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For The Quarter Ended December 31, September 30, June 30, March 31, December 31, (dollars in thousands, except per share data) 2023 2023 2023 2023 2022 Income before income taxes
Slide 49: Reconciliations of Non-GAAP Financial Measures: Efficiency Ratio (Quarterly)
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) Efficiency Ratio Reconciliation For the Quarter Ended December 31, September 30, June 30, March 31, December 31, 2023 2023 2023 2023 2022 (dollars in thousands) Noninterest expense - GAAP $ 44,488 $ 4
Slide 50: 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 December 31, September 30, June 30, March 31, December 31, (dollars in thousands, except per share data) 2023 20
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