Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Investor Presentation (November 2021)
45 slides from Midland States Bancorp's investor presentation, November 2021
Slide 1: Midland States Bancorp, Inc. Investor Presentation
Midland States Bancorp, Inc. NASDAQ: MSBI Investor Presentation November 2021 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 $7.09 billion asset community bank established in 1881 and headquartered in Effingham, Illinois 2nd largest Illinois-based community bank1 $4.1 billion Wealth Management business Commercial bank focused on in-market relationships with national diversification in equipment fi
Slide 4: Financial Services & Banking Center Footprint
Financial Services & Banking Center Footprint 4
Slide 5: 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 for scalability Organization‐wide focu
Slide 6: 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 service and accountability to our clients and of identifying and executing transactions that colleagues; seek to develop bankers
Slide 7: 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 Douglas J. Tucker | SVP, Corporate Counsel
Slide 8: Successful Acquisition History
Successful Acquisition History Midland States has completed 15 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 9: Successful Execution of Strategic Plan
Successful Execution of Strategic Plan… Total Assets (at period‐end in Billions) CAGR: 17% $7.1 $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 3Q21 Selected Acquisitions Selected Acquisitions: Total Assets at Time of Acquisitio
Slide 10: Leads to Creation of Shareholder Value
…Leads to Creation of Shareholder Value 21 Consecutive Years of Dividend Increases Tangible Book Value Per Share(1) Dividends Declared Per Share (at period‐end) $21.17 $1.12 CAGR: 6.5% CAGR: 9.6% $1.07 $19.31 $0.97 $18.64 $0.88 $17.16 $17.31 $0.80 $17.00 $0.72 $0.65 $15.20 $0.59 $13.82 2014 2015 201
Slide 11: Strategic Initiatives Strengthening Franchise
Strategic Initiatives Strengthening Franchise Significant Corporate Actions Since Coming Public in 2016… Action Strategic Rationale Financial Impact 2016 3Q21 Three whole bank acquisitions • Low‐cost deposits Total Assets $3.2B $7.1B Scale Four Wealth Management acquisitions • Recurring revenue AUA
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) $5,103 $108.9 $101.3 $4,401 $83.7 $4,138 $61.9 $50.1 $3,227 $2,320 2016 2017 2018 2019 2020 2016 2017 2018
Slide 13: 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 Sale of Commercia
Slide 14: 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 Near real time payments (Q1 2021) Consumer online loan Loan
Slide 15: Recent Financial Trends
15 Recent Financial Trends Midland [=] States Bancorp, Inc.
Slide 16: Overview of 3Q21
Overview of 3Q21 • Net income of $19.5 million, or $0.86 diluted EPS 3Q21 Earnings • 3Q21 results included a $3.0 million commercial MSR impairment • Adjusted pre-tax, pre-provision earnings(1) of $28.4 million, up from $27.0 million in prior quarter • Total loans increased 8.2% annualized, excludin
Slide 17: Loan Portfolio
Loan Portfolio • Total loans increased $79.7 million from prior quarter to $4.92 billion • Increased commercial and CRE loan production, higher end of period balances on commercial FHA warehouse credit lines, and growth in consumer portfolio offset lower PPP loans and continued runoff in residential
Slide 18: Total Deposits
Total Deposits • Total deposits increased $405.0 million, or 7.8% from prior quarter, to $5.60 billion • Increase in deposits largely attributable to increase in commercial FHA servicing deposits and other commercial deposits • $184 million of CDs maturing in 4Q21 with a weighted average rate of 1.6
Slide 19: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income increased 2.6% from the prior quarter due primarily to an increase in net interest margin • Net interest margin, excluding accretion income, increased 7 bps from prior quarter due primarily to a reduction in the cost of funds • Excess liquidity expect
Slide 20: Wealth Management
Wealth Management • During 3Q21, assets under administration decreased $19.4 million, primarily due to market performance • Wealth Management revenue increased 9.9% from prior quarter, primarily due to full quarter contribution of ATG Trust Company Assets Under Administration Wealth Management Reven
Slide 21: Noninterest Income
Noninterest Income • Noninterest income decreased 13.1% from prior quarter • Impairment on commercial MSRs impacted noninterest income by $3.0 million and $1.1 million in 3Q21 and 2Q21, respectively • Excluding the impact of the impairment of commercial MSRs, noninterest income decreased 2.1% primar
Slide 22: Noninterest Expense and Operating Efficiency
Noninterest Expense and Operating Efficiency Noninterest Expense and Efficiency Ratio (1) • Efficiency Ratio (1) was 58.8% in 3Q21 vs. 60.2% in 2Q21 (Noninterest expense in millions) • Adjustments to non-interest expense: $60.0 64.0% ($ in millions) 3Q21 2Q21 $55.0 $53.9 63.0% Integration and ($0.1)
Slide 23: COVID-19 Response and Impact
COVID‐19 Response and Impact 23
Slide 24: Paycheck Protection Program Overview
Paycheck Protection Program Overview Paycheck Protection Program Paycheck Protection Program (as of 9/30/21) Loan Forgiveness Loans Outstanding $82.4 million As of 6/30/21 As of 9/30/21 Round 1 $12.4 million Loans Submitted to SBA $263.8 million $313.9 million Round 2 $70.0 million Loans Forgiven by
Slide 25: 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 Health Care as of 9/30/21 2.8% 2.6% 2.8% General Freight Trucking RE / Rental & Leasing 4.2% 20.5% Trans. / Ground Passenger 4.7% Ag., Forestry,
Slide 26: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type Collateral type as a percentage of the All Others Commercial Real Estate and Construction Industrial / Warehouse 8.5% Portfolio as of 9/30/21 8.9% Office 6.3% Residential 1‐4 Family 4.3% Hotel/Motel 9.4% Farmland 3.9% C‐Store / Gas Station 3.9% Mix
Slide 27: Loan Deferral Overview
Loan Deferral Overview Total Loan Deferrals Deferral Type (as of September 30, 2021) As of As of As of Mar. 31, 2021 Jun. 30, 2021 Sep. 30, 2021 Full Payment Deferral $3.2 million Total Loans Deferred $219.1 million $107.3 million $34.3 million Deferred Loans Making $31.1 million % of Total Loans 4.
Slide 28: Midland Equipment Finance Portfolio Overview
Midland Equipment Finance Portfolio Overview Portfolio Characteristics Total Deferred (as of 9/30/21) Loans and Leases Nationwide portfolio providing financing solutions As of As of As of to equipment vendors and end‐users 3/31/21 6/30/21 9/30/21 Total Outstanding $899.1 million Loans and Leases (18
Slide 29: Hotel/Motel Portfolio Overview
Hotel/Motel Portfolio Overview Portfolio Characteristics (CRE & C&I) (as of 9/30/21) Total Outstanding $177.1 million (3.6% of total loans) Number of Loans 69 Average Loan Size $2.6 million Largest Loan $11.2 million Average LTV 56% Total Deferred Loans as of 6/30/21 $39.4 million (21.8% of portfoli
Slide 30: GreenSky Consumer Loan Portfolio Overview
GreenSky Consumer Loan Portfolio Overview Portfolio Characteristics Prime Credit (as of 9/30/21) Average FICO score of 772 $834.3 million Total Outstanding (17.0% of total loans) No losses to MSBI in 10 year history of portfolio Number of Loans 389,705 Average Loan Size $2,141 Credit Enhancement
Slide 31: Asset Quality
Asset Quality • Nonperforming loans decreased $6.7 million due to upgrades, disposition of certain loans, and minimal new inflow into nonperforming category • Net charge-offs of $3.0 million, or 0.25% of average loans • $1.5 million specific reserve charged-off on one of the three hotel loans put in
Slide 32: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) Specific Portfolio Economic Reserves Changes Factors Changes to specific reserves New loans Changes to macro- economic variables Changes in credit and forecasts quality including risk downgrades Changes to other and deferrals economic
Slide 33: ACL by Portfolio
ACL by Portfolio ($ in thousands) Total Loans at % of Total Loans at % of Portfolio ACL ACL 9/30/21 Total Loans 6/30/21 Total Loans Commercial $ 799,189 $ 6,360 0.80% $ 719,642 $ 5,825 0.81% Warehouse Lines 180,248 ‐ 0.00% 129,607 ‐ 0.00% Commercial Other 668,146 8,231 1.23% 704,438 9,024 1.28% Equi
Slide 34: Capital and Liquidity Overview
Capital and Liquidity Overview Capital Ratios Liquidity Sources (as of 9/30/21) (as of 9/30/21) 15.00% ($ in millions) 13.10% Cash and Cash Equivalents $ 662.6 Unpledged Securities 291.6 12.03% FHLB Committed Liquidity 730.0 11.17% 11.17% FRB Discount Window Availability 53.5 9.73% Primary Liquidity
Slide 35: Outlook
35 Outlook Midland [=] States Bancorp, Inc.
Slide 36: Outlook
Outlook • GreenSky relationship to gradually wind down over next two years Loan originations expected to continue through mid-2022 and keep balances relatively stable After loan originations end, GreenSky portfolio expected to decline by $400-$450 million over the following year Runoff expecte
Slide 37: 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 37
Slide 38: Appendix
38 APPENDIX Midland [=] States Bancorp, Inc.
Slide 39: ESG: A Framework for Sustainability
Financial Education ESG: A Framework for Sustainability • Since 2015 we have held more than 240 financial literacy seminars in LMI/minority neighborhoods in our footprint. Environmental Facilities CRA, Community Development and Financial Inclusion • Our Corporate HQ, built in 2011, is LEED (Silver)
Slide 40: Appendix: Reconciliation of TBV Per Share
Appendix: Reconciliation of TBV Per Share As of Sep 30, As of December 31, (do llars in tho usands, except per share data) 2021 2020 2019 2018 2017 2016 2015 2014 Shareholders' Equity to Tangible Common Equity: Total shareholders' equity—GAAP $ 657,844 $ 621,391 $ 661,911 $ 608,525 $ 449,545 $ 321,7
Slide 41: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings
MIDLAND S TATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEAS URES (unaudited) Adjusted Earnings Reconciliation For the Years Ended December 31, (dollars in thousands) 2020 2019 2018 2017 2016 Income before income taxes - GAAP $ 32,014 72,471 50,805 26,471 50,431 Adjustments to noninteres
Slide 42: Reconciliations of Non-GAAP Financial Measures: Efficiency Ratio
MIDLAND S TATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEAS URES (unaudited) Efficiency Ratio Reconcilation For the Years Ended December 31, (dollars in thousands) 2020 2019 2018 2017 2016 Noninterest expense $ 184,010 $ 175,641 $ 191,643 $ 152,997 $ 121,289 Adjustments to noninterest e
Slide 43: Adjusted Earnings Reconciliation (Quarterly)
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) 2021 2021 2021 2020 2020 Income before income taxes
Slide 44: Efficiency Ratio Reconciliation (Quarterly)
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) 2021 2021 2021 2020 2020 Noninterest expense - GAAP $ 41,292 $
Slide 45: Tangible Common Equity Ratio and Tangible Book Value Per Share
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) 2021 2
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