Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q3 2022 Earnings Presentation
21 slides from Midland States Bancorp's earnings presentation, Oct 20, 2022
Slide 1: Midland States Bancorp, Inc. Third Quarter 2022 Earnings Call
1 Midland States Bancorp, Inc. NASDAQ: MSBI Third Quarter 2022 Earnings Call
Slide 2: Forward-Looking Statements
2 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 - te rm goals may be based upon beliefs, expecta
Slide 3: Overview of 3Q22
3 Overview of 3Q22 3 Strengthened Capital Ratios Higher Earnings and Improved Returns • $115 million preferred stock offering completed in August • Combination of preferred stock offering and strong financial performance positively impacted capital ratios • Total capital ratio and Tier 1 leverage ra
Slide 4: Loan Portfolio
4 Loan Portfolio Total Loans and Average Loan Yield • Total loans increased $402.9 million from prior quarter to $6.20 billion • Growth in all portfolios with the exception of SBA PPP loans • Largest increases came in commercial and CRE loans, which increased at 36% annualized and 22% annualized, re
Slide 5: Total Deposits
5 Total Deposits Total Deposits and Cost of Deposits • Total deposits increased $210.8 million from prior quarter to $6.40 billion • Increase driven by higher balances of noninterest - bearing and lower - cost interest - bearing deposits • Continued improvement in deposit mix with noninterest - bear
Slide 6: Net Interest Income and Margin
6 • Net interest income increased 4.4% from the prior quarter due primarily to higher average loan balances • Net interest margin decreased 2 bps from prior quarter as increase in cost of deposits exceeded the increase in the average yield on earning assets • Planned redemption of $40 million of sub
Slide 7: Wealth Management
7 • During 3Q22, assets under administration decreased $152.7 million, primarily due to market performance • Wealth Management revenue relatively consistent with prior quarter Wealth Management Wealth Management Revenue Assets Under Administration (in millions) (in millions ) $4,058 $4,217 $4,044 $3
Slide 8: Noninterest Income
8 Noninterest Income • Noninterest income increased 8.3% from prior quarter, primarily due to impairment on commercial MSRs that negatively impacted noninterest income in 2Q22 • Most fee generating areas were relatively consistent with prior quarter • Commercial MSR portfolio in the process of being
Slide 9: Noninterest Expense and Operating Efficiency
9 Noninterest Expense and Operating Efficiency • Efficiency Ratio (1) was 54.3% in 3Q22 vs. 53.1% in 2Q22 • Adjustments to non - interest expense: • Excluding these adjustments, noninterest expense was up from the prior quarter primarily due to: » Increase in compensation including incentive compens
Slide 10: Asset Quality
10 Asset Quality NCO / Average Loans • Nonperforming loans decreased $10.0 million due to a combination of payoffs, note sale, and a charge - off on a previously reserved loan relationship • Generally positive trends in the loan portfolio with continued upgrades of watch list loans • Delinquencies i
Slide 11: Changes in Allowance for Credit Losses
11 Changes in Allowance for Credit Losses ACL 6/30/22 ACL 9/30/22 ($ in thousands) Specific Reserves Portfolio Changes Economic Factors ▪ Changes to specific reserves ▪ New loans ▪ Changes in credit quality including risk ratings ▪ Changes in portfolio mix ▪ Aging of existing portfolio ▪ Other charg
Slide 12: ACL by Portfolio
12 ACL by Portfolio Portfolio Loans ACL % of Total Loans Loans ACL % of Total Loans Commercial $ 852,930 $ 5,745 0.67% $ 747,782 $ 5,412 0.72% Warehouse Lines 51,309 - 0.00% 23,872 - 0.00% Commercial Other 683,353 8,620 1.26% 643,477 7,336 1.14% Equipment Finance Loans 577,323 8,307 1.44% 546,267 7,
Slide 13: Outlook
13 Outlook • Strengthened capital ratios will support continued balance sheet growth • Loan pipeline remains strong, but loan growth expected to moderate as higher rates and uncertain economic conditions have a greater impact on loan demand • Continued loan growth, higher net interest margin, and im
Slide 14: Appendix
14 APPENDIX
Slide 15: Commercial Loans and Leases by Industry
15 Commercial Loans and Leases by Industry RE / Rental & Leasing $1,353 28.9% All Others $562 12.0% Skilled Nursing $478 10.2% Construction - General $310 6.6% Finance and Insurance $306 6.5% Manufacturing $262 5.6% Accommodation & Food Svcs $211 4.5% Trans. / Ground Passenger $208 4.4% General Frei
Slide 16: Commercial Real Estate Portfolio by Collateral Type
16 Commercial Real Estate Portfolio by Collateral Type Skilled Nursing $508 18.9% Retail $436 16.2% Multi - Family $364 13.5% Industrial / Warehouse $219 8.1% Assisted Living $185 6.9% All Others $176 6.5% Hotel/Motel $160 5.9% Office $157 5.8% Residential 1 - 4 Family $84 3.1% Medical Building $79
Slide 17: Capital Ratios and Strategy
17 Capital Ratios and Strategy Capital Ratios (as of 9/30/22) 5.82% 7.56% 9.40% 10.05% 12.79% 10.43% 9.75% 10.43% 11.19% 0.00% 5.00% 10.00% 15.00% TCE/TA Common Eq. Tier 1 Tier 1 Leverage Tier 1 RBC Total RBC Consolidated Bank Level Capital Strategy » Strengthened capital ratios with issuance of $11
Slide 18: Liquidity Overview
18 Liquidity Overview Liquidity Sources (as of 9/30/22) ($ in millions) Cash and Cash Equivalents $ 313.2 Unpledged Securities 153.5 FHLB Committed Liquidity 1,148.9 FRB Discount Window Availability 13.5 Total Estimated Liquidity $ 1,629.1 Conditional Funding Based on Market Conditions Additional Cr
Slide 19: (dollars in thousands, except per share data) Income before income taxes - GAAP $
19 (dollars in thousands, except per share data) Income before income taxes - GAAP $ 29,380 $ 29,167 $ 27,389 $ 30,600 $ 25,431 Adjustments to noninterest income: Loss (gain) on sales of investment securities, net 129 101 — — (160) (Gain) on termination of hedged interest rate swap — — — (1,845) — T
Slide 20: (dollars in thousands) Noninterest expense - GAAP $ 43,496 $ 41,339 $ 40,884 $
20 (dollars in thousands) Noninterest expense - GAAP $ 43,496 $ 41,339 $ 40,884 $ 45,757 $ 41,292 Loss on mortgage servicing rights held for sale — — — — (79) FHLB advances prepayment fees — — — (4,859) — Integration and acquisition expenses 68 (324) (91) (171) (176) Adjusted noninterest expense $ 4
Slide 21: Shareholders' Equity to Tangible Common Equity
21 (dollars in thousands, except per share data) Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 739,279 $ 636,188 $ 644,986 $ 663,837 $ 657,844 Adjustments: Preferred Stock (110,548) — — — — Goodwill (161,904) (161,904) (161,904) (161,904) (161,904) Other intangible
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