Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q4 2023 Earnings Presentation
32 slides from Midland States Bancorp's earnings presentation, 2024
Slide 1: Fourth Quarter 2023 Earnings Presentation
Midland States Bancorp, Inc. NASDAQ: MSBI Fourth Quarter 2023 Earnings Presentation 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: 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 5: 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 6: ...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 $1.07 $21.42 $0.97 $0.88 $18.80 $0.80 $18.34 $17.22 $17.09 $23.35 $21.66 $20.94
Slide 7: ...And Increased Profitability
...And Increased Profitability Adjusted Diluted EPS(1) Adjusted ROATCE(1) CAGR: 10.4% $3.79 $3.65 18.33% 18.59% $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 77 Notes: (1) Represents a non-GAAP financial measure.
Slide 8: 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 9: 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, continued runoff of GreenSky portfolio of $70.4 million, and lower balances on commercial FHA warehouse lines • Decrease i
Slide 10: 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 11: 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 12: 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 13: Investment Portfolio
Investment Portfolio Fair Value of Investments by Type As of December 31, 2023 0.1% 7.9% 10.9% 3.0% • All Investments are classified as 6.3% Treasuries Available for Sale US GSE & US Agency MBS - agency • Average T/E Yield is 4.16% for 4Q23 9.1% $916 million MBS - non agency State & Muni • Average D
Slide 14: 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 15: 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 16: 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 17: 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 18: 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 19: 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 20: 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 $7.0 million,
Slide 21: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) $448 $715 $670 ▪ Changes to ▪ New Loans ▪ Change to macro- specific reserves ▪ Changes in Credit economic variables $68,502 quality including risk and forecasts rating ▪ Changes to other $66,669 ▪ Changes in portfolio economic qualitative mix f
Slide 22: ACL by Portfolio
ACL by Portfolio ($ 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 23: 2024 Outlook and Priorities
2024 Outlook and Priorities • 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 relationsh
Slide 24: Appendix
APPENDIX Midland [=] States Bancorp, Inc.
Slide 25: 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 $4.82 billion as of 12/31/2
Slide 26: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type ($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 27: 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 28: 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 29: Adjusted Earnings Reconciliation (Annual)
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 30: Adjusted Earnings Reconciliation (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(1) 2023 2023 2022 Income before income tax
Slide 31: Efficiency Ratio Reconciliation
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(1) 2023 2023 2022 (dollars in thousands) Noninterest expense - GAAP $ 44,488
Slide 32: Tangible Common Equity to Tangible Assets Ratio and TBV 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 December 31, September 30, June 30, March 31, December 31, (dollars in thousands, except per share data) 2023 20
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