Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q2 2021 Earnings Presentation
25 slides from Midland States Bancorp's earnings presentation, Jul 22, 2021
Slide 1: Midland States Bancorp, Inc. Second Quarter 2021 Earnings Call
1 Midland States Bancorp, Inc. NASDAQ: MSBI Second Quarter 2021 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 2Q21
3 Overview of 2Q21 3 Increasing Loan Production 2Q21 Earnings Strong Increase in Non - Interest Income • Increased production in equipment finance, CRE and construction offset by declines in commercial FHA warehouse lines, PPP loans, and residential real estate loans • Growth in consumer portfolio h
Slide 4: Paycheck Protection Program Overview
4 Paycheck Protection Program Overview Paycheck Protection Program (as of 6/30/21) Loans Outstanding $146.7 million Round 1 $50.1 million Round 2 $96.6 million Total Fees Earned $15.2 million Fees Recognized in 2Q21 $2.0 million Remaining Fees to be Recognized $5.6 million Impact on 2Q21 Financials
Slide 5: Loan Deferral Overview
5 Loan Deferral Overview Total Loan Deferrals As of Dec. 31, 2020 As of Mar. 31, 2021 As of Jun. 30, 2021 Total Loans Deferred $209.1 million $219.1 million $107.3 million % of Total Loans 4.1% 4.5% 2.2% Deferrals by Industry (as of June 30, 2021) Hotels/Motels $39.4 37% Transit & Ground Passenger $
Slide 6: Loan Portfolio
6 2Q 2021 1Q 2021 2Q 2020 Commercial loans and leases $ 1,831 $ 1,977 $ 1,856 Commercial real estate 1,540 1,494 1,495 Construction and land development 213 192 208 Residential real estate 367 399 509 Consumer 885 849 771 Total Loans $4,836 $4,911 $4,839 Total Loans ex. Commercial FHA Lines and PPP
Slide 7: Midland Equipment Finance Portfolio Overview
7 Midland Equipment Finance Portfolio Overview ($ in millions) Portfolio Characteristics (as of 6/30/21) Nationwide portfolio providing financing solutions to equipment vendors and end - users Total Outstanding Loans and Leases $871.5 million (18.0% of total loans) Number of Loans and Leases 7,121 A
Slide 8: Hotel/Motel Portfolio Overview
8 Hotel/Motel Portfolio Overview ($ in millions) Portfolio Characteristics (CRE & C&I) (as of 6/30/21) Total Outstanding $180.4 million (3.7% of total loans) Number of Loans 64 Average Loan Size $2.8 million Largest Loan $11.3 million Average LTV 52% Total Deferred Loans as of 3/31/21 $117.4 million
Slide 9: GreenSky Consumer Loan Portfolio Overview
9 GreenSky Consumer Loan Portfolio Overview Delinquency Rate (greater than 60 days) Portfolio Characteristics (as of 6/30/21) Total Outstanding $796.5 million (16.5% of total loans) Number of Loans 371,110 Average Loan Size $2,146 Average FICO Score 772 Total Deferred Loans (as of March 31, 2021) $3
Slide 10: Total Deposits and Cost of Deposits
10 2Q 2021 1Q 2021 2Q 2020 Noninterest - bearing demand $ 1,366 $ 1,522 $ 1,273 Interest - bearing: Checking 1,619 1,601 1,485 Money market 788 819 878 Savings 669 653 595 Time 722 719 690 Brokered time 32 25 23 Total Deposits $5,196 $5,341 $4,943 Total Deposits Total Deposits and Cost of Deposits •
Slide 11: Net Interest Income/Margin
11 • Net interest income decreased 3.4% from the prior quarter due to lower prepayment fees, an unfavorable shift in the mix of earning assets, and the recovery of interest on a previously charged - off loan in 1Q21 • Net interest margin, excluding accretion income, declined 17 bps from prior quarte
Slide 12: Wealth Management
12 • During 2Q21, assets under administration increased $517.2 million, primarily due to acquisition of ATG Trust Company in June • Wealth Management revenue increased 10.1% from prior quarter, primarily due to one month contribution of ATG Trust Company Wealth Management Wealth Management Revenue A
Slide 13: Noninterest Income
13 Noninterest Income • Noninterest income increased 17.6% from prior quarter • Impairment on commercial MSRs impacted noninterest income by $1.1 million and $1.3 million in 2Q21 and 1Q21, respectively • Excluding the impact of the impairment of commercial MSRs, noninterest income increased primaril
Slide 14: Noninterest Expense and Operating Efficiency
14 Noninterest Expense and Operating Efficiency • Efficiency Ratio (1) was 60.2% in 2Q21 vs. 56.9% in 1Q21 • Adjustments to non - interest expense: • Excluding these adjustments, noninterest expense increased primarily due to: » Higher salaries and benefits expense resulting from increased incentive
Slide 15: Asset Quality
15 Asset Quality NCO / Average Loans • Nonperforming loans increased $8.5 million due primarily to addition of three loans in the hotel/motel portfolio • Sale of properties for slight gain resulted in a $7.5 million decline in OREO from 1Q21 • Net charge - offs of $4.0 million, or 0.33% of average l
Slide 16: Changes in Allowance for Credit Losses
16 Changes in Allowance for Credit Losses ACL 3/31/21 ACL 6/30/21 ($ in thousands) Specific Reserves Portfolio Changes Economic Factors ▪ Changes to specific reserves ▪ New loans ▪ Changes in credit quality including risk downgrades and deferrals ▪ Changes in allocations to COVID - 19 impacted segme
Slide 17: ACL by Portfolio
17 ACL by Portfolio Portfolio Total Loans at 6/30/21 ACL % of Total Loans Total Loans at 3/31/21 ACL % of Total Loans Commercial $ 719,642 $ 5,825 0.81% $ 808,262 $ 8,214 1.02% Warehouse Lines 129,607 - 0.00% 205,115 - 0.00% Commercial Other 704,438 9,024 1.28% 766,632 9,125 1.19% Equipment Finance
Slide 18: Outlook
18 Outlook • Continued improvement in economic conditions should lead to reductions in problem loans and increased loan demand • Loan pipeline in Community Banking group approximately 14% higher than end of 1Q21, which should lead to higher level of loan growth in second half of 2021, favorable shif
Slide 19: Appendix
19 APPENDIX
Slide 20: Commercial Loans and Leases by Industry
20 Commercial Loans and Leases by Industry RE / Rental & Leasing 20.5% All Others 11.8% Assisted Living 9.5% Finance and Insurance 7.6% Manufacturing 7.4% Construction - General 7.4% Accommodation & Food Svcs 7.1% Retail Trade 6.5% Ag., Forestry, & Fishing 4.9% General Freight Trucking 4.4% Trans. /
Slide 21: Commercial Real Estate Portfolio by Collateral Type
21 Commercial Real Estate Portfolio by Collateral Type Assisted Living 18.0% Retail 15.4% Multi - Family 9.7% Hotel/Motel 9.6% All Others 9.0% Industrial / Warehouse 8.7% Office 6.0% Residential 1 - 4 Family 4.9% Farmland 4.0% C - Store / Gas Station 3.9% Mixed Use / Other 2.7% Medical Building 2.4%
Slide 22: Capital and Liquidity Overview
22 Capital and Liquidity Overview Capital Ratios (as of 6/30/21) Liquidity Sources (as of 6/30/21) 7.12% 8.44% 8.00% 9.64% 13.11% 11.06% 9.19% 11.06% 11.98% 0.00% 5.00% 10.00% 15.00% TCE/TA Tier 1 Common Tier 1 Leverage Tier 1 RBC Total RBC Consolidated Bank Level ($ in millions) Cash and Cash Equiv
Slide 23: Adjusted Earnings Reconciliation
23 (dollars in thousands, except per share data) Income before income taxes - GAAP $ 19,041 $ 24,040 $ 10,746 $ 3,270 $ 15,993 Adjustments to noninterest income: Gain on sales of investment securities, net 377 - - 1,721 - Other income (27) 75 3 (17) 11 Total adjustments to noninterest income 350 75
Slide 24: Adjusted Noninterest Expense and Income Reconciliation
24 (dollars in thousands) Noninterest expense - GAAP $ 48,941 $ 39,079 $ 47,048 $ 53,901 $ 41,395 Loss on mortgage servicing rights held for sale (143) - (617) (188) (391) Impairment related to facilities optimization - - 10 (12,651) (60) FHLB advances prepayment fees (3,669) (8) (4,872) - - Integra
Slide 25: Shareholders' Equity to Tangible Common Equity
25 (dollars in thousands, except per share data) Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 648,186 $ 635,467 $ 621,391 $ 621,880 $ 633,589 Adjustments: Goodwill (161,904) (161,904) (161,904) (161,904) (172,796) Other intangible assets, net (27,900) (26,867) (28
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