Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Piper Jaffray Midwest Bank Symposium (June 2019)
28 slides from Midland States Bancorp's conference presentation, June 2019
Slide 1: Midland States Bancorp, Inc. Investor Presentation
Midland States Bancorp, Inc. NASDAQ: MSBI Investor Presentation June 2019 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 express management’s current expectations, forecasts of future events or long-term goals, including with respect to pending acquisitions,
Slide 3: Company Snapshot
Company Snapshot $5.64 billion asset community bank established in 1881 and headquartered in Effingham, Illinois (3rd largest Illinois-based community bank1) $3.10 billion Wealth Management business Strong fee generators consistently account for approximately 30% of total revenue 95+ offices
Slide 4: Financial Services & Banking Center Footprint
Financial Services & Banking Center Footprint 4
Slide 5: Investment Summary
Investment Summary Experienced and deep management team Consistent track record of driving compelling shareholder returns through disciplined strategic expansion and earnings growth Solid asset quality with low charge-off history driven by a diversified loan portfolio, conservative credit cult
Slide 6: Business and Corporate Strategy
Business and Corporate Strategy Five Core Strategic Initiatives Customer-Centric Drive our organic growth by focusing on customer service and accountability to our Culture clients and colleagues; seek to develop bankers who create dynamic relationships; pursue continual investment in people; maintai
Slide 7: Management Team
Management Team Highly experienced senior management in place: John M. Schultz: Chairman of the Board Leon J. Holschbach: Vice Chairman of the Board Held the position since 2006 Former CEO of Midland States Bancorp Chief Executive Officer of Agracel, Inc. 35+ years in community banking; 25+
Slide 8: Successful Acquisition History
Successful Acquisition History Midland States has completed 13 transactions since 2008, including FDIC-assisted, branch, whole bank, asset purchase, business line, and a New York trust asset acquisition Demonstrated history of earnings expansion Deliberate diversification of geographies and re
Slide 9: Successful Execution of Strategic Plan…
Successful Execution of Strategic Plan… Total Assets (at period-end in Billions) CAGR: 19% $5.6 $5.6 $4.4 $3.2 $2.9 $2.7 $1.6 $1.7 $1.5 $1.6 $1.1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1Q 2019 Selected Acquisitions Selected Acquisitions: Total Assets at Time of Acquisition (in millions) 2
Slide 10: …Leads to Creation of Shareholder Value
…Leads to Creation of Shareholder Value 10%+ annual dividend growth over the past 15 years Tangible Book Value Per Share(1) Dividends Declared Per Share (at period-end) $17.68 $0.97 $17.31 $17.16 $17.00 $0.88 $0.80 $15.91 $15.20 $0.72 $0.65 $14.34 $0.59 $13.68 $13.82 $0.53 $0.48 $12.52 $0.43 $0.39 $
Slide 11: Overview of HomeStar Bank Acquisition
Overview of HomeStar Bank Acquisition Key Highlights(1) Combined Branch Map Expected to close in Q3 2019 Kenosha Kenosha Dubuque Dubuque Complements Midland’s franchise in Kankakee Waukegan Waukegan Waukegan Waukegan Provides #1 deposit market share in Kankakee, IL MSA Rockford Rockford Arling
Slide 12: Market Opportunities & Acquisition Strategy
Market Opportunities & Acquisition Strategy Number of Banks & Thrifts MSBI believes there will be numerous small With less than $1.0 Billion in Assets (1) to midsized banking organizations available for acquisition within Illinois and contiguous states Wisconsin There are more than 1,200 institu
Slide 13: Performance Metrics
Performance Metrics Adjusted Diluted Earnings Per Share (1) Adjusted Return on Avg. Tangible Common Equity (1) $0.67 16.0% 16.5% $0.59 $0.64 15.3% $0.58 13.9% $0.48 11.9% 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 Net Interest Margin (2) Noninterest Income / Total Revenue (3) 30.1% 28.8% 29.9
Slide 14: Higher Average Loan Yields Producing Stable NIM
Higher Average Loan Yields Producing Stable NIM Net Interest Margin, Average Loan Yields and Cost of Deposits 6% 4.92% 5.02% 5% 4.67% 4.72% 4.77% 4% 3.53% 3.51% 3.49% 3.54% 3.56% 3% 2% 1% 0.65% 0.74% 0.48% 0.48% 0.59% 0% 1Q18 2Q18 3Q18 4Q18 1Q19 Average Loan Yield (ex. accretion) Net interest Margin
Slide 15: Loan Portfolio Overview
Loan Portfolio Overview Broadly diversified loan portfolio by type of Loan Portfolio Mix customer and loan type Residential 64% of portfolio is fixed; 36% is floating Real Estate $569M Focus on growing Equipment Finance 14% portfolio that provides superior risk-adjusted Non-Owner yields Occupi
Slide 16: Revenue Mix
Revenue Mix Diverse revenue mix with nearly 30% non-interest income Strong sources of recurring income lead by Wealth Management business FY 2018 Revenue Mix FY 2018 Fee Income Mix Commercial Non-Interest All Other Fee FHA Income Residential Income 15.3% 18.7% Mortgage 29% Banking 8.0% Net Inter
Slide 17: Strong Credit Quality
Strong Credit Quality Managed by experienced personnel, MSBI maintains a disciplined approval process and conservative credit culture Credit losses have steadily declined since 2015 Nonperforming Assets / Total Assets (1) NCOs / Average Loans 1.48% 0.94% (2) 1.07% 0.80% 1.01% 0.91% 0.81% 0.70% 0
Slide 18: Strong Core Deposit Base
Strong Core Deposit Base (1) 93% core deposits (2) Deposit Mix Recent acquisitions have improved overall funding mix Interest-Bearing Noninterest- Checking Bearing 23% non-interest bearing deposits $969M 24% $941M 23% Retail deposits represent 51% of total Brokered Time Dep deposits MMDA $18
Slide 19: Wealth Management
Wealth Management Wealth Management group offers Trust and Estate services, Investment Management, Financial Planning and Employer Sponsored Retirement Plans Acquisition of Sterling Trust (Nov. 2016) added $400 million in Assets Under Administration Acquisition of CedarPoint Investment Advisor
Slide 20: Outlook
Outlook Midland [=]
Slide 21: Outlook
Outlook • Continued execution on protecting margin and controlling expenses resulting in solid financial performance • Low-single-digit organic loan growth expected in 2019 • Organic loan growth closely linked to core deposit growth • HomeStar acquisition will provide additional liquidity that can b
Slide 22: Formula for Enhancing Shareholder Value
Formula for Enhancing Shareholder Value Disciplined Balance Sheet Growth Improving Operating Efficiencies Growing Sources of Recurring Income Accretive M&A Transactions Earnings Growth, Improving Returns and Enhanced Franchise Value 22
Slide 23: Appendix
APPENDIX Midland [=] States Bancorp, Inc.
Slide 24: Appendix: Capital Position
Appendix: Capital Position 13.25% 12.00% 10.65% 9.16% 8.92% 7.74% 8.00% 4.00% 0.00% TCE/TA Tier 1 Common Tier 1 Leverage Tier 1 RBC Total RBC As Reported (3/31/19) 24
Slide 25: Appendix: Investments
Appendix: Investments Midland continues to adjust the portfolio Investment Portfolio to optimize the portfolio’s duration, mix, US Treasury, 4% Equity and to increase yield. Currently, the Corporate Securities, 0% Securities, 12% portfolio has an effective duration of GSE Debt Securities, 12% appr
Slide 26: Appendix: Reconciliation of Tangible Book Value Per Share
Appendix: Reconciliation of Tangible Book Value Per Share As of December 31, As of (dollars in thousands, except per share data) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 March 31, 2019 Shareholders' Equity to Tangible Common Equity—as converted: Total shareholders' equity—GAAP $ 76,627 $ 10
Slide 27: Appendix: Reconciliation of Net Interest Margin Excluding Accretion Income
Appendix: Reconciliation of Net Interest Margin Excluding Accretion Income For the Quarter Ended March 31, June 30, September 30, December 31, March 31, 2018 2018 2018 2018 2019 Reported yield on loans 4.85% 5.21% 4.88% 5.28% 5.22% Effect of accretion income on acquired loans (0.18%) (0.49%) (0.11%)
Slide 28: Appendix: Reconciliation of Adjusted Earnings/Profitability
Appendix: Reconciliation of Adjusted Earnings/Profitability For the Quarter Ended March 31, June 30, September 30, December 31, March 31, (dollars in thousands, except per share data) 2018 2018 2018 2018 2019 Adjusted Earnings Income before income taxes - GAAP $ 3,182 $ 15,827 $ 10,933 $ 20,863 $ 18
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