Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q1 2023 Earnings Presentation
32 slides from Midland States Bancorp's earnings presentation, Apr 27, 2023
Slide 1: First Quarter 2023 Earnings Presentation
1 Midland States Bancorp, Inc. NASDAQ: MSBI First Quarter 2023 Earnings Presentation
Slide 2: Forward-Looking Statements
22 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 an
Slide 3: Company Snapshot
3 Company Snapshot 3 • Illinois state-chartered community bank founded in 1881 • $7.9 billion in assets - largest Illinois-based community bank(1) • $3.5 billion Wealth Management business • Commercial bank focused on in-market relationships with national diversification in equipment finance • 53 br
Slide 4: Business and Corporate Strategy
4 Business and Corporate Strategy 4 Customer-Centric Culture Drive organic growth by focusing on customer service and accountability to our clients and colleagues; seek to develop bankers who create dynamic relationships; pursue continual investment in people; maintain a core set of institutional va
Slide 5: Successful Execution of Strategic Plan...
5 Successful Execution of Strategic Plan... 5 Total Assets (at period-end in billions) $1.1 $1.6 $1.5 $1.6 $1.7 $2.7 $2.9 $3.2 $4.4 $5.6 $6.1 $6.9 $7.4 $7.9 $7.9 Selected Acquisitions 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Q1 2023 CAG R si nce 201 6 IP O: 1 5% CAGR: 16
Slide 6: ...Leads to Creation of Shareholder Value
6 ...Leads to Creation of Shareholder Value 6 Tangible Book Value Per Share(1) 22 Consecutive Years of Dividend Increases $17.31 $17.00 $18.64 $19.31 $21.66 $20.94 $21.87 $17.22 $17.09 $18.34 $18.80 $21.42 $24.72 $25.39 Tangible Book Value Per Share TBV/Share ex. AOCI 2017 2018 2019 2020 2021 2022 Q
Slide 7: ...And Increased Profitability
7 ...And Increased Profitability 7 Adjusted Diluted EPS(1) CAGR: 14.9% Adjusted ROATCE(1) 11.32% 15.00% 14.44% 9.24% 18.33% 18.59% 17.11% 2017 2018 2019 2020 2021 2022 Q1 2023 Notes: (1) Represents a non-GAAP financial measure. See “Non-GAAP Reconciliation” in the appendix. $1.89 $2.39 $2.54 $1.70 $
Slide 8: Overview of 1Q23
8 Overview of 1Q23 Strong Financial Performance No Impact from Issues in Banking Industry Continued Loan Growth and Healthy Asset Quality Increase in TBV and Capital Ratios 8 • Net income available to common shareholders of $19.5 million, or $0.86 diluted EPS • Pre-tax, pre-provision earnings(1) of
Slide 9: Loan Portfolio
9 Loan Portfolio 9 • Total loans increased $47.8 million from prior quarter to $6.35 billion • Growth primarily driven by increases in commercial loans, partially offset by decline in consumer loans resulting from planned reduction of loans originated through GreenSky partnership • Equipment finance
Slide 10: Total Deposits
10 Total Deposits 10 • Total deposits increased $60 million from end of prior quarter, primarily related to interest rate promotions offered on money market and time deposit products • Noninterest-bearing deposits decline primarily attributable to commercial depositors moving excess liquidity into i
Slide 11: Deposit Type Trend
11 Deposit Type Trend 11 Deposits by Type Trend (in millions) $4,074 $4,544 $5,101 $6,111 $6,365 $6,425 Non Int Bearing Demand Interest Bearing Checking Money Market Savings Time Brokered Time 2018 2019 2020 2021 2022 1Q 2023 11% CAG R
Slide 12: Deposit Summary as of March 31, 2023
12 Deposit Summary as of March 31, 2023 12 Deposits by Channel (in millions) Commercial Deposits by NAICS Code (in millions) $2,829 44.0% $1,001 15.6% $1,016 15.8% $312 4.9% $142 2.2% $544 8.5% $581 9.0% Retail Deposits Commercial Deposits Servicing Deposits Public Funds Brokered Deposits ICS Recipr
Slide 13: Uninsured Deposits
13 Uninsured Deposits 13 Average Deposit Balance per Account = $33,000 *Excludes $645 million and $569 million, respectively, of fully insured funds in Insured Cash Sweep (ICS) accounts Uninsured Deposits (in millions) March 31, 2023 December 31, 2022 Call Report Uninsured Estimate(1) $ 1,793 $ 2,26
Slide 14: Investment Portfolio
14 Investment Portfolio As of March 31, 2023 14 Fair Value of Investments by Type 6.5% 6.7% 60.3% 5.2% 8.1% 2.8% 10.4% Treasuries US GSE & US Agency MSB - agency MSB - non agency State & Muni CLOs Corporate • All Investments are classified as Available for Sale • Average T/E Yield is 3.00% • Average
Slide 15: Liquidity Overview
15 Liquidity Overview 15 Liquidity Sources (in millions) March 31, 2023 December 31, 2022 Cash and Cash Equivalents $ 138.3 $ 160.6 Unpledged Securities 310.3 209.2 FHLB Committed Liquidity 932.8 997.4 FRB Discount Window Availability 207.7 12.2 Total Estimated Liquidity $ 1,589.1 $ 1,379.4 Conditio
Slide 16: Net Interest Income/Margin
16 Net Interest Income/Margin 16 • Net interest income down slightly from prior quarter as higher average balance of interest-earning assets was offset by an increase in cost of interest-bearing liabilities • Net interest margin decreased 11 bps from prior quarter as the increase in cost of deposits
Slide 17: Wealth Management
17 Wealth Management 17 • Assets under administration relatively unchanged in 1Q23 • Increase in Wealth Management revenue compared to the prior quarter primarily related to seasonal tax preparation fees Assets Under Administration (in millions) Wealth Management Revenue (in millions) $3,934 $3,503
Slide 18: Noninterest Income
18 Noninterest Income 18 • Excluding gain on termination of forward starting interest rate swaps in 4Q22, noninterest income was relatively consistent with prior quarter • 1Q23 noninterest income included $0.6 million loss on sale of investment securities as part of repositioning of portfolio that w
Slide 19: Noninterest Expense and Operating Efficiency
19 Noninterest Expense and Operating Efficiency 19 Noninterest Expense and Efficiency Ratio (1) (Noninterest expense in millions) $43.5 $44.5 $40.9 $41.3 $49.9 $0.1 $0.3 $3.3 55.7% 53.1% 54.3% 58.3% 57.6% Total Noninterest Expense Adjustments to Noninterest Expense Efficiency Ratio 1Q 2022 2Q 2022 3
Slide 20: Asset Quality
20 Asset Quality 20 • Nonperforming loans increased $1.3 million primarily due to one commercial real estate loan • Payment of $5.4 million received in early April on nonperforming loan, would have decreased nonperforming loans to total loans ratio by 8bps • Delinquencies in consumer portfolio remai
Slide 21: Changes in Allowance for Credit Losses
21 Changes in Allowance for Credit Losses 21 ($ in thousands) ▪ Changes to specific reserves ▪ New Loans ▪ Changes in Credit quality including risk rating ▪ Changes in portfolio mix ▪ Aging of existing portfolio ▪ Other charge-offs and recoveries ▪ Change to macro- economic variables and forecasts ▪
Slide 22: ACL by Portfolio
22 ACL by Portfolio 22 ($ in thousands) March 31, 2023 December 31, 2022 Portfolio Loans ACL % of Total Loans Loans ACL % of Total Loans Commercial $ 823,847 $ 5,365 0.65 % $ 786,877 $ 4,706 0.60 % Warehouse Lines 10,275 — — % 25,029 — — % Commercial Other 756,553 10,397 1.37 % 727,697 9,933 1.36 %
Slide 23: Outlook
23 Outlook 23 • Prudent risk management will remain top priority while economic uncertainty remains • Continue generating strong financial performance while maintaining conservative approach to new loan production to build capital and liquidity • Planned reduction of GreenSky portfolio will be utili
Slide 24: Appendix
APPENDIX Midland [=] States Bancorp, ne.
Slide 25: Commercial Loans and Leases by Industry
2525 Industries as a percentage of Commercial, CRE and Equipment Finance Loans and Leases with outstanding balances of $4.87 billion as of 3/31/2023 ($s in millions) RE/Rental & Leasing $1,467.8 30.2% All Others $631.5 13.0% Skilled Nursing $462.1 9.5% Construction - General $330.7 6.8% Manufacturin
Slide 26: Commercial Real Estate Portfolio by Collateral Type
26 Commercial Real Estate Portfolio by Collateral Type 26 CRE Concentration (as of March 31, 2023) CRE as a % of Total Loans 38.5% CRE as a % of Total Risk-Based Capital (1) 261.5% Notes: (1) Represents non-owner occupied CRE loans only Collateral type as a percentage of the Commercial Real Estate a
Slide 27: Capital Ratios and Strategy
27 Capital Ratios and Strategy 27 • Strengthened capital ratios with issuance of $115 million of non-cumulative preferred stock in August 2022 ◦ Included in Tier 1 Regulatory Capital ◦ 7.75% with reset at 5 years • Reduced cost of funds by redeeming $40 million of sub-debt with rate of 6.25% in Octo
Slide 28: Reconciliations of Non-GAAP Financial Measures: Tangible Book Value
2828 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 Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 4
Slide 29: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings
2929 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 Income before income taxes - GAAP $ 26,471 $ 50,805 $ 72,471 $ 32,014 $ 99,112
Slide 30: Reconciliations of Non-GAAP Financial Measures: Quarterly Adjusted Earnings
3030 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For The Quarter Ended March 31, December 31, September 30, June 30, March 31, (dollars in thousands, except per share data) 2023 2022 2022 2022 2022 Income before income taxe
Slide 31: Efficiency Ratio Reconciliation
3131 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) Efficiency Ratio Reconciliation For the Quarter Ended March 31, December 31, September 30, June 30, March 31, 2023 2022 2022 2022 2022 (dollars in thousands) Noninterest expense - GAAP $ 44,482 $
Slide 32: Tangible Common Equity to Tangible Assets Ratio
3232 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 March 31, December 31, September 30, June 30, March 31, (dollars in thousands, except per share data) 2023
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