Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Investor Presentation (March 2021)
45 slides from Midland States Bancorp's investor presentation, March 2021
Slide 1: Midland States Bancorp, Inc. Investor Presentation March 2021
Midland States Bancorp, Inc. NASDAQ: MSBI Investor Presentation March 2021 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 $6.86 billion asset community bank established in 1881 and headquartered in Effingham, Illinois 2nd largest Illinois-based community bank1 $3.48 billion Wealth Management business Diversified lender with national equipment financing and consumer loan origination platforms co
Slide 4: Financial Services & Banking Center Footprint
Financial Services & Banking Center Footprint 4
Slide 5: Investment Summary
Investment Summary Consistent track record of driving Proven track record of successful compelling shareholder returns acquisitions with a focus on enhancing through disciplined strategic shareholder value while building a expansion and earnings growth platform for scalability Organization‐wide focu
Slide 6: 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 service and accountability to our clients and of identifying and executing transactions that colleagues; seek to develop bankers
Slide 7: Experienced Senior Management Team
Experienced Senior Management Team Jeffrey G. Ludwig | President and CEO of Midland States Bancorp Assumed Company CEO role in Jan. 2019 after serving as Bank CEO More than 10 years serving as CFO Joined Midland in 2006; 16+ years in banking industry Douglas J. Tucker | SVP, Corporate Counsel
Slide 8: Successful Acquisition History
Successful Acquisition History Midland States has completed 14 transactions since 2008, including FDIC-assisted, branch, whole bank, asset purchase and business line acquisitions, and a New York trust asset acquisition Demonstrated history of earnings expansion Deliberate diversification of ge
Slide 9: Successful Execution of Strategic Plan…
Successful Execution of Strategic Plan… Total Assets (at period‐end in Billions) CAGR: 18% $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 Selected Acquisitions Selected Acquisitions: Total Assets at Time of Acquisition (in mill
Slide 10: …Leads to Creation of Shareholder Value
…Leads to Creation of Shareholder Value 21 Consecutive Years of Dividend Increases Tangible Book Value Per Share(1) Dividends Declared Per Share (at period‐end) $19.31 $1.12 $1.07 $18.64 $0.97 $17.31 $0.88 $17.16 $17.00 $0.80 $15.91 $0.72 $0.65 $15.20 $0.59 $14.34 $0.53 $13.82 $0.48 $13.68 $0.43 $0.
Slide 11: Strategic Initiatives Strengthening Franchise
Strategic Initiatives Strengthening Franchise Significant Corporate Actions Since Coming Public in 2016… Action Strategic Rationale Financial Impact 2016 2020 Three whole bank acquisitions • Low‐cost deposits Total Assets $3.2B $6.8B Scale Four Wealth Management acquisitions(1) • Recurring revenue A
Slide 12: Strategic Initiatives Strengthening Franchise
Strategic Initiatives Strengthening Franchise …Have Produced Improved Growth and Profitability Adjusted Pre‐Tax Pre‐Provision Earnings(1) Total Loans (in millions) (in millions, as of year‐end) $5,103 $108.9 $101.3 $4,401 $83.7 $4,138 $61.9 $50.1 $3,227 $2,320 2016 2017 2018 2019 2020 2016 2017 2018
Slide 13: 2020 Optimization and Efficiency Initiatives
2020 Optimization and Efficiency Initiatives FY 2021 Initiative Details Expected Financial Impact • Sale of origination platform to • Ongoing commercial FHA revenue of Dwight Capital $1.2 million for servicing • No significant gain on sale (reduced • $8-$9 million expense reduction Sale of Commercia
Slide 14: Technology Roadmap
Technology Roadmap Midland’s technology investments are enhancing efficiencies, improving client experience, and positively impacting retail deposit gathering and commercial/consumer loan production Consumer Small Business Commercial Wealth Near real time payments (Q1 2021) Consumer online loan Loan
Slide 15: Recent Financial Trends
15 Recent Financial Trends Midland [=] States Bancorp, Inc.
Slide 16: Overview of 4Q20
Overview of 4Q20 • Net income of $8.3 million, or $0.36 diluted EPS, includes $4.9 million in charges related to prepayment of FHLB advances • Adjusted earnings(1) of $12.5 million, or $0.54 diluted EPS, excluding charges primarily related to 4Q20 Earnings prepayments of FHLB advances • Adjusted Pre
Slide 17: Loan Portfolio
Loan Portfolio • Total loans increased $161.9 million, or 3.3% from prior quarter, to $5.10 billion • Increase primarily attributable to growth in commercial and commercial real estate portfolios, partially offset by decrease in residential real estate loans • Commercial loans increased due to an ex
Slide 18: Total Deposits
Total Deposits • Total deposits increased $72.3 million, or 1.4% from prior quarter, to $5.10 billion • Growth in deposits attributable to increase in retail and commercial FHA servicing deposits, offset by declines in commercial customer and money market accounts • Noninterest-bearing demand deposi
Slide 19: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income increased 7.1% from the prior quarter due to higher average loan balances and increased net interest margin • Net interest margin, excluding PPP income, was unchanged from prior quarter as lower earning asset yields were offset by favorable shift in m
Slide 20: Wealth Management
Wealth Management • During 4Q20, assets under administration increased $219.9 million, primarily due to market performance • Wealth Management revenue increased 5.6% from prior quarter, primarily due to higher assets under administration Assets Under Administration Wealth Management Revenue (in mill
Slide 21: Noninterest Income
Noninterest Income • Noninterest income reduced 24.2% from prior quarter, partially due to a $2.3 million impairment of commercial mortgage servicing rights (“MSRs”) and gains on sales of securities recorded in the prior quarter • Excluding the impact of the impairment of commercial MSRs and gains o
Slide 22: Noninterest Expense and Operating Efficiency
Noninterest Expense and Operating Efficiency Noninterest Expense and Efficiency Ratio (1) • Efficiency Ratio (1) was 58.6% in 4Q20 vs. 57.7% in 3Q20 (Noninterest expense in millions) • Adjustments to non-interest expense: ($ in millions) 4Q20 3Q20 Integration and $53.9 62.2% acquisition related ($0.
Slide 23: COVID-19 Response and Impact
COVID‐19 Response and Impact 23
Slide 24: Paycheck Protection Program Overview
Paycheck Protection Program Overview Paycheck Protection Program Paycheck Protection Program (as of 2/28/21) Loan Forgiveness Loans Outstanding $191.1 million As of 12/31/20 As of 2/28/21 Round 1 $146.4 million Loans Submitted to SBA $155.6 million $183.0 million Round 2 $44.7 million Total Fees Ear
Slide 25: Commercial Loans and Leases by Industry
Commercial Loans and Leases by Industry Industries as a percentage of Commercial, Other Services Wholesale Trade CRE and Equipment Finance Loans and Leases Trans. / Ground Passenger 3.3% 2.3% as of 12/31/20 3.7% Health Care RE / Rental & Leasing 3.9% 20.3% General Freight Trucking 4.6% Ag., Forestry
Slide 26: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type Collateral type as a percentage of the Hotel/Motel Commercial Real Estate and Construction Office 9.1% Portfolio as of 12/31/20 7.0% Residential 1‐4 Family Industrial / Warehouse 6.0% 9.2% Farmland 4.3% C‐Store / Gas Station All Others 3.7% 9.3% Me
Slide 27: Loan Deferral Overview
Loan Deferral Overview Total Loan Deferrals Deferral Type (as of February 28, 2021) As of As of As of Sept. 30, 2020 Dec. 31, 2020 Feb. 28, 2021 Full Payment Deferral $129.8 million Total Loans Deferred $279.3 million $209.1 million $225.3 million Deferred Loans Making $95.5 million % of Total Loans
Slide 28: Midland Equipment Finance Portfolio Overview
Midland Equipment Finance Portfolio Overview Portfolio Characteristics Total Deferred (as of 12/31/20) Loans and Leases Nationwide portfolio providing financing solutions As of As of As of to equipment vendors and end‐users 6/30/20 12/31/20 2/28/21 Total Outstanding $861.5 million Loans and Leases (
Slide 29: Hotel/Motel Portfolio Overview
Hotel/Motel Portfolio Overview Portfolio Characteristics (CRE & C&I) (as of 12/31/20) Total Outstanding $180.2 million (3.5% of total loans) Number of Loans 53 Average Loan Size $2.4 million Largest Loan $11.3 million Average LTV 52% Total Deferred Loans as of 12/31/20 $82.6 million (45.8% of portfo
Slide 30: GreenSky Consumer Loan Portfolio Overview
GreenSky Consumer Loan Portfolio Overview Portfolio Characteristics Prime Credit (as of 12/31/20) Average FICO score of 770 $767.2 million Total Outstanding (15.0% of total loans) No losses to MSBI in 9 year history of the portfolio Number of Loans 335,449 Portfolio can be sold to provide liqu
Slide 31: Asset Quality
Asset Quality • Nonperforming loans/total loans decreased to 1.06% from 1.36% at the end of the prior quarter, due to the resolution of long-term problem loans, the transfer of loans to Other Real Estate Owned, and minimal new inflow • Net charge-offs of $2.3 million, or 0.19% of average loans • Pro
Slide 32: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) Specific Portfolio Economic Reserves Changes Factors Changes to macro- economic variables and forecasts Changes to other New loans economic Changes to specific qualitative factors reserves Changes in credit quality including risk down
Slide 33: ACL by Portfolio
ACL by Portfolio ($ in thousands) Total Loans at % of Total Loans at % of Portfolio ACL ACL 12/31/20 Total Loans 9/30/20 Total Loans Commercial $ 937,382 $ 8,537 0.90% $ 729,745 $ 7,846 1.08% Warehouse Lines 273,298 ‐ 0.00% 136,761 ‐ 0.00% Commercial Other 748,193 11,314 1.51% 813,412 10,014 1.23% E
Slide 34: Capital and Liquidity Overview
Capital and Liquidity Overview Capital Ratios Liquidity Sources (as of 12/31/20) (as of 12/31/20) 15.00% ($ in millions) 13.24% Cash and Cash Equivalents $ 341.6 Unpledged Securities 261.7 11.77% FHLB Committed Liquidity 334.0 10.78% 10.78% FRB Discount Window Availability 54.4 Primary Liquidity 991
Slide 35: Outlook
35 Outlook Midland [=] States Bancorp, Inc.
Slide 36: 2021 Outlook and Priorities
2021 Outlook and Priorities • Maintain strong capital and liquidity positions to continue supporting clients and communities through the duration of the COVID-19 pandemic • Targeting low- to mid-single-digit loan growth (excluding PPP loans) resulting from continued growth in equipment finance, comm
Slide 37: Long-Term Formula for Enhancing Shareholder Value
Long‐Term Formula for Enhancing Shareholder Value Disciplined Balance Sheet Growth Improving Operating Efficiencies Stable Sources of Recurring Income Accretive M&A Transactions Earnings Growth, Improving Returns and Enhanced Franchise Value 37
Slide 38: Appendix
38 APPENDIX Midland [=] States Bancorp, Inc.
Slide 39: ESG: A Framework for Sustainability
Financial Education ESG: A Framework for Sustainability • Since 2015 we have held more than 240 financial literacy seminars in LMI/minority neighborhoods in our footprint. Environmental Facilities CRA, Community Development and Financial Inclusion • Our Corporate HQ, built in 2011, is LEED (Silver)
Slide 40: Appendix: Reconciliation of TBV Per Share
Appendix: Reconciliation of TBV Per Share As of December 31, (do llars in tho usands, except per share data) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Shareholders' Equity to Tangible Common Equity—as converted: Total shareholders' equity—GAAP $ 109,208 $ 126,953 $ 130,918 $ 149,440 $ 2
Slide 41: 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) 2020 2020 2020 2020 2019 Income before income taxes
Slide 42: Adjusted Earnings Reconciliation (Annual)
MIDLAND S TATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEAS URES (unaudited) Adjusted Earnings Reconciliation For the Years Ended December 31, (dollars in thousands) 2020 2019 2018 2017 2016 Income before income taxes - GAAP $ 32,014 72,471 50,805 26,471 50,431 Adjustments to noninteres
Slide 43: Efficiency Ratio Reconciliation (Quarterly)
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, (dollars in thousands) 2020 2020 2020 2020 2019 Noninterest expense - GAAP $ 47,048 $ 5
Slide 44: Efficiency Ratio Reconciliation (Annual)
MIDLAND S TATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEAS URES (unaudited) Efficiency Ratio Reconcilation For the Years Ended December 31, (dollars in thousands) 2020 2019 2018 2017 2016 Noninterest expense $ 184,010 $ 175,641 $ 191,643 $ 152,997 $ 121,289 Adjustments to noninterest e
Slide 45: Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continue d) Tangible Common Equity to Tangible Asse ts Ratio and Tangible Book Value Pe r Share As of Dece mbe r 31, Se ptember 30, June 30, March 31, De cember 31, (dollars in thousands, except per share data)
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