Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Sandler O'Neill East Coast Financial Services Conference 2019
28 slides from Midland States Bancorp's conference presentation, Nov 14, 2019
Slide 1: Midland States Bancorp Investor Presentation
Midland States Bancorp, Inc. NASDAQ: MSBI Investor Presentation Sandler O’Neill East Coast Financial Services Conference November 14, 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 $6.11 billion asset community bank established in 1881 and headquartered in Effingham, Illinois (3rd largest Illinois-based community bank1) $3.28 billion Wealth Management business Strong fee generators consistently account for approximately 30% of total revenue 85+ 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 organic growth by focusing on customer service and accountability to our clients and Culture colleagues; seek to develop bankers who create dynamic relationships; pursue continual investment in people; maintain a
Slide 7: Experienced Leadership Team
Experienced Leadership Team Highly experienced senior management in place: John M. Schultz: Chairman of the Board Jeffrey G. Ludwig: President and CEO of Midland States Held the position since 2006 Bancorp Chief Executive Officer of Agracel, Inc. Assumed Company CEO role in Jan. 2019 after ser
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: 19% $6.1 $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 3Q19 Selected Acquisitions Selected Acquisitions: Total Assets at Time of Acquisition (in millions) 2009
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) $18.40 $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 Closed in July 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 Arlington Heigh
Slide 12: Market Opportunities & Acquisition Strategy
Market Opportunities & Acquisition Strategy Number of Banks & Thrifts MSBI believes there will be numerous small to With less than $1.0 Billion in Assets (1) midsized banking organizations available for acquisition within Illinois and contiguous states There are more than 1,200 institutions in t
Slide 13: Performance Metrics
Performance Metrics Adjusted Diluted Earnings Per Share (1) Adjusted Return on Avg. Tangible Common Equity (1) $0.67 $0.66 $0.66 16.0% 16.5% $0.64 15.2% 14.5% $0.58 13.9% 3Q18 4Q18 1Q19 2Q19 3Q19 3Q18 4Q18 1Q19 2Q19 3Q19 Net Interest Margin (2) Noninterest Income / Total Revenue (3) 3.85% 3.73% 3.76
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 (1) 6% 4.92% 5.02% 5.03% 5.07% 5% 4.77% 4% 3.49% 3.54% 3.56% 3.51% 3.50% 3% 2% 1% 0.74% 0.84% 0.84% 0.59% 0.65% 0% 3Q18 4Q18 1Q19 2Q19 3Q19 Average Loan Yield (ex. accretion) Net interest Ma
Slide 15: Revenue Mix
Revenue Mix Diverse revenue mix with nearly 30% noninterest income Strong sources of recurring income led by Wealth Management business YTD 2019 Revenue Mix YTD 2019 Noninterest Income Mix All Other Fee Noninterest Income Income 16.9% Commercial FHA 29% Residential 19.7% Mortgage Banking 3.8% Ne
Slide 16: Loan Portfolio Overview
Loan Portfolio Overview Broadly diversified loan portfolio by type of Loan Portfolio Mix customer and loan type Residential Real 65% of portfolio is fixed; 35% is floating Estate $588M Focus on growing Equipment Finance portfolio that 14% provides superior risk-adjusted yields Non-Owner Occupi
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 been modest since 2014 Nonperforming Assets / Total Assets (1) NCOs / Average Loans 0.94% 0.98% 0.91% (2) 0.81% 0.82% 0.80% 0.73% 0.39% 0.31% 0
Slide 18: Strong Core Deposit Base
Strong Core Deposit Base (1) 95% core deposits (2) Deposit Mix Recent acquisitions have improved overall funding mix Noninterest- Interest-Bearing Bearing Checking 23% non-interest bearing deposits $1,222M $1,015M 23% 27% Brokered Retail deposits represent 53% of total deposits Time Dep $94M
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 [=] States Bancorp, Inc.
Slide 21: Outlook
Outlook • Focus on integrating HomeStar acquisition and fully capitalizing on synergies • All cost savings from HomeStar acquisition expected to be phased in by start of 2020 • Additional branch consolidation efforts will further enhance efficiencies • Continue to generate low-single-digit organic l
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 15.00% 14.82% 10.35% 10.00% 9.02% 8.77% 7.58% 5.00% 0.00% TCE/TA Tier 1 Common Tier 1 Leverage Tier 1 RBC Total RBC As Reported 9/30/19 24
Slide 25: Appendix: Investments
Appendix: Investments Midland continues to adjust the portfolio to Investment Portfolio U.S. Treasury optimize the portfolio’s duration, mix, and to Securities , increase yield. As of September 30, 2019, the Equity 11% U.S. GSE and Securities, portfolio had an effective duration of 1% U.S. Agency
Slide 26: Appendix: Reconciliation of TBV Per Share
Appendix: Reconciliation of TBV Per Share As of December 31, As of September 30, (dollars in thousands, except per share data) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Shareholders' Equity to Tangible Common Equity—as converted: Total shareholders' equity—GAAP $ 76,627 $ 109,208 $ 126,
Slide 27: Appendix: Reconciliation of Net Interest Margin Excluding Accretion Income
Appendix: Reconciliation of Net Interest Margin Excluding Accretion Income For the Quarter Ended September 30, December 31, March 31, June 30, September 30, 2018 2018 2019 2019 2019 Yield on Loans (excluding accretion income): Reported yield on loans 4.88 % 5.28 % 5.22 % 5.32 % 5.31 % Effect of accr
Slide 28: Appendix: Reconciliation of Adjusted Earnings/Profitability
Appendix: Reconciliation of Adjusted Earnings/Profitability For the Quarter Ended September 30, December 31, March 31, June 30, September 30, (dollars in thousands, except per share data) 2018 2018 2019 2019 2019 Income before income taxes - GAAP $ 10,933 $ 20,863 $ 18,336 $ 21,394 $ 16,670 Adjustme
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