Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q2 2020 Earnings Presentation
26 slides from Midland States Bancorp's earnings presentation, 2020
Slide 1: Second Quarter 2020 Earnings Call
Midland States Bancorp, Inc. NASDAQ: MSBI Second Quarter 2020 Earnings Call 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: Overview of 2Q20
Overview of 2Q20 • Net income of $12.6 million, or $0.53 diluted EPS 2Q20 Earnings • 2Q20 results include a $0.4 million loss on residential MSRs held for sale and $54,000 in integration and acquisition expenses, impacting diluted EPS by $0.02 Strong • Loan growth of 10.6% from the end of the prior
Slide 4: Paycheck Protection Program Overview
Paycheck Protection Program Overview Paycheck Protection Program (as of 6/30/20) Total Loans Funded $313.1 million Number of Loans 2,311 Average Loan Size $135,482 Loans Outstanding $276.0 million Average Fee 3.5% Total Fees $9.7 million Impact on 2Q20 Financials At or for the Metrics Excluding Thre
Slide 5: Loan Deferral Overview
Loan Deferral Overview C&I and CRE Loan Deferrals Deferrals by Portfolio (as of 6/30/20) ($ in millions) Consumer Total Loans Deferred $809.0 million $61.2 Number of Loans 2,094 7% CRE Other Generally 90-day $512.4 Modification $28.1 payment deferrals 57% 3% % of Total C&I and CRE Loans 22.7% Commer
Slide 6: Loan Portfolio
Loan Portfolio • Total loans increased $463.2 million, or 10.6% from prior quarter, to $4.84 billion • Increase primarily attributable to growth in commercial and consumer portfolios; partially offset by declines in the commercial real estate and residential real estate portfolios • PPP loans contri
Slide 7: Midland Equipment Finance Portfolio Overview
Midland Equipment Finance Portfolio Overview Portfolio Characteristics (as of 6/30/20) Nationwide portfolio providing financing solutions to equipment vendors and end-users Total Outstanding Loans and Leases $750.6 million (15.5% of total loans) Number of Loans and Leases 5,694 Average Loan/Lease Si
Slide 8: Hotel/Motel Portfolio Overview
Hotel/Motel Portfolio Overview Portfolio Characteristics (CRE & C&I) (as of 6/30/20) Total Outstanding $172.5 million (3.6% of total loans) Number of Loans 57 Average Loan Size $3.0 million Largest Loan $11.1 million Average LTV 54% Total Deferred Loans $146.2 million (84.8% of portfolio) Average LT
Slide 9: GreenSky Consumer Loan Portfolio Overview
GreenSky Consumer Loan Portfolio Overview Portfolio Characteristics Prime Credit (as of 6/30/20) Average FICO score of 746 $680.5 million Total Outstanding (14.1% of total loans) No losses to MSBI in 9 year history of the portfolio Number of Loans 297,241 Portfolio can be sold to provide liqui
Slide 10: Total Deposits
Total Deposits • Total deposits increased $292.5 million, or 6.3% from prior quarter, to $4.94 billion • Growth in deposits attributable to increase in core deposits, primarily from commercial customers, partially driven by inflows of PPP-related funds • Continued intentional run-off of higher-cost
Slide 11: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income increased 5.0% from the prior quarter due to lower cost of funds and higher average loan balances • Excluding the impact of accretion income, net interest margin declined 12 basis points • Decline in net interest margin was primarily attributable to e
Slide 12: Factors Impacting Net Interest Margin in 3Q20
Factors Impacting Net Interest Margin in 3Q20 • $107.1 million in time deposits scheduled to mature in 3Q20 with weighted average rate of 1.36% • $183.3 million in money market accounts at teaser rates of 1.60% scheduled to reprice in 3Q20 • $31.1 million in subordinated debt moved to floating rate
Slide 13: Wealth Management
Wealth Management • During 2Q20, assets under administration increased $286.2 million, primarily due to market performance • Total Wealth Management revenue was up slightly from prior quarter • Fees increased due to improved market performance, partially offset by reduction in trust fees related to
Slide 14: Noninterest Income
Noninterest Income • Noninterest income increased 125.6% from prior quarter, which included an $8.5 million impairment of commercial mortgage servicing rights (“MSRs”) • Excluding the impact of the impairment of commercial MSRs, noninterest income increased 13.5% primarily due to higher commercial F
Slide 15: Noninterest Expense and Operating Efficiency
Noninterest Expense and Operating Efficiency Noninterest Expense and Efficiency Ratio (1) • Efficiency Ratio (1) was 58.5% in 2Q20 vs. 63.8% in 1Q20 (Noninterest expense in millions) • Adjustments to non-interest expense: $48.0 $46.3 ($ in millions) 2Q20 1Q20 $5.2 $42.7 $5.2 $40.8 Integration and ac
Slide 16: Asset Quality
Asset Quality • Nonperforming loans/total loans declined to 1.25% from 1.33% at the end of the prior quarter • Net charge-offs of $3.1 million, or 0.26% of average loans • Provision for loan losses of $11.6 million in 2Q20 primarily reflects changes in portfolio and a continued downgrade in economic
Slide 17: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) Specific Portfolio Economic Reserves Changes Factors Changes to macro- economic variables and forecasts Changes to other economic qualitative factors Changes to specific New loans reserves Changes in credit quality including risk down
Slide 18: ACL by Portfolio
ACL by Portfolio ($ in thousands) Total Loans at % of Total Loans at % of Portfolio ACL ACL 6/30/20 Total Loans 3/31/20 Total Loans Commercial $ 715,206 $ 4,916 0.69% $ 649,403 $ 4,900 0.75% Warehouse Lines 127,568 - 0.00% 22,772 - 0.00% Commercial Other 767,175 7,297 0.95% 443,376 6,840 1.54% Equip
Slide 19: Outlook and Near-Term Priorities
Outlook and Near-Term Priorities • Maintain strong capital and liquidity positions to continue supporting clients and communities through the duration of the COVID-19 pandemic • Continue executing on technology initiatives to improve customer experience, reduce expenses and increase operational effi
Slide 20: Appendix
APPENDIX Midland [=] States Bancorp, Inc.
Slide 21: Commercial Loans and Leases by Industry
Commercial Loans and Leases by Industry Industries as a percentage of Commercial, Trans. / Ground Passenger Wholesale Trade CRE and Equipment Finance Loans and Leases Other Services 2.2% as of 6/30/20 3.3% 3.4% Ag., Forestry, & Fishing RE / Rental & Leasing 5.0% 22.2% General Freight Trucking 5.1% H
Slide 22: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type Collateral type as a percentage of the Industrial / Warehouse Commercial Real Estate and Construction Office 9.0% 6.5% Portfolio as of 6/30/20 Residential 1-4 Family Hotel/Motel 6.2% 9.3% Farmland 3.9% Medical Building 3.7% Multi-Family 9.6% C-Stor
Slide 23: Capital and Liquidity Overview
Capital and Liquidity Overview Capital Ratios Liquidity Sources (as of 6/30/20) (as of 6/30/20) 15.00% ($ in millions) 13.67% Cash and Cash Equivalents $ 519.9 Unpledged Securities 435.0 12.05% FHLB Committed Liquidity 329.4 11.28% 11.28% FRB Discount Window Availability 57.2 9.71% Primary Liquidity
Slide 24: Adjusted Earnings Reconciliation
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES Adjusted Earnings Reconciliation For the Quarter Ended June 30, March 31, December 31, September 30, June 30, (dollars in thousands, except per share data) 2020 2020 2019 2019 2019 Income before income taxes - GAAP $ 15,993
Slide 25: Efficiency Ratio Reconciliation
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (continued) Efficiency Ratio Reconciliation For the Quarter Ended June 30, March 31, December 31, September 30, June 30, (dollars in thousands) 2020 2020 2019 2019 2019 Noninterest expense - GAAP $ 40,782 $ 42,675 $ 46,325 $
Slide 26: Tangible Common Equity and Tangible Book Value Per Share
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (continued) Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share As of June 30, March 31, December 31, September 30, June 30, (dollars in thousands, except per share data) 2020 2020 2019 2019 201
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