Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Investor Presentation (May 2024)
49 slides from Midland States Bancorp's investor presentation, May 2024
Slide 1: Midland States Bancorp, Inc. Investor Presentation May 2024
Midland States Bancorp, Inc. NASDAQ: MSBI Investor Presentation May 2024 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 Founded in 1881, this Illinois state- chartered community bank focuses on in-market relationships while having national diversification through equipment finance. • 53 Branches in Illinois and Missouri • 16 successful acquisitions since 2008 Financial Highlights as of March 31, 2024
Slide 4: Investment Summary and Strategic Initiatives
Investment Summary and Strategic Initiatives • Profitable growth and improved efficiencies resulting in higher EPS and increased returns over the past few years • Strengthened commercial banking team and increased presence in faster growing markets driving high quality in-market loan production and
Slide 5: Financial Services & Banking Center Footprint
Financial Services & Banking Center Footprint Headquartered in Effingham, Illinois 43 Illinois Banking Centers 11 Missouri Banking Centers Our Community Bank is organized into four regions: • Northern • Eastern • Southern • St. Louis Services Include: • Wealth Management • Residential Mortgage • Com
Slide 6: Business and Corporate Strategy
Business and Corporate Strategy We are a community bank focused on developing deep customer relationships and building strong communities. 66
Slide 7: Business and Corporate Strategy
Business and Corporate Strategy We are a community bank focused on developing deep customer relationships and building strong communities. 77
Slide 8: Business and Corporate Strategy: Five Strategic Elements
Business and Corporate Strategy MSBI's Five Strategic Elements Superior Customer Experience We value the customer in everything we do, and we find satisfaction in knowing our contributions make a difference. High-Tech, High-Touch Process Excellence We blend cutting-edge technology We are continuousl
Slide 9: Experienced Senior Management Team
Experienced Senior Management Team Jeffrey G. Ludwig Jeffrey S. Mefford President and CEO of Midland States Bancorp President of Midland States Bank and EVP of Midland States Bancorp ▪ Assumed Company CEO role in Jan. 2019 after serving as Bank CEO ▪ Joined Midland in 2003 ▪ More than 10 years servi
Slide 10: Successful Execution of Strategic Plan...
Successful Execution of Strategic Plan... Total Assets (at period-end in billions) CAGR: 15% : 13% 6 IPO $7.9 $7.8 e 201 $7.4 c R sin CAG $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 2021 2022 2023 Selected Acquisitions Selec
Slide 11: ...Leads to Creation of Shareholder Value
...Leads to Creation of Shareholder Value 23 Consecutive Years of Dividend Increases Tangible Book Value Per Share(1) Dividends Declared Per Share TBV/Share ex. AOCI CAGR: 7.7% CAGR: 5.0% $26.91 $27.23 $1.24 $24.72 $1.20 $1.16 $1.12 $1.07 $0.97 $21.42 $0.88 $18.80 $18.34 $17.09 $23.35 $23.44 $21.66
Slide 12: ...And Increased Profitability
...And Increased Profitability Adjusted Diluted EPS(1) Adjusted ROATCE(1) & ROAA(1) CAGR: 6.2% $3.79 $3.65 18.33% 18.59% $3.42 15.98% 15.00% 14.44% $2.54 1.21% $2.39 1.18% 1.08% 1.08% 1.04% 9.24% 9.34% $1.70 0.72% 0.62% 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 YTD 2024 Adj ROATCE
Slide 13: 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) Adjusted PTPP Adjusted PTPP / Avg Assets CAGR: 14.9% $6,306 $6,131 Adjusted PTPP CAGR: 15.4% $137.5 $136
Slide 14: High Tech High Touch - Technology Roadmap
High Tech High Touch - 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 Flexible Overdrafts Commercial Onlin
Slide 15: Successful Acquisition History
Successful Acquisition History ▪ Midland States has completed 16 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 16: Loan Portfolio and Asset Quality
Loan Portfolio 2009 and Asset Quality 16 16
Slide 17: Commercial Loans and Leases by Industry
Commercial Loans and Leases by Industry Other Services Health Care Retail Trade Wholesale Trade $102.6 $70.5 Industries as a percentage of Commercial, ($s in millions) $168.4 $62.3 2.2% 1.5% CRE and Equipment Finance Loans and Leases 3.5% 1.3% with outstanding balances of $4.74 billion as of March 3
Slide 18: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type ($s in millions) Mixed Use/Other Restaurant Medical Building Raw Land Collateral type as a percentage of the $101.1 $30.4 $103.0 $21.8 Commercial Real Estate and Construction C-Store/Gas Station 3.5% 1.1% 3.6% 0.8% Portfolio with outstanding balanc
Slide 19: Commercial Loan Growth
Commercial Loan Growth More conservative approach to new loan production in light of economic uncertainty has impacted production levels since mid-2022 • New hires and an increase in productivity of the Commercial and CRE Loan Production commercial banking group without increasing (in millions) the
Slide 20: Midland Equipment Finance Portfolio Overview
Midland Equipment Finance Portfolio Overview Portfolio Characteristics (as of March 31, 2024) Nationwide portfolio providing financing solutions to equipment vendors and end-users Total Outstanding $949.9 million Loans and Leases (15.9% of total loans) Number of Loans and Leases 8,823 Average Loan/L
Slide 21: GreenSky Consumer Loan Portfolio Overview
GreenSky Consumer Loan Portfolio Overview Portfolio Characteristics Plan with GreenSky to Wind Down Portfolio (as of March 31, 2024) ▪ Notice provided to officially terminate the $606.0 million Total Outstanding GreenSky program in October 2023 (10.2% of total loans) Weighted Average Rate 5.49% ▪ Re
Slide 22: Asset Quality
Asset Quality • Nonperforming loans increased due to placement of 4 loans on non-accrual, totaling $47.4 million, 3 of which were multi-family construction or multi-family projects • Past due loans and substandard loans declined during the first quarter • Net charge-offs to average loans was 0.30% p
Slide 23: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) $982 $(886) ▪ Changes in Loans ▪ Change to macro- economic variables ▪ Changes in Credit and forecasts quality including $9,459 risk rating ▪ Changes to other economic ▪ Changes in portfolio qualitative factors mix ▪ Aging of existing portfolio
Slide 24: ACL by Portfolio
ACL by Portfolio ($ in thousands) March 31, 2024 December 31, 2023 % of Total % of Total Portfolio Loans ACL Loans ACL Loans Loans Commercial $ 813,963 $ 9,135 1.12 % $ 825,938 $ 8,897 1.08 % Commercial Other 601,704 12,194 2.03 % 656,592 12,950 1.97 % Equipment Finance Loans 494,068 11,806 2.39 % 5
Slide 25: Recent Financial Trends
Recent Financial Trends 2009 25 25
Slide 26: Overview of 1Q24
Overview of 1Q24 • Net income available to common shareholders of $11.7 million, or $0.53 diluted EPS • Pre-tax, pre-provision earnings(1) of $32.2 million Solid Financial • Steady net interest margin of 3.18% Performance • Strong noninterest income of $21.2 million • Disciplined expense control kep
Slide 27: Loan Portfolio
Loan Portfolio • Total loans decreased $172.6 million from prior quarter to $5.96 billion • Decrease primarily driven by decline in equipment finance portfolio of $54.5 million, continued runoff of GreenSky portfolio of $77.7 million, and lower C&I line utilization • Decrease in non-core portfolios
Slide 28: Total Deposits
Total Deposits • Total deposits increased $14.5 million from end of prior quarter, primarily due to increases in noninterest-bearing demand and brokered time, partially offset by seasonal outflows of servicing and public funds deposits • Noninterest-bearing deposits increased due to new and expanded
Slide 29: Deposit Summary as of March 31, 2024
Deposit Summary as of March 31, 2024 Deposits by Channel Trend of Deposit Channel Mix (in millions, as of quarter-end) (in millions, as of quarter-end) 1Q 2024 4Q 2023 1Q 2023 $6,425 $6,427 $6,405 $6,310 $6,324 Retail $ 2,768 $ 2,758 $ 2,829 Commercial 1,388 1,392 1,286 Public Funds 516 569 578 Weal
Slide 30: Investment Portfolio
Investment Portfolio Fair Value of Investments by Type As of March 31, 2024 10.3% 6.5% 3.3% • All Investments are classified as 5.8% Available for Sale US GSE & US Agency MBS - agency • Average T/E Yield is 4.36% for 1Q24 8.6% $1.04 billion MBS - non agency State & Muni and Average Duration is 4.83
Slide 31: Liquidity Overview
Liquidity Overview Liquidity Sources (in millions) March 31, 2024 December 31, 2023 Cash and Cash Equivalents $ 167.3 $ 135.1 Unpledged Securities 506.2 346.8 FHLB Committed Liquidity 1,167.4 936.0 FRB Discount Window Availability 613.3 699.9 Total Estimated Liquidity $ 2,454.1 $ 2,117.8 Conditional
Slide 32: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income down slightly from prior quarter due to lower average earning assets • Net interest margin decreased 3bp to 3.18% as the increase in the cost of deposits exceeded the increase in the average yield on earning assets, as well as the impact of interest r
Slide 33: Loans & Securities - Repricing and Maturity
Loans & Securities - Repricing and Maturity Total Loans and Leases (net of unearned income)(1) (in millions) As of March 31, 2024 Repricing Term Rate Structure 3 mos or 3-12 1-3 3-5 5-10 10-15 Over 15 Floating Adjustable Fixed less mos years years years years years Total Rate Rate Rate Commercial lo
Slide 34: Wealth Management
Wealth Management • Assets under administration increased mainly due to $97 million of new accounts and positive market performance • Wealth Management fees increased from prior quarter due to increases in estate and tax planning fees from new business development efforts • New technology planned to
Slide 35: Noninterest Income
Noninterest Income • Noninterest income increased from prior quarter primarily due to higher wealth management revenue • 1Q24 noninterest income included incremental servicing revenues of $3.7 million related to the Greensky portfolio • 4Q23 noninterest income included incremental servicing revenues
Slide 36: Noninterest Expense and Operating Efficiency
Noninterest Expense and Operating Efficiency Noninterest Expense and Efficiency Ratio (1) (Noninterest expense in millions) • Efficiency Ratio (1) was 58.0% in 1Q 2024 vs. 55.2% in 4Q 2023 • Slight increase in noninterest expense from prior quarter $44.9 primarily attributable to seasonal $44.5 $44.
Slide 37: Capital Ratios and Strategy
Capital Ratios and Strategy Capital Ratios Capital Strategy (as of March 31, 2024) • Capital initiatives increased CET1 to 8.60% from 7.77% at 12/31/22 with limited buybacks below TBV 13.68% • Internal capital generated from strong 12.77% profitability and slower balance sheet 11.62% 11.62% growth e
Slide 38: Building Capital
Building Capital • CET1 Increased 20 bps to 8.60% from from 4Q23 despite credit headwinds • Balance sheet and capital strategy reduced risk weighted assets $135M from 4Q23 • Support organic growth needs of new and existing core relationships • Opportunistic share repurchases at or below TBV and cont
Slide 39: Outlook
Outlook 2009 39 39
Slide 40: 2024 Outlook and Priorities
2024 Outlook and Priorities • Well positioned with increased levels of capital, liquidity, and reserves • Prudent risk management will remain top priority while economic uncertainty remains with business development efforts focused on adding new commercial and retail deposit relationships throughout
Slide 41: Long-Term Formula for Enhancing Shareholder Value
Long-Term Formula for Enhancing Shareholder Value Strategic Enhanced Operational Balance Sheet Efficiencies Expansion Sustained Earnings Growth Superior Returns Elevated Franchise Value Recurring Revenue Value-Add M&A Streams 41 41
Slide 42: Appendix
APPENDIX Midland [=] States Bancorp, Inc.
Slide 43: ESG: A Framework for Sustainability
ESG: A Framework for Sustainability Financial Education • In 2023, we provided over 600 volunteer hours specific to financial empowerment seminars in our communities. Environmental • Since 2015 we have held more than 450 financial literacy seminars benefiting Facilities low to moderate income or min
Slide 44: Reconciliations of Non-GAAP Financial Measures: Tangible Book Value Per Share
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) 2018 2019 2020 2021 2022 2023 Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 608,52
Slide 45: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings
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) 2018 2019 2020 2021 2022 2023 Income before income taxes - GAAP $ 50,805 $ 72,471 $ 32,014 $ 99,112 $ 129,838 $ 10
Slide 46: Reconciliations of Non-GAAP Financial Measures: Efficiency Ratio
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Efficiency Ratio Reconciliation For the Year Ended 2016 2017 2018 2019 2020 2021 2022 2023 (dollars in thousands) Noninterest expense - GAAP $ 121,289 $ 152,997 $ 191,643 $ 175,641 $ 184,010 $ 175,069 $ 175,662 $
Slide 47: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings (Quarterly)
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) 2024 2023 2023 2023 2023 Income before income taxes - G
Slide 48: Reconciliations of Non-GAAP Financial Measures: Efficiency Ratio (Quarterly)
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, 2024 2023 2023 2023 2023 (dollars in thousands) Noninterest expense - GAAP $ 44,867 $ 44,4
Slide 49: Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share
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) 2024 2023(
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