Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Investor Presentation (May 2022)
44 slides from Midland States Bancorp's investor presentation, May 2022
Slide 1: Midland States Bancorp, Inc. Investor Presentation May 2022
Midland States Bancorp, Inc. NASDAQ: MSBI Investor Presentation May 2022 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 $7.3 billion asset community bank established in 1881 and headquartered in Effingham, Illinois Largest Illinois-based community bank1 $4.0 billion Wealth Management business Commercial bank focused on in-market relationships with national diversification in equipment finance
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 15 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: Overview of Pending FNBC Branch Acquisition
Overview of Pending FNBC Branch Acquisition Key Highlights Extends Footprint Closer to Chicago Acquiring one branch and the deposits and certain loans from two FNBC Bank & Trust locations Adds branch in Mokena, IL Increases Midland’s exposure to faster growing markets in Northern Illinois Im
Slide 10: Successful Execution of Strategic Plan
Successful Execution of Strategic Plan… Total Assets (at period‐end in Billions) CAGR: 17% $7.4 $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 Selected Acquisitions Selected Acquisitions: Total Assets at Time of Acquisitio
Slide 11: Leads to Creation of Shareholder Value
…Leads to Creation of Shareholder Value 22 Consecutive Years of Dividend Increases Tangible Book Value Per Share(1) Dividends Declared Per Share (at period‐end) $21.66 $1.16 $1.12 CAGR: 6.6% CAGR: 8.8% $1.07 $19.31 $0.97 $18.64 $0.88 $17.16 $17.31 $0.80 $17.00 $0.72 $0.65 $15.20 $0.59 $13.82 2014 20
Slide 12: Strategic Initiatives Strengthening Franchise
Strategic Initiatives Strengthening Franchise Significant Corporate Actions Since Coming Public in 2016… Action Strategic Rationale Financial Impact 2016 2021 Three whole bank acquisitions • Low‐cost deposits Total Assets $3.2B $7.4B Scale Four Wealth Management acquisitions • Recurring revenue AUA
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) $120.4 $5,103 $5,225 $108.9 $101.3 $4,401 $83.7 $4,138 $61.9 $50.1 $3,227 $2,320 2016 2017 2018 2019 2020
Slide 14: Foundational Technology Roadmap
Technology Roadmap Midland’s technology investments are enhancing efficiencies, improving client experience, and positively impacting retail deposit gathering and commercial/consumer loan production Consumer Small Business Commercial Wealth Flexible Overdrafts (Q1 2022) Commercial Online Account Ope
Slide 15: Loan Portfolio and Asset Quality
Loan Portfolio and Asset Quality 15
Slide 16: Commercial Loans and Leases by Industry
Commercial Loans and Leases by Industry Industries as a percentage of Commercial, Retail Trade Wholesale Trade Other Services Health Care CRE and Equipment Finance Loans and Leases ($s in millions) $148 $128 $98 $82 with outstanding balances 3.5% 3.1% 2.4% 2.0% of $4.17 billion as of 3/31/22 General
Slide 17: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type Collateral type as a percentage of the Hotel/Motel Office Commercial Real Estate and Construction $168 $147 ($s in millions) Assisted Living Portfolio with outstanding balances of 7.3% 6.4% $182 $2.30 billion as of 3/31/22 All Others 7.9% $113 Farm
Slide 18: Accelerating Commercial Loan Growth
Accelerating Commercial Loan Growth 23% Annualized Loan Growth in Second Half of 2021(1) New hires and an increase in productivity of the Commercial and CRE Loan Production commercial banking group without increasing the size of the business development team ($ in millions) $858 Addition of expe
Slide 19: Midland Equipment Finance Portfolio Overview
Midland Equipment Finance Portfolio Overview Portfolio Characteristics (as of 3/31/22) Nationwide portfolio providing financing solutions to equipment vendors and end‐users Total Outstanding $957.6 million Loans and Leases (17.3% of total loans) Number of Loans and Leases 8,133 Average Loan/Lease Si
Slide 20: GreenSky Consumer Loan Portfolio Overview
GreenSky Consumer Loan Portfolio Overview Portfolio Characteristics Prime Credit (as of 3/31/22) Average FICO score of 771 $924.8 million Total Outstanding (16.7% of total loans) No losses to MSBI in 10 year history of portfolio Number of Loans 433,987 Average Loan Size $2,131 Credit Enhancement
Slide 21: Asset Quality
Asset Quality • Nonperforming loans increased $10.3 million due to the addition of one commercial real estate loan where no loss is currently expected • Generally positive trends in the loan portfolio with continued upgrades of watch list loans • Net charge-offs of $2.3 million, or 0.17% of average
Slide 22: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) Specific Portfolio Economic Reserves Changes Factors Changes to specific New loans Changes to macro- reserves Changes in credit economic variables and forecasts quality including risk ratings and Changes to other deferrals economic qu
Slide 23: ACL by Portfolio
ACL by Portfolio ($ in thousands) Total Loans at % of Total Loans at % of Portfolio ACL ACL 3/31/22 Total Loans 12/31/21 Total Loans Commercial $ 796,498 $ 5,078 0.64% $ 770,670 $ 5,783 0.75% Warehouse Lines 83,999 ‐ 0.00% 91,927 ‐ 0.00% Commercial Other 641,628 7,543 1.18% 679,518 8,592 1.26% Equip
Slide 24: Recent Financial Trends
Recent Financial Trends 24 Midland io States Bancorp, Inc.
Slide 25: Overview of 1Q22
Overview of 1Q22 • Net income of $20.7 million, or $0.92 diluted EPS • Pre-tax, pre-provision earnings(1) of $32.0 million 1Q22 Earnings • ROAA of 1.16%, ROATCE(1) of 17.84%, and Adjusted PTPP(1) of $32.0 million all increased from prior year Another Strong • Total commercial and CRE loan production
Slide 26: Loan Portfolio
Loan Portfolio • Total loans increased $315.2 million from prior quarter to $5.54 billion • Growth in CRE loans, equipment finance, conventional commercial loans, and consumer loans offset lower end-of-period balances on commercial FHA warehouse credit lines, residential real estate loans, and lower
Slide 27: Total Deposits
Total Deposits • Total deposits decreased $53.1 million from prior quarter to $6.06 billion • Decrease in deposits primarily attributable to fluctuations in end-of-period balances of commercial FHA servicing deposits • Decrease in noninterest-bearing deposits partially offset by increases in lower-c
Slide 28: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income increased 4.7% from the prior quarter due primarily to higher average loan balances and an increase in net interest margin • Net interest margin, excluding accretion income, increased 26 bps from prior quarter due primarily to the redeployment of exce
Slide 29: Wealth Management
Wealth Management • During 1Q22, assets under administration decreased $173.3 million, primarily due to market performance • Wealth Management revenue was consistent with prior quarter, as seasonal tax preparation fees offset the decrease in AUA Assets Under Administration Wealth Management Revenue
Slide 30: Noninterest Income
Noninterest Income • Noninterest income decreased 30.7% from prior quarter, which was positively impacted by a number of one-time items • Impairment on commercial MSRs impacted noninterest income by $0.4 million and $2.1 million in 1Q22 and 4Q21, respectively • Excluding the impact of the one-time i
Slide 31: Noninterest Expense and Operating Efficiency
Noninterest Expense and Operating Efficiency Noninterest Expense and Efficiency Ratio (1) • Efficiency Ratio (1) was 55.7% in 1Q22 vs. 52.6% in 4Q21 (Noninterest expense in millions) • Adjustments to non-interest expense: $55.0 70.0% ($ in millions) 1Q22 4Q21 $50.0 $48.9 Integration and $45.8 acquis
Slide 32: Outlook
Outlook 32 Midland [=] States Bancorp, Inc.
Slide 33: Outlook
Outlook • Loan pipeline remains very healthy and should support continued strong loan growth • Continued loan growth and asset sensitive balance sheet expected to drive further expansion in net interest margin as interest rates increase • Closing of FNBC branch acquisition in 2Q22 will provide addit
Slide 34: 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 34
Slide 35: Appendix
APPENDIX 35 Midland [=] States Bancorp, Inc.
Slide 36: 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 37: Paycheck Protection Program Overview
Paycheck Protection Program Overview Paycheck Protection Program Paycheck Protection Program (as of 3/31/22) Loan Forgiveness Loans Outstanding $22.9 million As of 12/31/21 As of 3/31/22 Total Fees Earned $15.3 million Loans Submitted to SBA $342.4 million $362.7 million Fees Recognized in 1Q22 $1.1
Slide 38: Capital and Liquidity Overview
Capital and Liquidity Overview Capital Ratios Liquidity Sources (as of 3/31/22) (as of 3/31/22) 15.00% ($ in millions) Cash and Cash Equivalents $ 332.3 Unpledged Securities 362.0 11.74% FHLB Committed Liquidity 1,007.1 10.73% FRB Discount Window Availability 64.8 9.99% 9.99% Total Estimated Liquidi
Slide 39: Appendix: Reconciliation of TBV Per Share
Appendix: Reconciliation of TBV Per Share As of Decem ber 31, (do llars in tho usands, except per share data) 2021 2020 2019 2018 2017 2016 2015 2014 Shareholders' Equity to Tangible Common Equity: Total shareholders' equity—GAAP $ 663,837 $ 621,391 $ 661,911 $ 608,525 $ 449,545 $ 321,770 $ 232,880
Slide 40: Adjusted Earnings Reconciliation
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For the Years Ended December 31, (dollars in thousands, except per share data) 2021 2020 2019 2018 2017 2016 Income before income taxes - GAAP $ 99,112 $ 32,014 $ 72,471 $ 50,805
Slide 41: Efficiency Ratio Reconciliation
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Update Efficiency Ratio Reconciliation For the Years Ended December 31, (dollars in thousands) 2021 2020 2019 2018 2017 2016 Noninterest expense - GAAP $ 175,069 $ 184,010 $ 175,641 $ 191,643 $ 152,997 $ 121,289
Slide 42: Adjusted Earnings Reconciliation (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) 2022 2021 2021 2021 2021 Income before income taxes - G
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 March 31, December 31, September 30, June 30, March 31, (dollars in thousands) 2022 2021 2021 2021 2021 Noninterest expense - GAAP $ 40,884 $ 45,7
Slide 44: Tangible Common Equity 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) 2022 2021
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