Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q2 2017 Earnings Presentation
17 slides from Midland States Bancorp's earnings presentation, Jul 27, 2017
Slide 1: Midland States Bancorp, Inc. Second Quarter 2017 Earnings Call
Midland States Bancorp, Inc. NASDAQ: MSBI Second Quarter 2017 Earnings Call
Slide 2: Forward-Looking Statements
2 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, and may be based upon beliefs, expect
Slide 3: Second Quarter 2017 Summary
Second Quarter 2017 Summary 3 2Q17 Earnings Strong Growth in Wealth Management Centrue Acquisition Continued Loan Growth Closed on June 9, 2017 Net income of $3.5 million, or $0.20 diluted EPS • Integration and acquisition expenses of $7.5 million, or $0.31 per diluted share • MSR impairment of $1.7
Slide 4: Net Interest Income/Margin
• Net interest income increased 7.1% from 1Q17 primarily due to higher interest income on loans due to organic loan growth and partial quarter contribution of Centrue • Net interest margin, excluding accretion income, increased by 5 basis points, due to higher average yields on both loans and invest
Slide 5: Non-Interest Income
Non - Interest Income 5 • Fee generating businesses drive 32% of total revenue in 2Q17 • $1.7 million in MSR impairments • Growth in wealth management offset by lower commercial FHA and residential mortgage banking revenue Non - Interest Income (in millions) $14.0 $14.9 $30.5 $16.3 2Q 2016 3Q 2016 4
Slide 6: Non-Interest Expense and Operating Efficiency
Non - Interest Expense and Operating Efficiency 6 • Efficiency Ratio 1 increased to 67% in 2Q17 vs. 66% in 1Q17 • Integration and acquisition related expenses » $7.5 million in 2Q17 » $1.3 million in 1Q17 • Excluding these charges in both quarters, noninterest expense increased 2.2% on a linked - qu
Slide 7: Loan Portfolio
Loan Portfolio Total Loans 7 • Total loans at quarter end increased by $729 million in 2Q17 vs. 1Q17 • $688 million of the increase was due to Centrue acquisition (preliminary credit mark of 1.6%) • $41 million of organic growth, most notably in residential mortgage portfolio Loan Portfolio Mix (in
Slide 8: Total Deposits
Total Deposits Total Deposits 8 • Total deposits at quarter end increased by $806 million in 2Q17 vs. 1Q17 • $742 million of increase was due to Centrue acquisition • $253 million increase in noninterest - bearing demand deposits Deposit Mix (in millions, as of quarter - end) (in millions, as of qua
Slide 9: Asset Quality
Asset Quality NCO / Average Loans 9 • Non - performing loans decreased by $1.3 million from 1Q17 • Net charge - offs totaled $0.8 million in 2Q17, or 13 bps of average loans • Provision for loan losses of $0.5 million in 2Q17 • ALL + credit marks/total loans of 0.98% at June 30, 2017 Non - performin
Slide 10: Business Unit Review - Love Funding
$7.8 $3.8 $3.9 $6.4 $4.5 [VALUE] ($0.5) ($0.2) $0.3 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 Gain Servicing ($0.3) $281 $73 $159 $217 $152 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 Loan Rate Locks • Commercial FHA origination and servicing business focused on multifamily and healthcare facilities • Lon
Slide 11: Business Unit Review - Residential Mortgage
Business Unit Review - Residential Mortgage Purchase / Refinance Mix 11 • Residential mortgage loan origination and servicing • Strong quarter of total residential mortgage loan production (portfolio and originated for sale) • $78 million in mortgage rate locks on loans originated for sale • $801 th
Slide 12: Business Unit Review - Heartland Business Credit
$32.8 $22.1 $29.1 $22.4 $23.2 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 New Originations Business Unit Review - Heartland Business Credit 12 • Equipment leasing sourced from a network of equipment manufacturers and brokers • $23 million in originations • Attractive yields – average rate (ex. accretion
Slide 13: Business Unit Review - Wealth Management
$1.87 $1.94 $2.50 $2.87 $3.41 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 $1,198 $1,235 $1,658 $1,869 $1,930 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 • Wealth Management group offers Trust and Estate services, Investment Management, Financial Planning and Employer Sponsored Retirement Plans • First full
Slide 14: Outlook
Outlook • Higher state tax rate will increase effective tax rate by 30 bps • Business climate in Illinois remains favorable despite fiscal challenges at state and municipal levels • Continue to expect 8 - 12% loan growth for full year • Stronger fee income expected in second half of 2017 • Synergies
Slide 15: Appendix
APPENDIX
Slide 16: Adjusted Earnings Reconciliation
16 (in thousands, except per share data) Adjusted Earnings Reconciliation Income before income taxes - GAAP $ 4,916 $ 11,473 $ 19,910 $ 12,153 $ 10,472 Adjustments to other income: Gain on sales of investment securities, net 55 67 14,387 39 72 Reversal of contingent consideration accrual - - - - 350
Slide 17: Tangible Common Equity and Tangible Book Value Per Share
17 Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share (dollars in thousands, except per share data) Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 451,952 $ 334,333 $ 321,770 $ 321,749 $ 316,268 Adjustments: Preferred stock (3,134) - -
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