Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q3 2020 Earnings Presentation
26 slides from Midland States Bancorp's earnings presentation, Oct 22, 2020
Slide 1: Midland States Bancorp, Inc. Third Quarter 2020 Earnings Call
1 Midland States Bancorp, Inc. NASDAQ: MSBI Third Quarter 2020 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 expressing management’s current expectations, forecasts of future events or long - te rm goals may be based upon beliefs, expecta
Slide 3: Overview of 3Q20
3 Overview of 3Q20 3 Positive Trends Across Multiple Business Lines 3Q20 Earnings Optimization and Efficiency Initiatives • Wealth management continues to provide stable source of noninterest income • Equipment financing group continues to see strong demand • Residential mortgage banking group capit
Slide 4: 2020 Optimization and Efficiency Initiatives
4 2020 Optimization and Efficiency Initiatives 4 Sale of Commercial FHA Loan Origination Platform • Sale of origination platform to Dwight Capital • No significant gain on sale (reduced goodwill by $10.9 million) • $3.0 million tax charge on sale • Retain servicing and low - cost deposits • Ongoing
Slide 5: Paycheck Protection Program Overview
5 Paycheck Protection Program Overview Paycheck Protection Program (as of 9/30/20) Loans Outstanding $277.6 million Number of Loans 2,295 Average Loan Size $120,938 Total Fees Earned $9.8 million Remaining Fees to be Recognized $7.6 million Impact on 3Q20 Financials At or for the Three Months Ended
Slide 6: Loan Deferral Overview
6 Loan Deferral Overview Total Loan Deferrals As of June 30, 2020 As of September 30, 2020 Percentage Change Total Loans Deferred $898.4 million $279.3 million (68.9%) % of Total Loans 18.6% 5.7% (69.7%) Deferrals by Industry (as of September 30, 2020) Hotels/Motels $105.6 38% Transit & Ground Passe
Slide 7: Loan Portfolio
7 3Q 2020 2Q 2020 3Q 2019 Commercial loans and leases $ 1,938 $ 1,856 $ 1,293 Commercial real estate 1,497 1,495 1,622 Construction and land development 178 208 216 Residential real estate 471 509 588 Consumer 857 771 610 Total Loans $4,941 $4,839 $4,329 Loan Portfolio Total Loans and Average Loan Y
Slide 8: Midland Equipment Finance Portfolio Overview
8 Midland Equipment Finance Portfolio Overview ($ in millions) Portfolio Characteristics (as of 9/30/20) Nationwide portfolio providing financing solutions to equipment vendors and end - users Total Outstanding Loans and Leases $815.5 million (16.5% of total loans) Number of Loans and Leases 6,210 A
Slide 9: Hotel/Motel Portfolio Overview
9 Hotel/Motel Portfolio Overview Deferrals by Chain Scale ($ in millions) Upper Midscale Chain $82.5 78% Upscale Chain $11.6 11% Midscale Chain $9.1 9% Other $2.4 2% Portfolio Characteristics (CRE & C&I) (as of 9/30/20) Total Outstanding $187.6 million (3.8% of total loans) Number of Loans 61 Averag
Slide 10: GreenSky Consumer Loan Portfolio Overview
10 GreenSky Consumer Loan Portfolio Overview Delinquency Rate (greater than 60 days) Portfolio Characteristics (as of 9/30/20) Total Outstanding $768.6 million (15.6% of total loans) Number of Loans 330,751 Average Loan Size $2,324 Average FICO Score 763 Total Deferred Loans (as of June 30, 2020) $3
Slide 11: Total Deposits and Cost of Deposits
11 3Q 2020 2Q 2020 3Q 2019 Noninterest - bearing demand $ 1,355 $ 1,273 $ 1,015 Interest - bearing: Checking 1,581 1,485 1,222 Money market 827 877 754 Savings 581 595 527 Time 662 690 833 Brokered time 23 23 94 Total Deposits $5,029 $4,943 $4,445 Total Deposits Total Deposits and Cost of Deposits •
Slide 12: Net Interest Income/Margin
12 $3.1 $3.6 $2.2 $1.8 $2.1 $49.5 $48.7 $46.7 $49.0 $50.0 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 NII Accretion Income 0.20% 0.23% 0.16% 0.12% 0.14% 3.70% 3.56% 3.48% 3.32% 3.33% 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 NIM Accretion Income • Net interest income increased 2.0% from the prior quarter
Slide 13: Wealth Management
13 $6.00 $5.38 $5.68 $5.70 $5.56 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 $3,281 $3,410 $2,968 $3,254 $3,261 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 • During 3Q20, assets under administration increased $7.1 million, primarily due to market performance • Wealth Management revenue remains a consistent
Slide 14: Noninterest Income
14 Noninterest Income • Noninterest income reduced 2.5% from prior quarter, due to lower Commercial FHA revenue resulting from the sale of the origination platform at the end of August and a $1.4 million impairment of commercial mortgage servicing rights (“MSRs”) • Excluding the impact of the impair
Slide 15: Noninterest Expense and Operating Efficiency
15 Noninterest Expense and Operating Efficiency • Efficiency Ratio (1) was 58.8% in 3Q20 vs. 58.5% in 2Q20 • Adjustments to non - interest expense: • Excluding these adjustments, noninterest expense was essentially unchanged from the prior quarter • Following branch and facilities consolidation sche
Slide 16: Asset Quality
16 Asset Quality NCO / Average Loans • Nonperforming loans/total loans increased to 1.36% from 1.25% at the end of the prior quarter, primarily due to the addition of three CRE loans • Net charge - offs of $5.3 million, or 0.44% of average loans, reflects charge - offs taken against the three CRE lo
Slide 17: Changes in Allowance for Credit Losses
17 Changes in Allowance for Credit Losses ACL 6/30/20 ACL 9/30/20 ($ in thousands) Specific Reserves Portfolio Changes Economic Factors ▪ Changes to specific reserves ▪ New loans ▪ Changes in credit quality including risk downgrades and deferrals ▪ Aging of existing portfolio ▪ Other charge - offs a
Slide 18: ACL by Portfolio
18 ACL by Portfolio Portfolio Total Loans at 9/30/20 ACL % of Total Loans Total Loans at 6/30/20 ACL % of Total Loans Commercial $ 729,745 $ 7,846 1.08% $ 715,206 $ 4,916 0.69% Warehouse Lines 136,761 - 0.00% 127,568 - 0.00% Commercial Other 813,412 10,014 1.23% 767,175 7,297 0.95% Equipment Finance
Slide 19: Outlook and Near-Term Priorities
19 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 capitalizing on areas of near - term demand to drive additional loan growth • Implement branch network and
Slide 20: Appendix
APPENDIX Midland [=]
Slide 21: Commercial Loans and Leases by Industry
21 Commercial Loans and Leases by Industry 21 RE / Rental & Leasing 21.3% All Others 11.5% Manufacturing 7.8% Construction - General 7.5% Accommodation & Food Svcs 7.3% Assisted Living 6.9% Finance and Insurance 6.9% Retail Trade 6.3% Ag., Forestry, & Fishing 5.2% General Freight Trucking 5.0% Healt
Slide 22: Commercial Real Estate Portfolio by Collateral Type
22 Commercial Real Estate Portfolio by Collateral Type 22 Retail 15.5% Assisted Living 11.3% Industrial / Warehouse 10.0% Multi - Family 9.4% Hotel/Motel 9.4% All Others 9.0% Office 6.8% Residential 1 - 4 Family 6.2% C - Store / Gas Station 4.1% Farmland 4.0% Medical Building 3.7% Mixed Use / Other
Slide 23: Capital and Liquidity Overview
23 Capital and Liquidity Overview Capital Ratios (as of 9/30/20) Liquidity Sources (as of 9/30/20) 6.61% 8.18% 7.72% 9.40% 13.34% 10.96% 9.01% 10.96% 11.82% 0.00% 5.00% 10.00% 15.00% TCE/TA Tier 1 Common Tier 1 Leverage Tier 1 RBC Total RBC Consolidated Bank Level ($ in millions) Cash and Cash Equiv
Slide 24: Adjusted Earnings Reconciliation
24 Adjusted Earnings Reconciliation (dollars in thousands, except per share data) Income before income taxes - GAAP $ 3,270 $ 15,993 $ 2,005 $ 16,071 $ 16,670 Adjustments to noninterest income: Gain on sales of investment securities, net 1,721 - - 635 25 Other (17) 11 (13) (6) - Total adjustments to
Slide 25: Efficiency Ratio Reconciliation
25 Efficiency Ratio Reconciliation (dollars in thousands) Noninterest expense - GAAP $ 54,659 $ 40,782 $ 42,675 $ 46,325 $ 48,025 (Loss) gain on mortgage servicing rights held for sale (188) (391) (496) (95) 70 Loss on repurchase of subordinated debt - - (193) (1,778) - Impairment related to branch
Slide 26: Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share
26 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 $ 621,880 $ 633,589 $ 631,160 $ 661,911 $ 655,522 Adjustments: Preferred stock - - - - - G
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