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CST: 07/12/2019 07:20:33   

Midland States Bancorp, Inc. Announces 2019 Third Quarter Results

43 Days ago

  • Net income of $12.7 million, or $0.51 diluted earnings per share, which included $5.3 million, or $0.15 per diluted share, of integration and acquisition expenses

  • Acquisition of HomeStar Financial Group, Inc. completed on July 17, 2019

  • Total assets surpassed $6 billion at September 30, 2019

  • Efficiency ratio improved to 60.6% from 61.6% in prior quarter

EFFINGHAM, Ill., Oct. 24, 2019 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $12.7 million, or $0.51 diluted earnings per share, for the third quarter of 2019, which included $5.3 million, or $0.15 per diluted share, in integration and acquisition expenses. This compares to net income of $16.4 million, or $0.67 diluted earnings per share, for the second quarter of 2019, which included $0.3 million in integration and acquisition expenses, and net income of $8.5 million, or $0.35 diluted earnings per share, for the third quarter of 2018, which included $9.6 million in integration and acquisition expenses.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “Our third quarter results reflect the initial benefits of our acquisition of HomeStar Financial Group, Inc., which has provided us a leading position in the Kankakee, Illinois market and improved our deposit base. We continued to execute well on our strategic priorities in the quarter, which resulted in strong inflows of core deposits, further improvement in our operational efficiencies, and maintaining a relatively stable net interest margin, excluding accretion income. During the third quarter, we also issued $100 million of subordinated notes that will put us in a position to reduce our cost of borrowings over the next year and authorized a $25 million stock repurchase program. We believe these capital management actions, along with our history of increasing our quarterly dividend by at least 10% each year, will contribute in our efforts to efficiently manage our capital and deliver a strong total return for our shareholders.”

Factors Affecting Comparability

The Company acquired HomeStar Financial Group, Inc. (“HomeStar”) in July 2019. The financial position and results of operations of HomeStar prior to its acquisition date are not included in the Company’s financial results.

Adjusted Earnings

Financial results for the third quarter of 2019 included $5.3 million in integration and acquisition expenses. Excluding these and other expenses and certain income, adjusted earnings were $16.4 million, or $0.66 diluted earnings per share, for the third quarter of 2019. 

Financial results for the third quarter of 2018 included $9.6 million in integration and acquisition expenses. Excluding these and other expenses and certain income, adjusted earnings were $15.6 million, or $0.64 diluted earnings per share, for the third quarter of 2018. 

A reconciliation of adjusted earnings to net income according to accounting principles generally accepted in the United States (“GAAP”) is provided in the financial tables at the end of this press release.

Net Interest Income

Net interest income for the third quarter of 2019 was $49.5 million, an increase of 7.3% from $46.1 million for the second quarter of 2019. Excluding accretion income, net interest income increased $3.7 million from the prior quarter. Accretion income associated with purchased loan portfolios totaled $3.1 million for the third quarter of 2019, compared with $3.4 million for the second quarter of 2019. The increase in net interest income excluding accretion income was primarily attributable to the contribution from HomeStar.

Relative to the third quarter of 2018, net interest income increased $4.4 million, or 9.7%. Accretion income for the third quarter of 2018 was $1.7 million. Excluding the impact of accretion income, net interest income increased primarily due to the contribution of HomeStar.

Net Interest Margin

Net interest margin for the third quarter of 2019 was 3.70%, compared to 3.76% for the second quarter of 2019. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 20 and 25 basis points to net interest margin in the third quarter of 2019 and second quarter of 2019, respectively. Excluding the impact of accretion income, net interest margin decreased one basis point from the second quarter of 2019.

Relative to the third quarter of 2018, net interest margin increased from 3.59%. Accretion income on purchased loan portfolios contributed 10 basis points to net interest margin in the third quarter of 2018. Excluding the impact of accretion income, net interest margin increased one basis point compared to the third quarter of 2018. 

Noninterest Income

Noninterest income for the third quarter of 2019 was $19.6 million, unchanged from $19.6 million for the second quarter of 2019. 

Relative to the third quarter of 2018, noninterest income increased 7.3% from $18.3 million. The increase was attributable to higher wealth management revenue, interchange revenue and other income, partially offset by a decline in commercial FHA and residential mortgage banking revenue.

Wealth management revenue for the third quarter of 2019 was $6.0 million, an increase of 9.0% from $5.5 million in the second quarter of 2019, primarily due to an increase in estate fees. Compared to the third quarter of 2018, wealth management revenue increased 9.7%.

Commercial FHA revenue for the third quarter of 2019 was $2.9 million, compared to $4.9 million in the second quarter of 2019. Commercial FHA revenue in the third quarter of 2019 included a $1.1 million mortgage servicing rights (“MSR”) impairment, while the second quarter of 2019 included a $0.6 million recapture of MSR impairment. The Company originated $112.8 million in rate lock commitments during the third quarter of 2019, compared to $42.2 million in the prior quarter. Compared to the third quarter of 2018, commercial FHA revenue decreased $0.2 million.

Noninterest Expense

Noninterest expense for the third quarter of 2019 was $48.0 million, which included $5.3 million in integration and acquisition expenses and a $0.1 million gain on MSR held for sale, compared with $40.2 million for the second quarter of 2019, which included $0.3 million in integration and acquisition expenses and a $0.5 million gain on MSR held for sale. Excluding integration and acquisition expenses and gain on MSR held for sale, the increase in noninterest expense primarily reflects the addition of HomeStar’s operations.

Relative to the third quarter of 2018, noninterest expense decreased 4.6% from $50.3 million, which included $9.6 million in integration and acquisition expenses and a $0.3 million loss on MSR held for sale. Excluding these items, noninterest expense increased 5.7% from $40.5 million, primarily due to the addition of HomeStar’s operations.

Loan Portfolio

Total loans outstanding were $4.33 billion at September 30, 2019, compared with $4.07 billion at June 30, 2019 and $4.16 billion at September 30, 2018. The increase in total loans from June 30, 2019 was primarily due to the addition of HomeStar’s loan portfolio. Excluding the impact of HomeStar’s loan portfolio, total loans increased $44.1 million, or 1.1%, from June 30, 2019, primarily due to growth in the commercial loan portfolio. Equipment finance balances increased $57.1 million from June 30, 2019, which are booked within the commercial loans and leases portfolio, reflecting management’s efforts to grow the equipment finance business. The increase in total loans from September 30, 2018 was primarily attributable to the addition of HomeStar’s loan portfolio.

Deposits

Total deposits were $4.45 billion at September 30, 2019, compared with $4.01 billion at June 30, 2019, and $4.14 billion at September 30, 2018. The increases in total deposits from June 30, 2019 and September 30, 2018 were primarily attributable to the addition of HomeStar’s deposits. Excluding the impact of HomeStar’s deposits, total deposits increased $112.2 million, or 2.8%, from June 30, 2019. 

Asset Quality

Nonperforming loans totaled $45.2 million, or 1.04% of total loans, at September 30, 2019, compared with $50.7 million, or 1.24% of total loans, at June 30, 2019, and $38.6 million, or 0.93% of total loans, at September 30, 2018.  

Net charge-offs for the third quarter of 2019 were $5.4 million, or 0.49% of average loans on an annualized basis. 

The Company recorded a provision for loan losses of $4.4 million for the third quarter of 2019, which included an increase of $2.3 million to the specific reserve established for an existing nonperforming loan. The Company’s allowance for loan losses was 0.58% of total loans and 55.3% of nonperforming loans at September 30, 2019, compared with 0.64% of total loans and 51.2% of nonperforming loans at June 30, 2019. Fair market value discounts recorded in connection with acquired loan portfolios represented 0.51% of total loans at September 30, 2019, compared with 0.39% of total loans at June 30, 2019.

Capital

At September 30, 2019, the Company exceeded all regulatory capital requirements under Basel III and was considered to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

  September 30,
2019
Well Capitalized
Regulatory Requirements
Total capital to risk-weighted assets 14.82% 10.00%
Tier 1 capital to risk-weighted assets 10.35% 8.00%
Tier 1 leverage ratio 8.77% 5.00%
Common equity Tier 1 capital 9.02% 6.50%
Tangible common equity to tangible assets (1) 7.58% NA

(1) A non-GAAP financial measure. Refer to page 14 for a reconciliation to the comparable GAAP financial measure.

Stock Repurchase Program

During the third quarter of 2019, the Company repurchased 71,603 shares of its common stock at a weighted average price of $25.58 under its stock repurchase program, which authorized the repurchase of up to $25 million of its common stock. As of September 30, 2019, the Company had $23.2 million remaining under the current stock repurchase authorization.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, October 25, 2019 to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 3089402. A recorded replay can be accessed through November 2, 2019 by dialing (855) 859-2056; conference ID: 3089402.

A slide presentation relating to the third quarter 2019 results will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website at investors.midlandsb.com under the “News and Events” tab.

About Midland States Bancorp, Inc.

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of September 30, 2019, the Company had total assets of approximately $6.11 billion and its Wealth Management Group had assets under administration of approximately $3.28 billion. Midland provides a full range of commercial and consumer banking products and services, business equipment financing, merchant credit card services, trust and investment management, and insurance and financial planning services. In addition, multi-family and healthcare facility FHA financing is provided through Love Funding, Midland’s non-bank subsidiary. For additional information, visit https://www.midlandsb.com/ or follow Midland on LinkedIn at https://www.linkedin.com/company/midland-states-bank.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP. These non-GAAP financial measures include “Adjusted Earnings,” “Adjusted Diluted Earnings Per Common Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company’s plans, objectives, future performance, goals and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe" or "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

CONTACTS:
Jeffrey G. Ludwig, President and CEO, at jludwig@midlandsb.com or (217) 342-7321
Douglas J. Tucker, SVP and Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321

                                           
                                           
MIDLAND STATES BANCORP, INC.  
CONSOLIDATED FINANCIAL SUMMARY (unaudited)  
   
    For the Quarter Ended    
    September 30,    June 30,    March 31,    December 31,    September 30,   
(dollars in thousands, except per share data)   2019   2019   2019   2018   2018  
Earnings Summary                                          
Net interest income   $ 49,450     $ 46,077     $ 45,601     $ 48,535     $ 45,081    
Provision for loan losses     4,361       4,076       3,243       3,467       2,103    
Noninterest income     19,606       19,587       17,075       21,170       18,272    
Noninterest expense     48,025       40,194       41,097       45,375       50,317    
Income before income taxes     16,670       21,394       18,336       20,863       10,933    
Income taxes     4,015       5,039       4,354       4,527       2,436    
Net income     12,655       16,355       13,982       16,336       8,497    
Preferred stock dividends, net     (22)       34       34       34       35    
Net income available to common shareholders   $ 12,677     $ 16,321     $ 13,948     $ 16,302     $ 8,462    
                                           
Diluted earnings per common share   $ 0.51     $ 0.67     $ 0.57     $ 0.67     $ 0.35    
Weighted average shares outstanding - diluted     24,684,529       24,303,211       24,204,661       24,200,346       24,325,743    
Return on average assets     0.84 %     1.17 %     1.01 %     1.14 %     0.59 %  
Return on average shareholders' equity     7.71 %     10.43 %     9.23 %     10.81 %     5.68 %  
Return on average tangible common equity (1)     11.19 %     15.34 %     13.79 %     16.40 %     8.69 %  
Net interest margin     3.70 %     3.76 %     3.73 %     3.85 %     3.59 %  
Efficiency ratio (1)     60.63 %     61.58 %     64.73 %     65.50 %     63.02 %  
                                           
Adjusted Earnings Performance Summary                                          
Adjusted earnings (1)   $ 16,422     $ 16,196     $ 14,098     $ 16,397     $ 15,632    
Adjusted diluted earnings per common share (1)   $ 0.66     $ 0.66     $ 0.58     $ 0.67     $ 0.64    
Adjusted return on average assets (1)     1.09 %     1.16 %     1.02 %     1.14 %     1.09 %  
Adjusted return on average shareholders' equity (1)     10.01 %     10.33 %     9.31 %     10.85 %     10.45 %  
Adjusted return on average tangible common equity (1)     14.52 %     15.19 %     13.90 %     16.46 %     16.02 %  
                                           
(1) Non-GAAP financial measures. Refer to pages 12 - 14 for a reconciliation to the comparable GAAP financial measures.     

 

                                           
                                           
                                           
MIDLAND STATES BANCORP, INC.  
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)  
     
    For the Quarter Ended    
    September 30,    June 30,    March 31,    December 31,    September 30,   
(in thousands, except per share data)   2019   2019   2019   2018   2018  
Net interest income:                                          
Total interest income   $ 65,006       $ 60,636       $ 59,432     $ 61,592     $ 56,987    
Total interest expense     15,556         14,559         13,831       13,057       11,906    
Net interest income     49,450         46,077         45,601       48,535       45,081    
Provision for loan losses     4,361         4,076         3,243       3,467       2,103    
Net interest income after provision for loan losses     45,089         42,001         42,358       45,068       42,978    
Noninterest income:                                          
Wealth management revenue     5,998         5,504         4,953       5,651       5,467    
Commercial FHA revenue     2,894         4,917         3,270       4,194       3,130    
Residential mortgage banking revenue     720         611         834       1,041       1,154    
Service charges on deposit accounts     3,008         2,639         2,520       2,976       2,804    
Interchange revenue     3,249         3,010         2,680       2,941       2,759    
Gain on sales of investment securities, net     25         14         -       469       -    
Other income     3,712         2,892         2,818       3,898       2,958    
Total noninterest income     19,606         19,587         17,075       21,170       18,272    
Noninterest expense:                                          
Salaries and employee benefits     25,083         21,134         22,039       23,020       22,528    
Occupancy and equipment     4,793         4,500         4,832       4,914       5,040    
Data processing     5,443         4,987         4,891       5,660       10,817    
Professional     2,348         2,410         2,073       2,752       3,087    
Amortization of intangible assets     1,803         1,673         1,810       1,852       1,853    
(Gain) loss on mortgage servicing rights held for sale     (70 )       (515 )       -       -       270    
Other expense     8,625         6,005         5,452       7,177       6,722    
Total noninterest expense     48,025         40,194         41,097       45,375       50,317    
Income before income taxes     16,670         21,394         18,336       20,863       10,933    
Income taxes     4,015         5,039         4,354       4,527       2,436    
Net income     12,655         16,355         13,982       16,336       8,497    
Preferred stock dividends, net     (22 )       34         34       34       35    
Net income available to common shareholders   $ 12,677       $ 16,321       $ 13,948     $ 16,302     $ 8,462    
                                           
Basic earnings per common share   $ 0.51       $ 0.67       $ 0.58     $ 0.68     $ 0.35    
Diluted earnings per common share   $ 0.51       $ 0.67       $ 0.57     $ 0.67     $ 0.35    
                                           

 

                                         
                                         
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                                         
    As of  
    September 30,    June 30,    March 31,    December 31,    September 30, 
(in thousands)   2019   2019   2019   2018   2018
Assets                                        
Cash and cash equivalents   $ 409,346       $ 245,415       $ 276,480       $ 213,700       $ 242,433    
Investment securities     668,630         613,026         656,152         660,785         685,753    
Loans     4,328,835         4,073,527         4,092,106         4,137,551         4,156,282    
Allowance for loan losses     (24,917 )       (25,925 )       (23,091 )       (20,903 )       (19,631 )  
Total loans, net     4,303,918         4,047,602         4,069,015         4,116,648         4,136,651    
Loans held for sale, at fair value     88,322         22,143         16,851         30,401         35,246    
Premises and equipment, net     93,896         94,824         94,514         94,840         95,062    
Other real estate owned     4,890         3,797         2,020         3,483         3,684    
Loan servicing rights, at lower of cost or fair value     54,124         54,191         52,957         53,447         51,626    
Mortgage servicing rights held for sale     1,860         159         257         3,545         4,419    
Intangible assets     36,690         33,893         35,566         37,376         39,228    
Goodwill     171,074         164,673         164,673         164,673         164,044    
Cash surrender value of life insurance policies     141,510         140,593         139,686         138,783         138,600    
Other assets     139,644         125,739         133,609         119,992         127,866    
Total assets   $ 6,113,904       $ 5,546,055       $ 5,641,780       $ 5,637,673       $ 5,724,612    
                                         
Liabilities and Shareholders' Equity  
Noninterest-bearing deposits   $ 1,015,081       $ 902,286       $ 941,344       $ 972,164       $ 991,311    
Interest-bearing deposits     3,430,090         3,108,921         3,094,944         3,102,006         3,151,895    
Total deposits     4,445,171         4,011,207         4,036,288         4,074,170         4,143,206    
Short-term borrowings     122,294         113,844         115,832         124,235         145,450    
FHLB advances and other borrowings     559,932         582,387         669,009         640,631         652,253    
Subordinated debt     192,689         94,215         94,174         94,134         94,093    
Trust preferred debentures     48,165         48,041         47,918         47,794         47,676    
Other liabilities     90,131         56,473         54,391         48,184         47,788    
Total liabilities     5,458,382         4,906,167         5,017,612         5,029,148         5,130,466    
Total shareholders’ equity     655,522         639,888         624,168         608,525         594,146    
Total liabilities and shareholders’ equity   $ 6,113,904       $ 5,546,055       $ 5,641,780       $ 5,637,673       $ 5,724,612    
                                         

 

 
 
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
 
    As of    
    September 30,    June 30,    March 31,    December 31,    September 30,   
(in thousands)   2019   2019   2019   2018   2018  
Loan Portfolio                                          
Commercial loans and leases   $ 1,292,511     $ 1,149,370     $ 1,122,621     $ 1,074,935     $ 1,034,546    
Commercial real estate loans     1,622,363       1,524,369       1,560,427       1,639,155       1,711,926    
Construction and land development loans   215,978       250,414       239,376       232,229       239,480    
Residential real estate loans     587,984       552,406       569,051       578,048       586,134    
Consumer loans     609,999       596,968       600,631       613,184       584,196    
Total loans   $ 4,328,835     $ 4,073,527     $ 4,092,106     $ 4,137,551     $ 4,156,282    
                                           
Deposit Portfolio                                          
Noninterest-bearing demand deposits   $ 1,015,081     $ 902,286     $ 941,344     $ 972,164     $ 991,311    
Interest-bearing:                                          
Checking accounts     1,222,599       1,009,023       968,844       1,002,275       1,047,914    
Money market accounts     753,869       732,573       802,036       862,171       836,151    
Savings accounts     526,938       442,017       457,176       442,132       445,640    
Time deposits     833,038       785,337       685,700       633,787       633,654    
Brokered time deposits     93,646       139,971       181,188       161,641       188,536    
Total deposits   $ 4,445,171     $ 4,011,207     $ 4,036,288     $ 4,074,170     $ 4,143,206    

 

                                           
                                           
MIDLAND STATES BANCORP, INC.  
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)  
                                           
    For the Quarter Ended    
    September 30,    June 30,    March 31,    December 31,    September 30,   
(dollars in thousands)   2019   2019   2019   2018   2018  
Average Balance Sheets                                          
Cash and cash equivalents   $ 259,427     $ 162,110     $ 152,078     $ 155,280     $ 154,526    
Investment securities     666,157       636,946       654,764       676,483       700,018    
Loans     4,352,635       4,086,720       4,128,893       4,139,831       4,106,367    
Loans held for sale     31,664       40,177       30,793       51,981       48,715    
Nonmarketable equity securities     44,010       44,217       44,279       42,708       42,770    
Total interest-earning assets     5,353,893       4,970,170       5,010,807       5,066,283       5,052,396    
Non-earning assets     636,028       618,023       618,996       624,378       639,323    
Total assets   $ 5,989,921     $ 5,588,193     $ 5,629,803     $ 5,690,661     $ 5,691,719    
                                           
Interest-bearing deposits   $ 3,429,063     $ 3,107,660     $ 3,093,979     $ 3,123,134     $ 3,172,422    
Short-term borrowings     124,183       120,859       135,337       143,869       139,215    
FHLB advances and other borrowings     591,516       607,288       673,250       645,642       608,153    
Subordinated debt     106,090       94,196       94,156       94,115       94,075    
Trust preferred debentures     48,105       47,982       47,848       47,737       47,601    
Total interest-bearing liabilities     4,298,957       3,977,985       4,044,570       4,054,497       4,061,466    
Noninterest-bearing deposits     967,192       921,115       919,185       989,954       989,142    
Other noninterest-bearing liabilities     72,610       60,363       51,838       46,487       47,654    
Shareholders' equity     651,162       628,730       614,210       599,723       593,457    
Total liabilities and shareholders' equity   $ 5,989,921     $ 5,588,193     $ 5,629,803     $ 5,690,661     $ 5,691,719    
                                           
Yields      
Cash and cash equivalents     2.14 %     2.43 %     2.42 %     2.24 %     1.96 %  
Investment securities     3.00 %     3.11 %     3.07 %     3.04 %     3.01 %  
Loans     5.31 %     5.32 %     5.22 %     5.28 %     4.88 %  
Loans held for sale     3.02 %     4.50 %     3.94 %     3.92 %     4.17 %  
Nonmarketable equity securities     5.33 %     5.42 %     5.69 %     5.20 %     5.01 %  
Total interest-earning assets     4.85 %     4.94 %     4.85 %     4.87 %     4.52 %  
Interest-bearing deposits     1.08 %     1.09 %     0.97 %     0.86 %     0.77 %  
Short-term borrowings     0.68 %     0.70 %     0.71 %     0.67 %     0.61 %  
FHLB advances and other borrowings     2.36 %     2.34 %     2.32 %     2.26 %     2.09 %  
Subordinated debt     6.30 %     6.43 %     6.43 %     6.43 %     6.44 %  
Trust preferred debentures     6.83 %     7.17 %     7.38 %     6.93 %     6.81 %  
Total interest-bearing liabilities     1.44 %     1.47 %     1.39 %     1.28 %     1.16 %  
Net interest margin     3.70 %     3.76 %     3.73 %     3.85 %     3.59 %  
                                           

 

                                           
                                           
MIDLAND STATES BANCORP, INC.  
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)  
                                           
    As of and for the Quarter Ended    
    September 30,    June 30,    March 31,    December 31,    September 30,   
(dollars in thousands, except per share data)   2019   2019   2019   2018   2018  
Asset Quality                                          
Loans 30-89 days past due   $ 23,118     $ 21,554     $ 23,999     $ 25,213     $ 22,678    
Nonperforming loans     45,168       50,676       49,262       42,899       38,561    
Nonperforming assets     50,058       54,473       51,282       45,899       41,638    
Net charge-offs     5,369       1,242       1,055       2,195       718    
Loans 30-89 days past due to total loans     0.53 %     0.53 %     0.59 %     0.61 %     0.55 %  
Nonperforming loans to total loans     1.04 %     1.24 %     1.20 %     1.04 %     0.93 %  
Nonperforming assets to total assets     0.82 %     0.98 %     0.91 %     0.81 %     0.73 %  
Allowance for loan losses to total loans     0.58 %     0.64 %     0.56 %     0.51 %     0.47 %  
Allowance for loan losses to nonperforming loans   55.29 %     51.16 %     46.87 %     48.73 %     50.91 %  
Net charge-offs to average loans     0.49 %     0.12 %     0.10 %     0.21 %     0.07 %  
                                           
Wealth Management                                          
Trust assets under administration   $ 3,281,260     $ 3,125,869     $ 3,097,091     $ 2,945,084     $ 3,218,013    
                                           
Market Data                                          
Book value per share at period end   $ 26.93     $ 26.66     $ 26.08     $ 25.50     $ 24.96    
Tangible book value per share at period end (1)   $ 18.40     $ 18.36     $ 17.68     $ 17.00     $ 16.38    
Market price at period end   $ 26.05     $ 26.72     $ 24.06     $ 22.34     $ 32.10    
Shares outstanding at period end     24,338,748       23,897,038       23,827,438       23,751,798       23,694,637    
                                           
Capital                                          
Total capital to risk-weighted assets     14.82 %     13.49 %     13.25 %     12.79 %     12.35 %  
Tier 1 capital to risk-weighted assets     10.35 %     10.85 %     10.65 %     10.25 %     9.85 %  
Tier 1 leverage ratio     8.77 %     9.27 %     8.92 %     8.53 %     8.24 %  
Tier 1 common capital to risk-weighted assets     9.02 %     9.38 %     9.16 %     8.76 %     8.37 %  
Tangible common equity to tangible assets (1)     7.58 %     8.20 %     7.74 %     7.43 %     7.03 %  
                                           
(1) Non-GAAP financial measures. Refer to pages 12 - 14 for a reconciliation to the comparable GAAP financial measures.                            
                                           

 

                                         
 
MIDLAND STATES BANCORP, INC.  
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES  
                                         
Adjusted Earnings Reconciliation                                        
                                         
  For the Quarter Ended    
  September 30,    June 30,    March 31,    December 31,    September 30,   
(dollars in thousands, except per share data) 2019   2019   2019   2018   2018  
Income before income taxes - GAAP $ 16,670       $ 21,394       $ 18,336     $ 20,863       $ 10,933      
Adjustments to noninterest income:                                        
Gain on sales of investment securities, net   25         14         -       469         -      
Other   -         (23 )       -       (1 )       (12 )    
 Total adjustments to noninterest income   25         (9 )       -       468         (12 )    
Adjustments to noninterest expense:                                        
(Gain) loss on mortgage servicing rights held for sale   (70 )       (515 )       -       -         270      
Integration and acquisition expenses   5,292         286         160       553         9,559      
 Total adjustments to noninterest expense   5,222         (229 )       160       553         9,829      
Adjusted earnings pre tax   21,867         21,174         18,496       20,948         20,774      
Adjusted earnings tax   5,445         4,978         4,398       4,551         5,142      
Adjusted earnings - non-GAAP   16,422         16,196         14,098       16,397         15,632      
Preferred stock dividends, net   (22 )       34         34       34         35      
Adjusted earnings available to common shareholders - non-GAAP $ 16,444       $ 16,162       $ 14,064     $ 16,363       $ 15,597      
Adjusted diluted earnings per common share $ 0.66       $ 0.66       $ 0.58     $ 0.67       $ 0.64      
Adjusted return on average assets   1.09   %     1.16   %     1.02 %     1.14   %     1.09   %  
Adjusted return on average shareholders' equity   10.01   %     10.33   %     9.31 %     10.85   %     10.45   %  
Adjusted return on average tangible common equity   14.52   %     15.19   %     13.90 %     16.46   %     16.02   %  
                                         

 

                                         
MIDLAND STATES BANCORP, INC.  
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (continued)  
                                         
                                         
Efficiency Ratio Reconciliation                                        
  For the Quarter Ended    
  September 30,    June 30,    March 31,    December 31,    September 30,   
(dollars in thousands) 2019   2019   2019   2018   2018  
Noninterest expense - GAAP $ 48,025       $ 40,194       $ 41,097       $ 45,375       $ 50,317      
Gain (loss) on mortgage servicing rights held for sale   70         515         -         -         (270 )    
Integration and acquisition expenses   (5,292 )       (286 )       (160 )       (553 )       (9,559 )    
Adjusted noninterest expense $ 42,803       $ 40,423       $ 40,937       $ 44,822       $ 40,488      
                                         
Net interest income - GAAP $ 49,450       $ 46,077       $ 45,601       $ 48,535       $ 45,081      
Effect of tax-exempt income   502         526         543         574         585      
Adjusted net interest income   49,952         46,603         46,144         49,109         45,666      
                                         
Noninterest income - GAAP $ 19,606       $ 19,587       $ 17,075       $ 21,170       $ 18,272      
Loan servicing rights impairment (recapture)   1,060         (559 )       25         (1,380 )       297      
Gain on sales of investment securities, net   (25 )       (14 )       -         (469 )       -      
Other   -         23         -         1         12      
Adjusted noninterest income   20,641         19,037         17,100         19,322         18,581      
                                         
Adjusted total revenue $ 70,593       $ 65,640       $ 63,244       $ 68,431       $ 64,247      
                                         
Efficiency ratio   60.63   %     61.58   %     64.73   %     65.50   %     63.02   %  
                                         

 

                                       
                                       
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  
  September 30,   June 30,   March 31,    December 31,    September 30, 
(dollars in thousands, except per share data) 2019   2019   2019   2018   2018
Shareholders' Equity to Tangible Common Equity                                      
Total shareholders' equity—GAAP $ 655,522       $ 639,888       $ 624,168       $ 608,525       $ 594,146    
Adjustments:                                      
Preferred stock   -         (2,684 )       (2,733 )       (2,781 )       (2,829 )  
Goodwill   (171,074 )       (164,673 )       (164,673 )       (164,673 )       (164,044 )  
Other intangibles   (36,690 )       (33,893 )       (35,566 )       (37,376 )       (39,228 )  
Tangible common equity $ 447,758       $ 438,638       $ 421,196       $ 403,695       $ 388,045    
                                       
Total Assets to Tangible Assets:                                      
Total assets—GAAP $ 6,113,904       $ 5,546,055       $ 5,641,780       $ 5,637,673       $ 5,724,612    
Adjustments:                                      
Goodwill   (171,074 )       (164,673 )       (164,673 )       (164,673 )       (164,044 )  
Other intangibles   (36,690 )       (33,893 )       (35,566 )       (37,376 )       (39,228 )  
Tangible assets $ 5,906,140       $ 5,347,489       $ 5,441,541       $ 5,435,624       $ 5,521,340    
                                       
Common Shares Outstanding   24,338,748         23,897,038         23,827,438         23,751,798         23,694,637    
                                       
Tangible Common Equity to Tangible Assets   7.58   %     8.20   %     7.74   %     7.43   %     7.03   %
Tangible Book Value Per Share $ 18.40       $ 18.36       $ 17.68       $ 17.00       $ 16.38    
                                       
Return on Average Tangible Common Equity (ROATCE)                                  
                                       
  For the Quarter Ended
  September 30,   June 30,   March 31,    December 31,    September 30, 
(dollars in thousands) 2019   2019   2019   2018   2018
Net income available to common shareholders $ 12,677       $ 16,321       $ 13,948       $ 16,302       $ 8,462    
                                       
Average total shareholders' equity—GAAP $ 651,162       $ 628,730       $ 614,210       $ 599,723       $ 593,457    
Adjustments:                                      
Preferred stock   (814 )       (2,708 )       (2,759 )       (2,812 )       (2,859 )  
Goodwill   (166,389 )       (164,673 )       (164,673 )       (164,051 )       (164,044 )  
Other intangibles   (34,519 )       (34,689 )       (36,438 )       (38,394 )       (40,228 )  
Average tangible common equity $ 449,440       $ 426,660       $ 410,340       $ 394,466       $ 386,326    
ROATCE   11.19   %     15.34   %     13.79   %     16.40   %     8.69   %
                                       


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