Midland States Bancorp, Inc. Announces 2019 Second Quarter Results
Highlights
- Net income of $16.4 million, or $0.67 diluted earnings per share
- Book value per share increased 2.2% to $26.66
- Tangible book value per share increased 3.8% to $18.36
- Acquisition of HomeStar Financial Group, Inc. completed on July 17, 2019
EFFINGHAM, Ill., July 25, 2019 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $16.4 million, or $0.67 diluted earnings per share, for the second quarter of 2019. This compares to net income of $14.0 million, or $0.57 diluted earnings per share, for the first quarter of 2019, and net income of $12.8 million, or $0.52 diluted earnings per share, for the second quarter of 2018, which included $2.0 million in integration and acquisition expenses.
Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We continue to execute well on our strategic priorities and deliver solid financial results for our shareholders. We had another strong quarter of production in our equipment finance business, generated significant non-interest income from a diverse range of business lines, and continued to drive improved efficiencies throughout our organization. We were very pleased to complete our acquisition of HomeStar Financial Group, Inc. in just over three months after announcing the transaction. With its leading market position in Kankakee, Illinois, attractive deposit base, excess liquidity, and strong team of community bankers, we believe that HomeStar adds significant value to our franchise.”
Net Interest Income
Net interest income for the second quarter of 2019 was $46.1 million, an increase of 1.0% from $45.6 million for the first quarter of 2019. Excluding accretion income, net interest income decreased $0.4 million from the prior quarter. Accretion income associated with purchased loan portfolios totaled $3.4 million for the second quarter of 2019, compared with $2.5 million for the first quarter of 2019.
Relative to the second quarter of 2018, net interest income decreased $2.2 million, or 4.6%. Accretion income for the second quarter of 2018 was $5.5 million. Excluding the impact of accretion income, net interest income was relatively unchanged compared to the second quarter of 2018.
Net Interest Margin
Net interest margin for the second quarter of 2019 was 3.76%, compared to 3.73% for the first quarter of 2019. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 25 and 17 basis points to net interest margin in the second quarter of 2019 and first quarter of 2019, respectively. Excluding the impact of accretion income, net interest margin decreased five basis points from the first quarter of 2019, primarily due to the impact of higher average deposit costs.
Relative to the second quarter of 2018, net interest margin decreased from 3.91%. Accretion income on purchased loan portfolios contributed 40 basis points to net interest margin in the second quarter of 2018. Excluding the impact of accretion income, net interest margin was unchanged compared to the second quarter of 2018.
Noninterest Income
Noninterest income for the second quarter of 2019 was $19.6 million, an increase of 14.7% from $17.1 million for the first quarter of 2019. The increase was attributable to increases in most major noninterest income items.
Relative to the second quarter of 2018, noninterest income increased 23.6% from $15.8 million. The increase was primarily attributable to higher commercial FHA revenue, partially offset by a decline in residential mortgage banking revenue.
Wealth management revenue for the second quarter of 2019 was $5.5 million, an increase of 11.1% from $5.0 million in the first quarter of 2019, primarily due to an increase in trust fees. Compared to the second quarter of 2018, wealth management revenue increased 3.5%.
Commercial FHA revenue for the second quarter of 2019 was $4.9 million, compared to $3.3 million in the first quarter of 2019. Commercial FHA revenue in the second quarter of 2019 included a $0.6 million recapture of mortgage servicing rights impairment, lower loan costs and an increase in gain premiums. The Company originated $42.2 million in rate lock commitments during the second quarter of 2019, compared to $64.5 million in the prior quarter. Compared to the second quarter of 2018, commercial FHA revenue increased $4.6 million.
Noninterest Expense
Noninterest expense for the second quarter of 2019 was $40.2 million, which included $0.3 million in integration and acquisition expenses and a $0.5 million gain on mortgage servicing rights held for sale, compared with $41.1 million for the first quarter of 2019, which included $0.2 million in integration and acquisition expenses. The decrease was primarily attributable to lower salaries and employee benefits expense, partially offset by higher professional fees.
Relative to the second quarter of 2018, noninterest expense decreased 13.5% from $46.5 million, which included $2.0 million in integration and acquisition expenses and a $0.2 million loss on mortgage servicing rights held for sale. Excluding these items, noninterest expense decreased 8.6% from $44.2 million. The decrease was primarily due to lower salaries and employee benefits expense and certain non-recurring items that impacted expense levels in the second quarter of 2018.
Loan Portfolio
Total loans outstanding were $4.07 billion at June 30, 2019, compared with $4.09 billion at March 31, 2019 and $4.10 billion at June 30, 2018. The decrease in total loans from March 31, 2019 was primarily attributable to declines in the commercial real estate and residential real estate portfolios, which was partially offset by organic growth in commercial loans and leases and construction and land development loans. Equipment finance balances increased $74.0 million from March 31, 2019, which are booked within the commercial loans and leases portfolio, reflecting management’s efforts to grow the equipment finance business. The decrease in total loans from June 30, 2018 was primarily attributable to a decline in commercial real estate and residential real estate loans, partially offset by organic growth in commercial loans and leases and consumer loans.
Deposits
Total deposits were $4.01 billion at June 30, 2019, compared with $4.04 billion at March 31, 2019, and $4.16 billion at June 30, 2018. The decrease in total deposits from March 31, 2019 was primarily related to the intentional reduction of $111.7 million in brokered money market deposits and brokered time deposits.
Asset Quality
Nonperforming loans totaled $50.7 million, or 1.24% of total loans, at June 30, 2019, compared with $49.3 million, or 1.20% of total loans, at March 31, 2019, and $28.3 million, or 0.69% of total loans, at June 30, 2018.
Net charge-offs for the second quarter of 2019 were $1.2 million, or 0.12% of average loans on an annualized basis.
The Company recorded a provision for loan losses of $4.1 million for the second quarter of 2019, which included a specific reserve for one credit placed on non-accrual during the prior quarter. The Company’s allowance for loan losses was 0.64% of total loans and 51.2% of nonperforming loans at June 30, 2019, compared with 0.56% of total loans and 46.9% of nonperforming loans at March 31, 2019. Fair market value discounts recorded in connection with acquired loan portfolios represented 0.39% of total loans at June 30, 2019, compared with 0.47% of total loans at March 31, 2019.
Capital
At June 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:
June 30, 2019 | Well Capitalized Regulatory Requirements |
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Total capital to risk-weighted assets | 13.49% | 10.00% | ||
Tier 1 capital to risk-weighted assets | 10.85% | 8.00% | ||
Tier 1 leverage ratio | 9.27% | 5.00% | ||
Common equity Tier 1 capital | 9.38% | 6.50% | ||
Tangible common equity to tangible assets (1) | 8.20% | NA |
(1) A non-GAAP financial measure. Refer to page 14 for a reconciliation to the comparable GAAP financial measure.
Acquisition of HomeStar Financial Group, Inc.
On July 17, 2019, the Company completed its acquisition of HomeStar Financial Group, Inc. and its banking subsidiary, HomeStar Bank and Financial Services, which operates 5 locations in the Kankakee, Illinois area, and which the Company intends to merge into the Bank. The Company acquired HomeStar for consideration of approximately $1.0 million in cash and the issuance of 405,000 shares of the Company’s common stock. At closing, HomeStar had approximately $374.4 million in assets, $219.5 million in loans, and $321.8 million in deposits.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, July 26, 2019 to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 8484268. A recorded replay can be accessed through August 2, 2019 by dialing (855) 859-2056; conference ID: 8484268.
A slide presentation relating to the second 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.
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 June 30, 2019, the Company had total assets of approximately $5.55 billion and its Wealth Management Group had assets under administration of approximately $3.13 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
Stephen A. Erickson, Chief Financial Officer, at serickson@midlandsb.com or (217) 540-1712
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 | |||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
(dollars in thousands, except per share data) | 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||||||||
Earnings Summary | |||||||||||||||||||
Net interest income | $ | 46,077 | $ | 45,601 | $ | 48,535 | $ | 45,081 | $ | 48,286 | |||||||||
Provision for loan losses | 4,076 | 3,243 | 3,467 | 2,103 | 1,854 | ||||||||||||||
Noninterest income | 19,587 | 17,075 | 21,170 | 18,272 | 15,847 | ||||||||||||||
Noninterest expense | 40,194 | 41,097 | 45,375 | 50,317 | 46,452 | ||||||||||||||
Income before income taxes | 21,394 | 18,336 | 20,863 | 10,933 | 15,827 | ||||||||||||||
Income taxes | 5,039 | 4,354 | 4,527 | 2,436 | 3,045 | ||||||||||||||
Net income | 16,355 | 13,982 | 16,336 | 8,497 | 12,782 | ||||||||||||||
Preferred stock dividends, net | 34 | 34 | 34 | 35 | 36 | ||||||||||||||
Net income available to common shareholders | $ | 16,321 | $ | 13,948 | $ | 16,302 | $ | 8,462 | $ | 12,746 | |||||||||
Diluted earnings per common share | $ | 0.67 | $ | 0.57 | $ | 0.67 | $ | 0.35 | $ | 0.52 | |||||||||
Weighted average shares outstanding - diluted | 24,303,211 | 24,204,661 | 24,200,346 | 24,325,743 | 24,268,111 | ||||||||||||||
Return on average assets | 1.17 | % | 1.01 | % | 1.14 | % | 0.59 | % | 0.91 | % | |||||||||
Return on average shareholders' equity | 10.43 | % | 9.23 | % | 10.81 | % | 5.68 | % | 8.77 | % | |||||||||
Return on average tangible common equity (1) | 15.34 | % | 13.79 | % | 16.40 | % | 8.69 | % | 13.48 | % | |||||||||
Net interest margin | 3.76 | % | 3.73 | % | 3.85 | % | 3.59 | % | 3.91 | % | |||||||||
Efficiency ratio (1) | 61.58 | % | 64.73 | % | 65.50 | % | 63.02 | % | 67.76 | % | |||||||||
Adjusted Earnings Performance Summary | |||||||||||||||||||
Adjusted earnings (1) | $ | 16,196 | $ | 14,098 | $ | 16,397 | $ | 15,632 | $ | 14,469 | |||||||||
Adjusted diluted earnings per common share (1) | $ | 0.66 | $ | 0.58 | $ | 0.67 | $ | 0.64 | $ | 0.59 | |||||||||
Adjusted return on average assets (1) | 1.16 | % | 1.02 | % | 1.14 | % | 1.09 | % | 1.03 | % | |||||||||
Adjusted return on average shareholders' equity (1) | 10.33 | % | 9.31 | % | 10.85 | % | 10.45 | % | 9.93 | % | |||||||||
Adjusted return on average tangible common equity (1) | 15.19 | % | 13.90 | % | 16.46 | % | 16.02 | % | 15.27 | % | |||||||||
(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 | |||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
(in thousands, except per share data) | 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||||||||
Net interest income: | |||||||||||||||||||
Total interest income | $ | 60,636 | $ | 59,432 | $ | 61,592 | $ | 56,987 | $ | 58,283 | |||||||||
Total interest expense | 14,559 | 13,831 | 13,057 | 11,906 | 9,997 | ||||||||||||||
Net interest income | 46,077 | 45,601 | 48,535 | 45,081 | 48,286 | ||||||||||||||
Provision for loan losses | 4,076 | 3,243 | 3,467 | 2,103 | 1,854 | ||||||||||||||
Net interest income after provision for loan losses | 42,001 | 42,358 | 45,068 | 42,978 | 46,432 | ||||||||||||||
Noninterest income: | |||||||||||||||||||
Wealth management revenue | 5,504 | 4,953 | 5,651 | 5,467 | 5,316 | ||||||||||||||
Commercial FHA revenue | 4,917 | 3,270 | 4,194 | 3,130 | 326 | ||||||||||||||
Residential mortgage banking revenue | 611 | 834 | 1,041 | 1,154 | 2,116 | ||||||||||||||
Service charges on deposit accounts | 2,639 | 2,520 | 2,976 | 2,804 | 2,693 | ||||||||||||||
Interchange revenue | 3,010 | 2,680 | 2,941 | 2,759 | 2,929 | ||||||||||||||
Gain (loss) on sales of investment securities, net | 14 | - | 469 | - | (70 | ) | |||||||||||||
Other income | 2,892 | 2,818 | 3,898 | 2,958 | 2,537 | ||||||||||||||
Total noninterest income | 19,587 | 17,075 | 21,170 | 18,272 | 15,847 | ||||||||||||||
Noninterest expense: | |||||||||||||||||||
Salaries and employee benefits | 21,134 | 22,039 | 23,020 | 22,528 | 23,467 | ||||||||||||||
Occupancy and equipment | 4,500 | 4,832 | 4,914 | 5,040 | 4,708 | ||||||||||||||
Data processing | 4,987 | 4,891 | 5,660 | 10,817 | 5,106 | ||||||||||||||
Professional | 2,410 | 2,073 | 2,752 | 3,087 | 3,185 | ||||||||||||||
Amortization of intangible assets | 1,673 | 1,810 | 1,852 | 1,853 | 1,576 | ||||||||||||||
(Gain) loss on mortgage servicing rights held for sale | (515 | ) | - | - | 270 | 188 | |||||||||||||
Other expense | 6,005 | 5,452 | 7,177 | 6,722 | 8,222 | ||||||||||||||
Total noninterest expense | 40,194 | 41,097 | 45,375 | 50,317 | 46,452 | ||||||||||||||
Income before income taxes | 21,394 | 18,336 | 20,863 | 10,933 | 15,827 | ||||||||||||||
Income taxes | 5,039 | 4,354 | 4,527 | 2,436 | 3,045 | ||||||||||||||
Net income | 16,355 | 13,982 | 16,336 | 8,497 | 12,782 | ||||||||||||||
Preferred stock dividends, net | 34 | 34 | 34 | 35 | 36 | ||||||||||||||
Net income available to common shareholders | $ | 16,321 | $ | 13,948 | $ | 16,302 | $ | 8,462 | $ | 12,746 | |||||||||
Basic earnings per common share | $ | 0.67 | $ | 0.58 | $ | 0.68 | $ | 0.35 | $ | 0.53 | |||||||||
Diluted earnings per common share | $ | 0.67 | $ | 0.57 | $ | 0.67 | $ | 0.35 | $ | 0.52 |
MIDLAND STATES BANCORP, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||
As of | |||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
(in thousands) | 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||||||||
Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 245,415 | $ | 276,480 | $ | 213,700 | $ | 242,433 | $ | 276,331 | |||||||||
Investment securities | 613,026 | 656,152 | 660,785 | 685,753 | 708,001 | ||||||||||||||
Loans | 4,073,527 | 4,092,106 | 4,137,551 | 4,156,282 | 4,095,811 | ||||||||||||||
Allowance for loan losses | (25,925 | ) | (23,091 | ) | (20,903 | ) | (19,631 | ) | (18,246 | ) | |||||||||
Total loans, net | 4,047,602 | 4,069,015 | 4,116,648 | 4,136,651 | 4,077,565 | ||||||||||||||
Loans held for sale, at fair value | 22,143 | 16,851 | 30,401 | 35,246 | 41,449 | ||||||||||||||
Premises and equipment, net | 94,824 | 94,514 | 94,840 | 95,062 | 94,783 | ||||||||||||||
Other real estate owned | 3,797 | 2,020 | 3,483 | 3,684 | 3,911 | ||||||||||||||
Mortgage servicing rights, at lower of cost or fair value | 54,191 | 52,957 | 53,447 | 51,626 | 52,381 | ||||||||||||||
Mortgage servicing rights held for sale | 159 | 257 | 3,545 | 4,419 | 4,806 | ||||||||||||||
Intangible assets | 33,893 | 35,566 | 37,376 | 39,228 | 41,081 | ||||||||||||||
Goodwill | 164,673 | 164,673 | 164,673 | 164,044 | 164,044 | ||||||||||||||
Cash surrender value of life insurance policies | 140,593 | 139,686 | 138,783 | 138,600 | 137,681 | ||||||||||||||
Other assets | 125,739 | 133,609 | 119,992 | 127,866 | 128,567 | ||||||||||||||
Total assets | $ | 5,546,055 | $ | 5,641,780 | $ | 5,637,673 | $ | 5,724,612 | $ | 5,730,600 | |||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||
Noninterest-bearing deposits | $ | 902,286 | $ | 941,344 | $ | 972,164 | $ | 991,311 | $ | 1,001,802 | |||||||||
Interest-bearing deposits | 3,108,921 | 3,094,944 | 3,102,006 | 3,151,895 | 3,158,055 | ||||||||||||||
Total deposits | 4,011,207 | 4,036,288 | 4,074,170 | 4,143,206 | 4,159,857 | ||||||||||||||
Short-term borrowings | 113,844 | 115,832 | 124,235 | 145,450 | 114,536 | ||||||||||||||
FHLB advances and other borrowings | 582,387 | 669,009 | 640,631 | 652,253 | 678,873 | ||||||||||||||
Subordinated debt | 94,215 | 94,174 | 94,134 | 94,093 | 94,053 | ||||||||||||||
Trust preferred debentures | 48,041 | 47,918 | 47,794 | 47,676 | 47,559 | ||||||||||||||
Other liabilities | 56,473 | 54,391 | 48,184 | 47,788 | 43,187 | ||||||||||||||
Total liabilities | 4,906,167 | 5,017,612 | 5,029,148 | 5,130,466 | 5,138,065 | ||||||||||||||
Total shareholders’ equity | 639,888 | 624,168 | 608,525 | 594,146 | 592,535 | ||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,546,055 | $ | 5,641,780 | $ | 5,637,673 | $ | 5,724,612 | $ | 5,730,600 |
MIDLAND STATES BANCORP, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||
As of | |||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
(in thousands) | 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||||||||
Loan Portfolio | |||||||||||||||||||
Commercial loans and leases | $ | 1,149,370 | $ | 1,122,621 | $ | 1,074,935 | $ | 1,034,546 | $ | 991,164 | |||||||||
Commercial real estate loans | 1,524,369 | 1,560,427 | 1,639,155 | 1,711,926 | 1,711,296 | ||||||||||||||
Construction and land development loans | 250,414 | 239,376 | 232,229 | 239,480 | 247,889 | ||||||||||||||
Residential real estate loans | 552,406 | 569,051 | 578,048 | 586,134 | 601,808 | ||||||||||||||
Consumer loans | 596,968 | 600,631 | 613,184 | 584,196 | 543,654 | ||||||||||||||
Total loans | $ | 4,073,527 | $ | 4,092,106 | $ | 4,137,551 | $ | 4,156,282 | $ | 4,095,811 | |||||||||
Deposit Portfolio | |||||||||||||||||||
Noninterest-bearing demand deposits | $ | 902,286 | $ | 941,344 | $ | 972,164 | $ | 991,311 | $ | 1,001,802 | |||||||||
Interest-bearing: | |||||||||||||||||||
Checking accounts | 1,009,023 | 968,844 | 1,002,275 | 1,047,914 | 1,024,506 | ||||||||||||||
Money market accounts | 732,573 | 802,036 | 862,171 | 836,151 | 843,984 | ||||||||||||||
Savings accounts | 442,017 | 457,176 | 442,132 | 445,640 | 460,560 | ||||||||||||||
Time deposits | 785,337 | 685,700 | 633,787 | 633,654 | 638,215 | ||||||||||||||
Brokered time deposits | 139,971 | 181,188 | 161,641 | 188,536 | 190,790 | ||||||||||||||
Total deposits | $ | 4,011,207 | $ | 4,036,288 | $ | 4,074,170 | $ | 4,143,206 | $ | 4,159,857 |
MIDLAND STATES BANCORP, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
(dollars in thousands) | 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||||||||
Average Balance Sheets | |||||||||||||||||||
Cash and cash equivalents | $ | 162,110 | $ | 152,078 | $ | 155,280 | $ | 154,526 | $ | 227,499 | |||||||||
Investment securities | 636,946 | 654,764 | 676,483 | 700,018 | 731,017 | ||||||||||||||
Loans | 4,086,720 | 4,128,893 | 4,139,831 | 4,106,367 | 3,982,958 | ||||||||||||||
Loans held for sale | 40,177 | 30,793 | 51,981 | 48,715 | 31,220 | ||||||||||||||
Nonmarketable equity securities | 44,217 | 44,279 | 42,708 | 42,770 | 38,872 | ||||||||||||||
Total interest-earning assets | 4,970,170 | 5,010,807 | 5,066,283 | 5,052,396 | 5,011,566 | ||||||||||||||
Non-earning assets | 618,023 | 618,996 | 624,378 | 639,323 | 639,864 | ||||||||||||||
Total assets | $ | 5,588,193 | $ | 5,629,803 | $ | 5,690,661 | $ | 5,691,719 | $ | 5,651,430 | |||||||||
Interest-bearing deposits | $ | 3,107,660 | $ | 3,093,979 | $ | 3,123,134 | $ | 3,172,422 | $ | 3,158,816 | |||||||||
Short-term borrowings | 120,859 | 135,337 | 143,869 | 139,215 | 120,794 | ||||||||||||||
FHLB advances and other borrowings | 607,288 | 673,250 | 645,642 | 608,153 | 573,107 | ||||||||||||||
Subordinated debt | 94,196 | 94,156 | 94,115 | 94,075 | 94,035 | ||||||||||||||
Trust preferred debentures | 47,982 | 47,848 | 47,737 | 47,601 | 47,488 | ||||||||||||||
Total interest-bearing liabilities | 3,977,985 | 4,044,570 | 4,054,497 | 4,061,466 | 3,994,240 | ||||||||||||||
Noninterest-bearing deposits | 921,115 | 919,185 | 989,954 | 989,142 | 1,025,308 | ||||||||||||||
Other noninterest-bearing liabilities | 60,363 | 51,838 | 46,487 | 47,654 | 47,229 | ||||||||||||||
Shareholders' equity | 628,730 | 614,210 | 599,723 | 593,457 | 584,653 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 5,588,193 | $ | 5,629,803 | $ | 5,690,661 | $ | 5,691,719 | $ | 5,651,430 | |||||||||
Yields | |||||||||||||||||||
Cash and cash equivalents | 2.43 | % | 2.42 | % | 2.24 | % | 1.96 | % | 1.79 | % | |||||||||
Investment securities | 3.11 | % | 3.07 | % | 3.04 | % | 3.01 | % | 2.91 | % | |||||||||
Loans | 5.32 | % | 5.22 | % | 5.28 | % | 4.88 | % | 5.21 | % | |||||||||
Loans held for sale | 4.50 | % | 3.94 | % | 3.92 | % | 4.17 | % | 3.79 | % | |||||||||
Nonmarketable equity securities | 5.42 | % | 5.69 | % | 5.20 | % | 5.01 | % | 4.97 | % | |||||||||
Total interest-earning assets | 4.94 | % | 4.85 | % | 4.87 | % | 4.52 | % | 4.71 | % | |||||||||
Interest-bearing deposits | 1.09 | % | 0.97 | % | 0.86 | % | 0.77 | % | 0.64 | % | |||||||||
Short-term borrowings | 0.70 | % | 0.71 | % | 0.67 | % | 0.61 | % | 0.38 | % | |||||||||
FHLB advances and other borrowings | 2.34 | % | 2.32 | % | 2.26 | % | 2.09 | % | 1.81 | % | |||||||||
Subordinated debt | 6.43 | % | 6.43 | % | 6.43 | % | 6.44 | % | 6.44 | % | |||||||||
Trust preferred debentures | 7.17 | % | 7.38 | % | 6.93 | % | 6.81 | % | 6.59 | % | |||||||||
Total interest-bearing liabilities | 1.47 | % | 1.39 | % | 1.28 | % | 1.16 | % | 1.00 | % | |||||||||
Net interest margin | 3.76 | % | 3.73 | % | 3.85 | % | 3.59 | % | 3.91 | % |
MIDLAND STATES BANCORP, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||
As of and for the Quarter Ended | |||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
(dollars in thousands, except per share data) | 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||||||||
Asset Quality | |||||||||||||||||||
Loans 30-89 days past due | $ | 21,554 | $ | 23,999 | $ | 25,213 | $ | 22,678 | $ | 19,362 | |||||||||
Nonperforming loans | 50,676 | 49,262 | 42,899 | 38,561 | 28,342 | ||||||||||||||
Nonperforming assets | 54,473 | 51,282 | 45,899 | 41,638 | 31,542 | ||||||||||||||
Net charge-offs | 1,242 | 1,055 | 2,195 | 718 | 1,312 | ||||||||||||||
Loans 30-89 days past due to total loans | 0.53 | % | 0.59 | % | 0.61 | % | 0.55 | % | 0.47 | % | |||||||||
Nonperforming loans to total loans | 1.24 | % | 1.20 | % | 1.04 | % | 0.93 | % | 0.69 | % | |||||||||
Nonperforming assets to total assets | 0.98 | % | 0.91 | % | 0.81 | % | 0.73 | % | 0.55 | % | |||||||||
Allowance for loan losses to total loans | 0.64 | % | 0.56 | % | 0.51 | % | 0.47 | % | 0.45 | % | |||||||||
Allowance for loan losses to nonperforming loans | 51.16 | % | 46.87 | % | 48.73 | % | 50.91 | % | 64.38 | % | |||||||||
Net charge-offs to average loans | 0.12 | % | 0.10 | % | 0.21 | % | 0.07 | % | 0.13 | % | |||||||||
Wealth Management | |||||||||||||||||||
Trust assets under administration | $ | 3,125,869 | $ | 3,097,091 | $ | 2,945,084 | $ | 3,218,013 | $ | 3,188,909 | |||||||||
Market Data | |||||||||||||||||||
Book value per share at period end | $ | 26.66 | $ | 26.08 | $ | 25.50 | $ | 24.96 | $ | 24.92 | |||||||||
Tangible book value per share at period end (1) | $ | 18.36 | $ | 17.68 | $ | 17.00 | $ | 16.38 | $ | 16.25 | |||||||||
Market price at period end | $ | 26.72 | $ | 24.06 | $ | 22.34 | $ | 32.10 | $ | 34.26 | |||||||||
Shares outstanding at period end | 23,897,038 | 23,827,438 | 23,751,798 | 23,694,637 | 23,664,596 | ||||||||||||||
Capital | |||||||||||||||||||
Total capital to risk-weighted assets | 13.49 | % | 13.25 | % | 12.79 | % | 12.35 | % | 12.27 | % | |||||||||
Tier 1 capital to risk-weighted assets | 10.85 | % | 10.65 | % | 10.25 | % | 9.85 | % | 9.78 | % | |||||||||
Tier 1 leverage ratio | 9.27 | % | 8.92 | % | 8.53 | % | 8.24 | % | 8.16 | % | |||||||||
Tier 1 common capital to risk-weighted assets | 9.38 | % | 9.16 | % | 8.76 | % | 8.37 | % | 8.28 | % | |||||||||
Tangible common equity to tangible assets (1) | 8.20 | % | 7.74 | % | 7.43 | % | 7.03 | % | 6.96 | % | |||||||||
(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 | |||||||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||
(dollars in thousands, except per share data) | 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||||||||||||
Income before income taxes - GAAP | $ | 21,394 | $ | 18,336 | $ | 20,863 | $ | 10,933 | $ | 15,827 | |||||||||||||
Adjustments to noninterest income: | |||||||||||||||||||||||
Gain (loss) on sales of investment securities, net | 14 | - | 469 | - | (70 | ) | |||||||||||||||||
Other | (23 | ) | - | (1 | ) | (12 | ) | (48 | ) | ||||||||||||||
Total adjustments to noninterest income | (9 | ) | - | 468 | (12 | ) | (118 | ) | |||||||||||||||
Adjustments to noninterest expense: | |||||||||||||||||||||||
(Gain) loss on mortgage servicing rights held for sale | (515 | ) | - | - | 270 | 188 | |||||||||||||||||
Integration and acquisition expenses | 286 | 160 | 553 | 9,559 | 2,019 | ||||||||||||||||||
Total adjustments to noninterest expense | (229 | ) | 160 | 553 | 9,829 | 2,207 | |||||||||||||||||
Adjusted earnings pre tax | 21,174 | 18,496 | 20,948 | 20,774 | 18,152 | ||||||||||||||||||
Adjusted earnings tax | 4,978 | 4,398 | 4,551 | 5,142 | 3,683 | ||||||||||||||||||
Adjusted earnings - non-GAAP | 16,196 | 14,098 | 16,397 | 15,632 | 14,469 | ||||||||||||||||||
Preferred stock dividends, net | 34 | 34 | 34 | 35 | 36 | ||||||||||||||||||
Adjusted earnings available to common shareholders - non-GAAP | $ | 16,162 | $ | 14,064 | $ | 16,363 | $ | 15,597 | $ | 14,433 | |||||||||||||
Adjusted diluted earnings per common share | $ | 0.66 | $ | 0.58 | $ | 0.67 | $ | 0.64 | $ | 0.59 | |||||||||||||
Adjusted return on average assets | 1.16 | % | 1.02 | % | 1.14 | % | 1.09 | % | 1.03 | % | |||||||||||||
Adjusted return on average shareholders' equity | 10.33 | % | 9.31 | % | 10.85 | % | 10.45 | % | 9.93 | % | |||||||||||||
Adjusted return on average tangible common equity | 15.19 | % | 13.90 | % | 16.46 | % | 16.02 | % | 15.27 | % |
MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (continued) | ||||||||||||||||||||||||
Efficiency Ratio Reconciliation | ||||||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||
(dollars in thousands) | 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||||||
Noninterest expense - GAAP | $ | 40,194 | $ | 41,097 | $ | 45,375 | $ | 50,317 | $ | 46,452 | ||||||||||||||
Gain (loss) on mortgage servicing rights held for sale | 515 | - | - | (270 | ) | (188 | ) | |||||||||||||||||
Integration and acquisition expenses | (286 | ) | (160 | ) | (553 | ) | (9,559 | ) | (2,019 | ) | ||||||||||||||
Adjusted noninterest expense | $ | 40,423 | $ | 40,937 | $ | 44,822 | $ | 40,488 | $ | 44,245 | ||||||||||||||
Net interest income - GAAP | $ | 46,077 | $ | 45,601 | $ | 48,535 | $ | 45,081 | $ | 48,286 | ||||||||||||||
Effect of tax-exempt income | 526 | 543 | 574 | 585 | 541 | |||||||||||||||||||
Adjusted net interest income | 46,603 | 46,144 | 49,109 | 45,666 | 48,827 | |||||||||||||||||||
Noninterest income - GAAP | $ | 19,587 | $ | 17,075 | $ | 21,170 | $ | 18,272 | $ | 15,847 | ||||||||||||||
Mortgage servicing rights (recapture) impairment | (559 | ) | 25 | (1,380 | ) | 297 | 500 | |||||||||||||||||
(Gain) loss on sales of investment securities, net | (14 | ) | - | (469 | ) | - | 70 | |||||||||||||||||
Other | 23 | - | 1 | 12 | 48 | |||||||||||||||||||
Adjusted noninterest income | 19,037 | 17,100 | 19,322 | 18,581 | 16,465 | |||||||||||||||||||
Adjusted total revenue | $ | 65,640 | $ | 63,244 | $ | 68,431 | $ | 64,247 | $ | 65,292 | ||||||||||||||
Efficiency ratio | 61.58 | % | 64.73 | % | 65.50 | % | 63.02 | % | 67.76 | % | ||||||||||||||
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 | ||||||||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||
(dollars in thousands, except per share data) | 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||||||
Shareholders' Equity to Tangible Common Equity | ||||||||||||||||||||||||
Total shareholders' equity—GAAP | $ | 639,888 | $ | 624,168 | $ | 608,525 | $ | 594,146 | $ | 592,535 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Preferred stock | (2,684 | ) | (2,733 | ) | (2,781 | ) | (2,829 | ) | (2,876 | ) | ||||||||||||||
Goodwill | (164,673 | ) | (164,673 | ) | (164,673 | ) | (164,044 | ) | (164,044 | ) | ||||||||||||||
Other intangibles | (33,893 | ) | (35,566 | ) | (37,376 | ) | (39,228 | ) | (41,081 | ) | ||||||||||||||
Tangible common equity | $ | 438,638 | $ | 421,196 | $ | 403,695 | $ | 388,045 | $ | 384,534 | ||||||||||||||
Total Assets to Tangible Assets: | ||||||||||||||||||||||||
Total assets—GAAP | $ | 5,546,055 | $ | 5,641,780 | $ | 5,637,673 | $ | 5,724,612 | $ | 5,730,600 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Goodwill | (164,673 | ) | (164,673 | ) | (164,673 | ) | (164,044 | ) | (164,044 | ) | ||||||||||||||
Other intangibles | (33,893 | ) | (35,566 | ) | (37,376 | ) | (39,228 | ) | (41,081 | ) | ||||||||||||||
Tangible assets | $ | 5,347,489 | $ | 5,441,541 | $ | 5,435,624 | $ | 5,521,340 | $ | 5,525,475 | ||||||||||||||
Common Shares Outstanding | 23,897,038 | 23,827,438 | 23,751,798 | 23,694,637 | 23,664,596 | |||||||||||||||||||
Tangible Common Equity to Tangible Assets | 8.20 | % | 7.74 | % | 7.43 | % | 7.03 | % | 6.96 | % | ||||||||||||||
Tangible Book Value Per Share | $ | 18.36 | $ | 17.68 | $ | 17.00 | $ | 16.38 | $ | 16.25 | ||||||||||||||
Return on Average Tangible Common Equity (ROATCE) | ||||||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||
(dollars in thousands) | 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||||||
Net income available to common shareholders | $ | 16,321 | $ | 13,948 | $ | 16,302 | $ | 8,462 | $ | 12,746 | ||||||||||||||
Average total shareholders' equity—GAAP | $ | 628,730 | $ | 614,210 | $ | 599,723 | $ | 593,457 | $ | 584,653 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Preferred stock | (2,708 | ) | (2,759 | ) | (2,812 | ) | (2,859 | ) | (2,905 | ) | ||||||||||||||
Goodwill | (164,673 | ) | (164,673 | ) | (164,051 | ) | (164,044 | ) | (158,461 | ) | ||||||||||||||
Other intangibles | (34,689 | ) | (36,438 | ) | (38,394 | ) | (40,228 | ) | (44,098 | ) | ||||||||||||||
Average tangible common equity | $ | 426,660 | $ | 410,340 | $ | 394,466 | $ | 386,326 | $ | 379,189 | ||||||||||||||
ROATCE | 15.34 | % | 13.79 | % | 16.40 | % | 8.69 | % | 13.48 | % | ||||||||||||||
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