Midland States Bancorp, Inc. Announces 2024 Second Quarter Results

by insideout

Second Quarter 2024 Highlights:

  • Net income available to common shareholders of $4.5 million, or $0.20 per diluted share
  • Adjusted pre-tax, pre-provision earnings of $25.2 million
  • Tangible book value per share decreased to $23.36, compared to $23.44 at March 31, 2024
  • Common equity tier 1 capital ratio improved to 8.63% from 8.60%
  • Net interest margin of 3.12%, compared to 3.18% in prior quarter
  • Efficiency ratio of 65.2%, compared to 58.0% in prior quarter

EFFINGHAM, Ill., July 25, 2024 (GLOBE NEWSWIRE) — Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income available to common shareholders of $4.5 million, or $0.20 per diluted share, for the second quarter of 2024, compared to $11.7 million, or $0.53 per diluted share, for the first quarter of 2024. This also compares to net income available to common shareholders of $19.3 million, or $0.86 per diluted share, for the second quarter of 2023.

Provision expense was $16.8 million in the second quarter of 2024 compared to $14.0 million and $5.9 million in the first quarter of 2024 and the second quarter of 2023, respectively. The provision expense in the second quarter of 2024 included provision for credit losses on loans of $17.0 million, offset by a $0.2 million benefit related to unfunded commitments. The elevated loan provision in the second quarter of 2024 was primarily due to credit deterioration and servicing issues involving one of our fintech partners, LendingPoint, subsequent to their system conversion in late 2023. The provision expense for the first quarter of 2024 included a specific reserve of $8.0 million on a multi-family construction project.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We continued to execute well on our strategic priorities during the second quarter and our balance sheet management strategies resulted in further increases in our capital ratios. We are continuing to address credit risk in our loan portfolios, including the relationship with Lending Point, by prudently increasing our loan loss reserves with a focus on reducing problem assets. Our emphasis on our community bank and local markets has led to another good quarter of generating high quality, in-market loans with full banking relationships, which are partially funded by the continued intentional reduction of our equipment finance and consumer portfolios. In particular, we are seeing good results from the investments we have made to increase our presence and business development efforts in the St. Louis market, where our loan balances increased at an annualized rate of 31% during the second quarter.

“We continue to benefit from the strength of the franchise we have built to attract high quality banking talent across the organization. We recently added a new market president for our Northern Illinois region and a new Chief Deposit Officer, who we expect to positively impact our treasury management services and our ability to add new commercial deposit relationships. We are also continuing to invest in our Wealth Management business to improve our ability to cross-sell this service to our community bank clients. We believe the banking talent we are adding will further enhance our efforts to expand our market share within our community bank. Our successful efforts in this area are resulting in a favorable shift in the mix of our loan portfolio; moving towards a higher quality portfolio and expanded banking relationships with both loans and deposits. We expect to make continued progress on this strategic priority over the remainder of the year, which we believe will further enhance the value of our franchise,” said Mr. Ludwig.

Balance Sheet Highlights

Total assets were $7.76 billion at June 30, 2024, compared to $7.83 billion at March 31, 2024, and $8.03 billion at June 30, 2023. At June 30, 2024, portfolio loans were $5.85 billion, compared to $5.96 billion at March 31, 2024, and $6.37 billion at June 30, 2023.

Loans

During the second quarter of 2024, outstanding loans declined by $106.5 million, or 1.8%, from March 31, 2024, as the Company continued to shrink its equipment financing and consumer loan portfolios, and focus on commercial loan opportunities in our community bank footprint. Increases in commercial, commercial real estate, and construction and land development loans of $25.9 million, $24.4 million and $2.4 million, respectively, were offset by decreases in all other loan categories.

Equipment finance loan and lease balances decreased $59.9 million during the second quarter of 2024 as the Company continued to reduce its concentration of this product within the overall loan portfolio. Consumer loans decreased $91.1 million due to loan payoffs and a cessation in loans originated through GreenSky. Our Greensky-originated loan balances decreased $67.7 million during the second quarter to $538.3 million at June 30, 2024. In addition, as previously disclosed, during the fourth quarter of 2023, the Company ceased originating loans through LendingPoint. As of June 30, 2024, the Company had $114.2 million in loans that were originated through and serviced by LendingPoint. Equipment financing and consumer loans comprised 15.2% and 12.7%, respectively, of the loan portfolio at June 30, 2024, compared to 15.9% and 14.0%, respectively, at March 31, 2024.

    As of
    June 30,   March 31,   December 31,   September 30,   June 30,
(in thousands)   2024   2024   2023   2023   2023
Loan Portfolio                    
Commercial loans   $ 939,458   $ 913,564   $ 951,387   $ 943,761   $ 962,756
Equipment finance loans     461,409     494,068     531,143     578,931     614,633
Equipment finance leases     428,659     455,879     473,350     485,460     500,485
Commercial FHA warehouse lines         8,035         48,547     30,522
Total commercial loans and leases     1,829,526     1,871,546     1,955,880     2,056,699     2,108,396
Commercial real estate     2,421,505     2,397,113     2,406,845     2,412,164     2,443,995
Construction and land development     476,528     474,128     452,593     416,801     366,631
Residential real estate     378,393     378,583     380,583     375,211     371,486
Consumer     746,042     837,092     935,178     1,020,008     1,076,836
Total loans   $ 5,851,994   $ 5,958,462   $ 6,131,079   $ 6,280,883   $ 6,367,344


Loan Quality

Overall, credit quality metrics declined this quarter compared to the first quarter of 2024. Non-performing loans increased $7.1 million to $112.1 million at June 30, 2024, compared to $105.0 million as of March 31, 2024. A $3.6 million commercial loan and $4.7 million of equipment financing loans account for the increase.

    As of and for the Three Months Ended
(in thousands)   June 30,   March 31,   December 31,   September 30,   June 30,
    2024       2024       2023       2023       2023  
Asset Quality                    
Loans 30-89 days past due   $ 54,045     $ 58,854     $ 82,778     $ 46,608     $ 44,161  
Nonperforming loans     112,124       104,979       56,351       55,981       54,844  
Nonperforming assets     123,774       116,721       67,701       58,677       57,688  
Substandard loans     135,555       149,049       184,224       143,793       130,707  
Net charge-offs     2,874       4,445       5,117       3,449       2,996  
Loans 30-89 days past due to total loans     0.92 %     0.99 %     1.35 %     0.74 %     0.69 %
Nonperforming loans to total loans     1.92 %     1.76 %     0.92 %     0.89 %     0.86 %
Nonperforming assets to total assets     1.60 %     1.49 %     0.86 %     0.74 %     0.72 %
Allowance for credit losses to total loans     1.58 %     1.31 %     1.12 %     1.06 %     1.02 %
Allowance for credit losses to nonperforming loans     82.22 %     74.35 %     121.56 %     119.09 %     118.43 %
Net charge-offs to average loans     0.20 %     0.30 %     0.33 %     0.22 %     0.19 %

The Company continued to increase its allowance for credit losses on loans during the second quarter of 2024. Notably, the Company recognized provision expense of $14.0 million this quarter related to the loans originated and serviced by LendingPoint, increasing the allowance to $14.6 million on this portfolio. Credit deterioration and servicing issues following their system conversion have resulted in increased losses within this portfolio. At June 30, 2024, loans serviced by LendingPoint totaled $114.2 million.

The allowance for credit losses on loans totaled $92.2 million at June 30, 2024, compared to $78.1 million at March 31, 2024, and $65.0 million at June 30, 2023. The allowance as a percentage of portfolio loans was 1.58% at June 30, 2024, compared to 1.31% at March 31, 2024, and 1.02% at June 30, 2023.

Deposits

Total deposits were $6.12 billion at June 30, 2024, compared with $6.32 billion at March 31, 2024. Noninterest-bearing deposits decreased $103.9 million to $1.11 billion at June 30, 2024, while interest-bearing deposits decreased $102.1 million to $5.01 billion at June 30, 2024. Brokered time deposits decreased $56.8 million to $131.4 million, and represented 2.15% of total deposits at June 30, 2024.

    As of
    June 30,   March 31,   December 31,   September 30,   June 30,
(in thousands)   2024   2024   2023   2023   2023
Deposit Portfolio                    
Noninterest-bearing demand   $ 1,108,521   $ 1,212,382   $ 1,145,395   $ 1,154,515   $ 1,162,909
Interest-bearing:                    
Checking     2,343,533     2,394,163     2,511,840     2,572,224     2,499,693
Money market     1,143,668     1,128,463     1,135,629     1,090,962     1,226,470
Savings     538,462     555,552     559,267     582,359     624,005
Time     852,415     845,190     862,865     885,858     840,734
Brokered time     131,424     188,234     94,533     119,084     72,737
Total deposits   $ 6,118,023   $ 6,323,984   $ 6,309,529   $ 6,405,002   $ 6,426,548

Results of Operations Highlights

Net Interest Income and Margin

During the second quarter of 2024, net interest income, on a tax-equivalent basis, totaled $55.2 million, a decrease of $0.9 million, or 1.6%, compared to $56.1 million for the first quarter of 2024. The tax-equivalent net interest margin for the second quarter of 2024 was 3.12%, compared with 3.18% in the first quarter of 2024. Net interest income and net interest margin, on a tax-equivalent basis, were $59.0 million and 3.23%, respectively, in the second quarter of 2023. The decline in both the net interest income and margin were largely attributable to increased market interest rates resulting in a faster increase in the cost of funding liabilities than the yield on earning assets, as well as the impact of interest reversals on loans placed on non-accrual.

Average interest-earning assets for the second quarter of 2024 were $7.13 billion, compared to $7.11 billion for the first quarter of 2024. The yield increased 8 basis points to 5.84% compared to the first quarter of 2024. Interest-earning assets averaged $7.33 billion for the second quarter of 2023.

Average loans were $5.92 billion for the second quarter of 2024, compared to $6.01 billion for the first quarter of 2024 and $6.36 billion for the second quarter of 2023. The yield on loans was 6.03% for the second quarter of 2024, up from 5.99% for the first quarter of 2024 and 5.80% for the second quarter of 2023.

Investment securities averaged $1.10 billion for the second quarter of 2024, and yielded 4.69%, compared to an average balance and yield of $988.7 million and 4.36%, respectively, for the first quarter of 2024. The Company purchased additional higher-yielding investments resulting in the increased average balance and yield. Investment securities averaged $861.4 million for the second quarter of 2023.

Average interest-bearing deposits were $5.10 billion for the second quarter of 2024, compared to $5.20 billion for the first quarter of 2024, and $5.26 billion for the second quarter of 2023. Cost of interest-bearing deposits was 3.11% in the second quarter of 2024, which represented a 7 basis point increase from the first quarter of 2024. A competitive market, driven by rising interest rates and increased competition, contributed to the increase in deposit costs.

    For the Three Months Ended
(dollars in thousands)   June 30, 2024   March 31, 2024   June 30, 2023
Interest-earning assets   Average Balance   Interest & Fees   Yield/Rate   Average Balance   Interest & Fees   Yield/Rate   Average Balance   Interest & Fees   Yield/Rate
Cash and cash equivalents   $ 65,250   $ 875   5.40 %   $ 69,316   $ 951   5.52 %   $ 67,377   $ 852   5.07 %
Investment securities(1)     1,098,452     12,805   4.69       988,716     10,708   4.36       861,409     7,286   3.39  
Loans(1)(2)     5,915,523     88,738   6.03       6,012,032     89,489   5.99       6,356,012     91,890   5.80  
Loans held for sale     4,910     84   6.84       3,405     55   6.56       4,067     59   5.79  
Nonmarketable equity securities     44,216     963   8.76       35,927     687   7.69       45,028     599   5.33  
Total interest-earning assets     7,128,351     103,465   5.84       7,109,396     101,890   5.76       7,333,893     100,686   5.51  
Noninterest-earning assets     669,370             671,671             612,238        
Total assets   $ 7,797,721           $ 7,781,067           $ 7,946,131        
                                     
Interest-Bearing Liabilities                                    
Interest-bearing deposits   $ 5,101,365   $ 39,476   3.11 %   $ 5,195,118   $ 39,214   3.04 %   $ 5,259,188   $ 33,617   2.56 %
Short-term borrowings     30,449     308   4.07       65,182     836   5.16       22,018     14   0.26  
FHLB advances & other borrowings     500,758     5,836   4.69       313,121     3,036   3.90       471,989     5,396   4.59  
Subordinated debt     93,090     1,265   5.47       93,583     1,280   5.50       97,278     1,335   5.51  
Trust preferred debentures     50,921     1,358   10.73       50,707     1,389   11.02       50,218     1,289   10.29  
Total interest-bearing liabilities     5,776,583     48,243   3.36       5,717,711     45,755   3.22       5,900,691     41,651   2.83  
Noninterest-bearing deposits     1,132,451             1,151,542             1,187,584        
Other noninterest-bearing liabilities     104,841             121,908             81,065        
Shareholders’ equity     783,846             789,906             776,791        
Total liabilities and shareholder’s equity   $ 7,797,721           $ 7,781,067           $ 7,946,131        
                                     
Net Interest Margin       $ 55,222   3.12 %       $ 56,135   3.18 %       $ 59,035   3.23 %
                                     
Cost of Deposits           2.55 %           2.49 %           2.09 %

(1)   Interest income and average rates for tax-exempt loans and investment securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.2 million for each of the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively.
(2)   Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

For the six months ended June 30, 2024, net interest income, on a tax-equivalent basis, decreased to $111.4 million, with a tax-equivalent net interest margin of 3.15%, compared to net interest income, on a tax-equivalent basis, of $119.8 million, and a tax-equivalent net interest margin of 3.31% for the six months ended June 30, 2023.

The yield on earning assets increased 37 basis points to 5.80% for the six months ended June 30, 2024 compared to the prior year. However, the cost of interest-bearing liabilities increased at a faster rate during this period, increasing 64 basis points to 3.29% for the six months ended June 30, 2024.

    For the Six Months Ended
(dollars in thousands)   June 30, 2024   June 30, 2023
Interest-earning assets   Average Balance   Interest & Fees   Yield/Rate   Average Balance   Interest & Fees   Yield/Rate
Cash and cash equivalents   $ 67,283   $ 1,826   5.46 %   $ 76,201   $ 1,832   4.85 %
Investment securities(1)     1,043,585     23,513   4.53       835,771     13,281   3.18  
Loans(1)(2)     5,963,777     178,226   6.01       6,338,305     179,887   5.72  
Loans held for sale     4,157     139   6.72       2,794     75   5.42  
Nonmarketable equity securities     40,072     1,650   8.28       46,416     1,394   6.05  
Total interest-earning assets     7,118,874     205,354   5.80       7,299,487     196,469   5.43  
Noninterest-earning assets     669,370             611,528        
Total assets   $ 7,788,244           $ 7,911,015        
                         
Interest-Bearing Liabilities                        
Interest-bearing deposits   $ 5,148,242   $ 78,690   3.07 %   $ 5,157,148   $ 60,022   2.35 %
Short-term borrowings     47,815     1,144   4.81       30,291     39   0.26  
FHLB advances & other borrowings     406,940     8,872   4.38       505,945     11,402   4.54  
Subordinated debt     93,337     2,545   5.45       98,538     2,705   5.54  
Trust preferred debentures     50,814     2,747   10.87       50,133     2,518   10.13  
Total interest-bearing liabilities     5,747,148     93,998   3.29       5,842,055     76,686   2.65  
Noninterest-bearing deposits     1,141,996             1,219,050        
Other noninterest-bearing liabilities     112,223             77,895        
Shareholders’ equity     786,877             772,015        
Total liabilities and shareholders’ equity   $ 7,788,244           $ 7,911,015        
                         
Net Interest Margin       $ 111,356   3.15 %       $ 119,783   3.31 %
                         
Cost of Deposits           2.52 %           1.90 %

(1)   Interest income and average rates for tax-exempt loans and investment securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.4 million for each of the six months ended June 30, 2024 and 2023, respectively.
(2)   Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.


Noninterest Income

Noninterest income was $17.7 million for the second quarter of 2024, compared to $21.2 million for the first quarter of 2024. Noninterest income for the second quarter of 2024 included a $0.2 million gain on the repurchase of subordinated debt, offset by $0.2 million of net losses on the sale of investment securities. Noninterest income for the first quarter of 2024 included incremental servicing revenues of $3.7 million related to the Greensky portfolio. The second quarter of 2023 included an $0.8 million gain on the sale of OREO and a $0.7 million gain on the repurchase of subordinated debt, partially offset by $0.9 million of net losses on the sale of investment securities. Excluding these transactions, noninterest income for the second quarter of 2024, the first quarter of 2024, and the second quarter of 2023 was $17.6 million, $17.5 million, and $18.1 million, respectively.

    For the Three Months Ended   For the Six Months Ended
    June 30,   March 31,   June 30,   June 30,   June 30,
(in thousands)     2024       2024     2023       2024       2023  
Noninterest income                    
Wealth management revenue   $ 6,801     $ 7,132   $ 6,269     $ 13,933     $ 12,680  
Service charges on deposit accounts     3,121       3,116     2,677       6,237       5,245  
Interchange revenue     3,563       3,358     3,696       6,921       7,108  
Residential mortgage banking revenue     557       527     540       1,084       945  
Income on company-owned life insurance     1,925       1,801     891       3,726       1,767  
Loss on sales of investment securities, net     (152 )         (869 )     (152 )     (1,517 )
Other income     1,841       5,253     5,549       7,094       8,304  
Total noninterest income   $ 17,656     $ 21,187   $ 18,753     $ 38,843     $ 34,532  

Wealth management revenue totaled $6.8 million in the second quarter of 2024, a decrease of $0.3 million, or 4.6%, as compared to the first quarter of 2024, due to the seasonal impact of tax planning fees in the first quarter. Assets under administration increased to $4.00 billion at June 30, 2024 from $3.89 billion at March 31, 2024, primarily due to improved sales activity. Assets under administration totaled $3.59 billion at June 30, 2023.

Noninterest Expense

Noninterest expense was $47.5 million in the second quarter of 2024, compared to $44.9 million in the first quarter of 2024 and $42.9 million in the second quarter of 2023. Noninterest expense for the second quarter of 2024 included $4.1 million of aggregate expenses related to OREO impairment and property taxes, and accruals related to various legal actions. Excluding these transactions, noninterest expense for the second quarter of 2024, the first quarter of 2024, and the second quarter of 2023 was $43.4 million, $44.9 million, and $42.9 million, respectively. The efficiency ratio increased to 65.16% for the quarter ended June 30, 2024, compared to 58.03% for the quarter ended March 31, 2024, and 55.01% for the quarter ended June 30, 2023.

    For the Three Months Ended   For the Six Months Ended
    June 30,   March 31,   June 30,   June 30,   June 30,
(in thousands)   2024   2024   2023   2024   2023
Noninterest expense                    
Salaries and employee benefits   $ 22,872   $ 24,102   $ 22,857   $ 46,974   $ 47,100
Occupancy and equipment     3,964     4,142     3,879     8,106     8,322
Data processing     7,205     6,722     6,544     13,927     12,855
Professional services     2,243     2,255     1,663     4,498     3,423
Amortization of intangible assets     1,016     1,089     1,208     2,105     2,499
FDIC insurance     1,219     1,274     1,196     2,493     2,525
Other expense     8,960     5,283     5,547     14,243     10,652
Total noninterest expense   $ 47,479   $ 44,867   $ 42,894   $ 92,346   $ 87,376


Income Tax Expense

Income tax expense was $1.7 million for the second quarter of 2024, compared to $4.4 million for the first quarter of 2024 and $7.2 million for the second quarter of 2023. The resulting effective tax rates were 19.9%, 23.9% and 25.1%, respectively.

Capital

At June 30, 2024, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

  As of June 30, 2024
  Midland States Bank   Midland States Bancorp, Inc.   Minimum Regulatory Requirements (2)
Total capital to risk-weighted assets 13.06 %   13.94 %   10.50 %
Tier 1 capital to risk-weighted assets 11.69 %   11.21 %   8.50 %
Tier 1 leverage ratio 10.26 %   9.84 %   4.00 %
Common equity Tier 1 capital 11.69 %   8.63 %   7.00 %
Tangible common equity to tangible assets (1) N/A   6.59 %   N/A

(1) A non-GAAP financial measure. Refer to page 15 for a reconciliation to the comparable GAAP financial measure.
(2) Includes the capital conservation buffer of 2.5%, as applicable.

The impact of rising interest rates on the Company’s investment portfolio and cash flow hedges resulted in an $82.6 million accumulated other comprehensive loss at June 30, 2024, which reduced tangible book value by $3.86 per share.

Stock Repurchase Program

As previously disclosed, on December 5, 2023, the Company’s board of directors authorized a new share repurchase program, pursuant to which the Company is authorized to repurchase up to $25.0 million of common stock through December 31, 2024. During the second quarter of 2024, the Company repurchased 131,372 shares of its common stock at a weighted average price of $22.84 under its stock repurchase program.

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, 2024, the Company had total assets of approximately $7.76 billion, and its Wealth Management Group had assets under administration of approximately $4.00 billion. The Company provides a full range of commercial and consumer banking products and services and business equipment financing, merchant credit card services, trust and investment management, insurance and financial planning services. For additional information, visit https://www.midlandsb.com/ or 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 Earnings Available to Common Shareholders,” “Adjusted Diluted Earnings Per Common Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Adjusted Pre-Tax, Pre-Provision Earnings,” “Adjusted Pre-Tax, Pre-Provision Return on Average Assets,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share,” “Tangible Book Value Per Share excluding Accumulated Other Comprehensive Income,” 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, the measures in this press release 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, the impact of inflation, increased deposit volatility and potential regulatory developments; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; changes to U.S. tax laws, regulations and guidance; 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,” “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
Eric T. Lemke, Chief Financial Officer, at elemke@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)
                     
    As of and for the Three Months Ended   As of and
for the Six Months Ended
    June 30,   March 31,   June 30,   June 30,   June 30,
(dollars in thousands, except per share data)     2024       2024       2023       2024       2023  
Earnings Summary                    
Net interest income   $ 55,052     $ 55,920     $ 58,840     $ 110,972     $ 119,344  
Provision for credit losses     16,800       14,000       5,879       30,800       9,014  
Noninterest income     17,656       21,187       18,753       38,843       34,532  
Noninterest expense     47,479       44,867       42,894       92,346       87,376  
Income before income taxes     8,429       18,240       28,820       26,669       57,486  
Income taxes     1,679       4,355       7,245       6,034       14,139  
Net income     6,750       13,885       21,575       20,635       43,347  
Preferred dividends     2,228       2,228       2,228       4,456       4,456  
Net income available to common shareholders   $ 4,522     $ 11,657     $ 19,347     $ 16,179     $ 38,891  
                     
Diluted earnings per common share   $ 0.20     $ 0.53     $ 0.86     $ 0.73     $ 1.72  
Weighted average common shares outstanding – diluted     21,734,849       21,787,691       22,205,079       21,761,492       22,348,981  
Return on average assets     0.35 %     0.72 %     1.09 %     0.53 %     1.10 %
Return on average shareholders’ equity     3.46 %     7.07 %     11.14 %     5.27 %     11.32 %
Return on average tangible common equity (1)     3.66 %     9.34 %     15.99 %     6.51 %     16.34 %
Net interest margin     3.12 %     3.18 %     3.23 %     3.15 %     3.31 %
Efficiency ratio (1)     65.16 %     58.03 %     55.01 %     61.49 %     56.31 %
                     
Adjusted Earnings Performance Summary (1)                    
Adjusted earnings available to common shareholders   $ 4,511     $ 11,657     $ 19,488     $ 16,168     $ 39,505  
Adjusted diluted earnings per common share   $ 0.20     $ 0.53     $ 0.87     $ 0.73     $ 1.75  
Adjusted return on average assets     0.35 %     0.72 %     1.10 %     0.53 %     1.12 %
Adjusted return on average shareholders’ equity     3.46 %     7.07 %     11.21 %     5.27 %     11.48 %
Adjusted return on average tangible common equity     3.65 %     9.34 %     16.10 %     6.51 %     16.60 %
Adjusted pre-tax, pre-provision earnings   $ 25,214     $ 32,240     $ 34,892     $ 57,454     $ 67,341  
Adjusted pre-tax, pre-provision return on average assets     1.30 %     1.67 %     1.76 %     1.48 %     1.72 %
                     
Market Data                    
Book value per share at period end   $ 31.59     $ 31.67     $ 30.49          
Tangible book value per share at period end (1)   $ 23.36     $ 23.44     $ 22.24          
Tangible book value per share excluding accumulated other comprehensive income at period end (1)   $ 27.22     $ 27.23     $ 26.11          
Market price at period end   $ 22.65     $ 25.13     $ 19.91          
Common shares outstanding at period end     21,377,215       21,485,231       21,854,800          
                     
Capital                    
Total capital to risk-weighted assets     13.94 %     13.68 %     12.65 %        
Tier 1 capital to risk-weighted assets     11.21 %     11.16 %     10.47 %        
Tier 1 common capital to risk-weighted assets     8.63 %     8.60 %     8.03 %        
Tier 1 leverage ratio     9.84 %     9.92 %     9.57 %        
Tangible common equity to tangible assets (1)     6.59 %     6.58 %     6.19 %        
                     
Wealth Management                    
Trust assets under administration   $ 3,996,175     $ 3,888,219     $ 3,594,727          

(1) Non-GAAP financial measures. Refer to pages 13 – 15 for a reconciliation to the comparable GAAP financial measures.

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                     
    As of
    June 30,   March 31,   December 31,   September 30,   June 30,
(in thousands)     2024       2024       2023       2023       2023  
Assets                    
Cash and cash equivalents   $ 124,646     $ 167,316     $ 135,061     $ 132,132     $ 160,695  
Investment securities     1,099,654       1,044,900       920,396       839,344       887,003  
Loans     5,851,994       5,958,462       6,131,079       6,280,883       6,367,344  
Allowance for credit losses on loans     (92,183 )     (78,057 )     (68,502 )     (66,669 )     (64,950 )
Total loans, net     5,759,811       5,880,405       6,062,577       6,214,214       6,302,394  
Loans held for sale     5,555       5,043       3,811       6,089       5,632  
Premises and equipment, net     83,040       81,831       82,814       82,741       81,006  
Other real estate owned     8,304       8,920       9,112       480       202  
Loan servicing rights, at lower of cost or fair value     18,902       19,577       20,253       20,933       21,611  
Goodwill     161,904       161,904       161,904       161,904       161,904  
Other intangible assets, net     14,003       15,019       16,108       17,238       18,367  
Company-owned life insurance     207,211       205,286       203,485       201,750       152,210  
Other assets     274,244       241,608       251,347       292,460       243,697  
Total assets   $ 7,757,274     $ 7,831,809     $ 7,866,868     $ 7,969,285     $ 8,034,721  
                     
Liabilities and Shareholders’ Equity                    
Noninterest-bearing demand deposits   $ 1,108,521     $ 1,212,382     $ 1,145,395     $ 1,154,515     $ 1,162,909  
Interest-bearing deposits     5,009,502       5,111,602       5,164,134       5,250,487       5,263,639  
Total deposits     6,118,023       6,323,984       6,309,529       6,405,002       6,426,548  
Short-term borrowings     7,208       214,446       34,865       17,998       21,783  
FHLB advances and other borrowings     600,000       255,000       476,000       538,000       575,000  
Subordinated debt     91,656       93,617       93,546       93,475       93,404  
Trust preferred debentures     50,921       50,790       50,616       50,457       50,296  
Other liabilities     103,694       102,966       110,459       106,743       90,869  
Total liabilities     6,971,502       7,040,803       7,075,015       7,211,675       7,257,900  
Total shareholders’ equity     785,772       791,006       791,853       757,610       776,821  
Total liabilities and shareholders’ equity   $ 7,757,274     $ 7,831,809     $ 7,866,868     $ 7,969,285     $ 8,034,721  
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                     
    For the Three Months Ended   For the Six Months Ended
    June 30,   March 31,   June 30,   June 30,   June 30,
(in thousands, except per share data)   2024   2024   2023   2024   2023
Net interest income:                    
Interest income   $ 103,295     $ 101,675   $ 100,491     $ 204,970     $ 196,030  
Interest expense     48,243       45,755     41,651       93,998       76,686  
Net interest income     55,052       55,920     58,840       110,972       119,344  
Provision for credit losses on loans     17,000       14,000     5,879       31,000       9,014  
Provision for credit losses on unfunded commitments     (200 )               (200 )      
Total provision for credit losses     16,800       14,000     5,879       30,800       9,014  
Net interest income after provision for credit losses     38,252       41,920     52,961       80,172       110,330  
Noninterest income:                    
Wealth management revenue     6,801       7,132     6,269       13,933       12,680  
Service charges on deposit accounts     3,121       3,116     2,677       6,237       5,245  
Interchange revenue     3,563       3,358     3,696       6,921       7,108  
Residential mortgage banking revenue     557       527     540       1,084       945  
Income on company-owned life insurance     1,925       1,801     891       3,726       1,767  
Loss on sales of investment securities, net     (152 )         (869 )     (152 )     (1,517 )
Other income     1,841       5,253     5,549       7,094       8,304  
Total noninterest income     17,656       21,187     18,753       38,843       34,532  
Noninterest expense:                    
Salaries and employee benefits     22,872       24,102     22,857       46,974       47,100  
Occupancy and equipment     3,964       4,142     3,879       8,106       8,322  
Data processing     7,205       6,722     6,544       13,927       12,855  
Professional services     2,243       2,255     1,663       4,498       3,423  
Amortization of intangible assets     1,016       1,089     1,208       2,105       2,499  
FDIC insurance     1,219       1,274     1,196       2,493       2,525  
Other expense     8,960       5,283     5,547       14,243       10,652  
Total noninterest expense     47,479       44,867     42,894       92,346       87,376  
Income before income taxes     8,429       18,240     28,820       26,669       57,486  
Income taxes     1,679       4,355     7,245       6,034       14,139  
Net income     6,750       13,885     21,575       20,635       43,347  
Preferred stock dividends     2,228       2,228     2,228       4,456       4,456  
Net income available to common shareholders   $ 4,522     $ 11,657   $ 19,347     $ 16,179     $ 38,891  
                     
Basic earnings per common share   $ 0.20     $ 0.53   $ 0.86     $ 0.73     $ 1.72  
Diluted earnings per common share   $ 0.20     $ 0.53   $ 0.86     $ 0.73     $ 1.72  
MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
                     
Adjusted Earnings Reconciliation
                     
    For the Three Months Ended   For the Six Months Ended
    June 30,   March 31,   June 30,   June 30,   June 30,
(dollars in thousands, except per share data)     2024       2024       2023       2024       2023  
Income before income taxes – GAAP   $ 8,429     $ 18,240     $ 28,820     $ 26,669     $ 57,486  
Adjustments to noninterest income:                    
Loss on sales of investment securities, net     152             869       152       1,517  
(Gain) on repurchase of subordinated debt     (167 )           (676 )     (167 )     (676 )
Total adjustments to noninterest income     (15 )           193       (15 )     841  
Adjusted earnings pre tax – non-GAAP     8,414       18,240       29,013       26,654       58,327  
Adjusted earnings tax     1,675       4,355       7,297       6,030       14,366  
Adjusted earnings – non-GAAP     6,739       13,885       21,716       20,624       43,961  
Preferred stock dividends     2,228       2,228       2,228       4,456       4,456  
Adjusted earnings available to common shareholders   $ 4,511     $ 11,657     $ 19,488     $ 16,168     $ 39,505  
Adjusted diluted earnings per common share   $ 0.20     $ 0.53     $ 0.87     $ 0.73     $ 1.75  
Adjusted return on average assets     0.35 %     0.72 %     1.10 %     0.53 %     1.12 %
Adjusted return on average shareholders’ equity     3.46 %     7.07 %     11.21 %     5.27 %     11.48 %
Adjusted return on average tangible common equity     3.65 %     9.34 %     16.10 %     6.51 %     16.60 %
 
                     
                     
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
                     
    For the Three Months Ended   For the Six Months Ended
    June 30,   March 31,   June 30,   June 30,   June 30,
(dollars in thousands)     2024       2024       2023       2024       2023  
Adjusted earnings pre tax – non-GAAP   $ 8,414     $ 18,240     $ 29,013     $ 26,654     $ 58,327  
Provision for credit losses     16,800       14,000       5,879       30,800       9,014  
Adjusted pre-tax, pre-provision earnings – non-GAAP   $ 25,214     $ 32,240     $ 34,892     $ 57,454     $ 67,341  
Adjusted pre-tax, pre-provision return on average assets     1.30 %     1.67 %     1.76 %     1.48 %     1.72 %
MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
                     
Efficiency Ratio Reconciliation
                     
    For the Three Months Ended   For the Six Months Ended
    June 30,   March 31,   June 30,   June 30,   June 30,
(dollars in thousands)     2024       2024       2023       2024       2023  
Noninterest expense – GAAP   $ 47,479     $ 44,867     $ 42,894     $ 92,346     $ 87,376  
                     
Net interest income – GAAP   $ 55,052     $ 55,920     $ 58,840     $ 110,972     $ 119,344  
Effect of tax-exempt income     170       215       195       384       439  
Adjusted net interest income     55,222       56,135       59,035       111,356       119,783  
                     
Noninterest income – GAAP     17,656       21,187       18,753       38,843       34,532  
Loss on sales of investment securities, net     152             869       152       1,517  
(Gain) on repurchase of subordinated debt     (167 )           (676 )     (167 )     (676 )
Adjusted noninterest income     17,641       21,187       18,946       38,828       35,373  
                     
Adjusted total revenue   $ 72,863     $ 77,322     $ 77,981     $ 150,184     $ 155,156  
                     
Efficiency ratio     65.16 %     58.03 %     55.01 %     61.49 %     56.31 %
                     
Return on Average Tangible Common Equity (ROATCE)
                     
    For the Three Months Ended   For the Six Months Ended
    June 30,   March 31,   June 30,   June 30,   June 30,
(dollars in thousands)     2024       2024       2023       2024       2023  
Net income available to common shareholders   $ 4,522     $ 11,657     $ 19,347     $ 16,179     $ 38,891  
                     
Average total shareholders’ equity—GAAP   $ 783,846     $ 789,906     $ 776,791     $ 786,877     $ 772,015  
Adjustments:                    
Preferred Stock     (110,548 )     (110,548 )     (110,548 )     (110,548 )     (110,548 )
Goodwill     (161,904 )     (161,904 )     (161,904 )     (161,904 )     (161,904 )
Other intangible assets, net     (14,483 )     (15,525 )     (18,937 )     (15,004 )     (19,557 )
Average tangible common equity   $ 496,911     $ 501,929     $ 485,402     $ 499,421     $ 480,006  
ROATCE     3.66 %     9.34 %     15.99 %     6.51 %     16.34 %
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
    June 30,   March 31,   December 31,   September 30,   June 30,
(dollars in thousands, except per share data)     2024       2024       2023       2023       2023  
Shareholders’ Equity to Tangible Common Equity                
Total shareholders’ equity—GAAP   $ 785,772     $ 791,006     $ 791,853     $ 757,610     $ 776,821  
Adjustments:                    
Preferred Stock     (110,548 )     (110,548 )     (110,548 )     (110,548 )     (110,548 )
Goodwill     (161,904 )     (161,904 )     (161,904 )     (161,904 )     (161,904 )
Other intangible assets, net     (14,003 )     (15,019 )     (16,108 )     (17,238 )     (18,367 )
Tangible common equity     499,317       503,535       503,293       467,920       486,002  
                     
Less: Accumulated other comprehensive loss (AOCI)     (82,581 )     (81,419 )     (76,753 )     (101,181 )     (84,719 )
Tangible common equity excluding AOCI   $ 581,898     $ 584,954     $ 580,046     $ 569,101     $ 570,721  
                     
Total Assets to Tangible Assets:                    
Total assets—GAAP   $ 7,757,274     $ 7,831,809     $ 7,866,868     $ 7,969,285     $ 8,034,721  
Adjustments:                    
Goodwill     (161,904 )     (161,904 )     (161,904 )     (161,904 )     (161,904 )
Other intangible assets, net     (14,003 )     (15,019 )     (16,108 )     (17,238 )     (18,367 )
Tangible assets   $ 7,581,367     $ 7,654,886     $ 7,688,856     $ 7,790,143     $ 7,854,450  
                     
Common Shares Outstanding     21,377,215       21,485,231       21,551,402       21,594,546       21,854,800  
                     
Tangible Common Equity to Tangible Assets     6.59 %     6.58 %     6.55 %     6.01 %     6.19 %
Tangible Book Value Per Share   $ 23.36     $ 23.44     $ 23.35     $ 21.67     $ 22.24  
Tangible Book Value Per Share, excluding AOCI   $ 27.22     $ 27.23     $ 26.91     $ 26.35     $ 26.11  

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