MSBI Midland States Bancorp

Midland States Bancorp, Inc. Announces 2023 Third Quarter Results

Midland States Bancorp, Inc. Announces 2023 Third Quarter Results

Third Quarter 2023 Highlights:

  • Net income available to common shareholders of $15.8 million, or $0.71 per diluted share
  • Adjusted earnings per diluted share of $0.78 reflects impact of balance sheet repositioning that is expected to be accretive to earnings prospectively
  • Common equity tier 1 capital ratio improved to 8.16%
  • Efficiency ratio of 55.8% compared to 55.0% in prior quarter

EFFINGHAM, Ill., Oct. 26, 2023 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income available to common shareholders of $15.8 million, or $0.71 per diluted share, for the third quarter of 2023, compared to $19.3 million, or $0.86 per diluted share, for the second quarter of 2023. This also compares to net income available to common shareholders of $23.5 million, or $1.04 per diluted share, for the third quarter of 2022.

Financial results for the third quarter of 2023 included a one-time enhancement fee of $6.6 million related to the surrender and purchase of company-owned life insurance, a $4.5 million tax charge related to the surrender, and $5.0 million of losses on the sale of investment securities. Excluding these transactions, adjusted earnings available to common shareholders were $17.3 million, or $0.78 per diluted share.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We delivered another quarter of strong financial results highlighted by good stability in our deposit base, net interest margin, and asset quality, as well as disciplined expense control that resulted in a decline in our non-interest expense from the prior quarter. Due to our strong financial performance and prudent balance sheet management, we had increases in all of our regulatory capital ratios, while also continuing to repurchase our common stock at below tangible book value, which we believe is in the best long-term interests of shareholders.

“While continuing to prioritize prudent risk management and maintaining disciplined expense control, we will continue to be active in our new business development efforts with a focus on adding new core deposit relationships with both retail and commercial customers. We also continue to invest in initiatives that we believe will enhance the long-term value of the franchise, including our Banking-as-a-Service platform with two new partnerships launching in the fourth quarter that will contribute low-cost deposits and generate fee income. We expect the Banking-as-a-Service initiative to begin making a meaningful contribution during 2024, which, along with our continued progress on adding new clients in our markets, should support profitable growth in the future, improve our level of returns, and create additional value for our shareholders,” said Mr. Ludwig.

Balance Sheet Highlights

Total assets were $7.98 billion at September 30, 2023, compared to $8.03 billion at June 30, 2023, and $7.82 billion at September 30, 2022. At September 30, 2023, portfolio loans were $6.28 billion, compared to $6.37 billion as of June 30, 2023, and $6.20 billion as of September 30, 2022.

Loans

During the third quarter of 2023, outstanding loans declined slightly as the Company continued to originate loans in a more selective and deliberate approach to balance liquidity and funding costs. Increases in construction and land development loans, commercial FHA warehouse lines, and residential real estate loans of $50.2 million, $18.0 million, and $3.7 million, respectively, were offset by decreases in all other loan categories. Consumer loans decreased $56.8 million due to loan payoffs and a decrease in loans originated through GreenSky.

  As of
  September 30, June 30, March 31, December 31, September 30,
(in thousands) 2023 2023 2023 2022 2022
Loan Portfolio          
Commercial loans $943,761 $962,756 $937,920 $872,794 $907,651
Equipment finance loans  578,931  614,633  632,205  616,751  577,323
Equipment finance leases  485,460  500,485  510,029  491,744  457,611
Commercial FHA warehouse lines  48,547  30,522  10,275  25,029  51,309
Total commercial loans and leases  2,056,699  2,108,396  2,090,429  2,006,318  1,993,894
Commercial real estate  2,412,164  2,443,995  2,448,158  2,433,159  2,466,303
Construction and land development  416,801  366,631  326,836  320,882  225,549
Residential real estate  375,211  371,486  369,910  366,094  356,225
Consumer  1,020,008  1,076,836  1,118,938  1,180,014  1,156,480
Total loans $6,280,883 $6,367,344 $6,354,271 $6,306,467 $6,198,451
                

Loan Quality

Credit quality metrics remained steady during the third quarter of 2023. Loans 30-89 days past due totaled $46.6 million as of September 30, 2023, compared to $44.2 million as of June 30, 2023. Non-performing loans were $56.0 million at September 30, 2023, compared to $54.8 million as of June 30, 2023, and non-performing assets were 0.74% of total assets at the end of the third quarter of 2023, compared to 0.72% at June 30, 2023.

At September 30, 2022, loans 30-89 days past due totaled $28.3 million, non-performing loans were $46.9 million, and non-performing assets as a percentage of total assets were 0.76%.

  As of and for the Three Months Ended
(in thousands)



 September 30, June 30, March 31, December 31, September 30,
 2023 2023 2023 2022 2022
Asset Quality          
Loans 30-89 days past due $46,608  $44,161  $30,895  $32,372  $28,275 
Nonperforming loans  55,981   54,844   50,713   49,423   46,882 
Nonperforming assets  58,677   57,688   58,806   57,824   59,524 
Substandard loans  143,793   130,707   99,819   101,044   98,517 
Net charge-offs  3,449   2,996   2,119   538   3,233 
Loans 30-89 days past due to total loans  0.74%  0.69%  0.49%  0.51%  0.46%
Nonperforming loans to total loans  0.89%  0.86%  0.80%  0.78%  0.76%
Nonperforming assets to total assets  0.74%  0.72%  0.74%  0.74%  0.76%
Allowance for credit losses to total loans  1.06%  1.02%  0.98%  0.97%  0.95%
Allowance for credit losses to nonperforming loans  119.09%  118.43%  122.39%  123.53%  125.08%
Net charge-offs to average loans  0.22%  0.19%  0.14%  0.03%  0.21%
                     

The Company continued to increase its allowance for credit losses on loans due to increased delinquencies and losses within our equipment finance portfolio. The allowance totaled $66.7 million at September 30, 2023, compared to $65.0 million at June 30, 2023, and $58.6 million at September 30, 2022. The allowance as a percentage of portfolio loans was 1.06% at September 30, 2023, compared to 1.02% at June 30, 2023, and 0.95% at September 30, 2022.

Deposits

Total deposits were $6.41 billion at September 30, 2023, compared with $6.43 billion at June 30, 2023 and $6.40 billion at September 30, 2022. The deposit mix continues to shift from noninterest-bearing deposits to interest-bearing deposits due to the recent rate increases announced by the Federal Reserve and the expectation that rates will remain high for a longer period.

  As of
  September 30, June 30, March 31, December 31, September 30,
(in thousands) 2023 2023 2023 2022 2022
Deposit Portfolio          
Noninterest-bearing demand $1,154,515 $1,162,909 $1,215,758 $1,362,158 $1,362,481
Interest-bearing:          
Checking  2,572,224  2,499,693  2,502,827  2,494,073  2,568,195
Money market  1,090,962  1,226,470  1,263,813  1,184,101  1,125,333
Savings  582,359  624,005  636,832  661,932  704,245
Time  885,858  840,734  766,884  649,552  620,960
Brokered time  119,084  72,737  39,087  12,836  14,038
Total deposits $6,405,002 $6,426,548 $6,425,201 $6,364,652 $6,395,252
                

The Company estimates that uninsured deposits(1) totaled $1.28 billion, or 20% of total deposits, at September 30, 2023 compared to $1.21 billion, or 19%, at June 30, 2023.

(1)   Uninsured deposits include the Call Report estimate of uninsured deposits less affiliate deposits, estimated insured portion of servicing deposits, additional structured FDIC coverage and collateralized deposits.

Results of Operations Highlights

Net Interest Income and Margin

During the third quarter of 2023, net interest income, on a tax-equivalent basis, totaled $58.8 million, a decrease of $0.2 million, or 0.4%, compared to $59.0 million for the second quarter of 2023. The tax-equivalent net interest margin for the third quarter of 2023 was 3.20%, compared with 3.23% in the second quarter of 2023. Net interest income and related margin, on a tax-equivalent basis, was $64.3 million and 3.63%, respectively, in the third quarter of 2022. The decline in the net interest income and margin was largely attributable to increased market interest rates resulting in the cost of funding liabilities increasing at a faster rate than the yield on earning assets.

Average interest-earning assets for the third quarter of 2023 were $7.28 billion, compared to $7.33 billion for the second quarter of 2023. The yield increased 14 basis points to 5.65% compared to the second quarter of 2023. Interest-earning assets averaged $7.03 billion for the third quarter of 2022.

Average loans were $6.30 billion for the third quarter of 2023, compared to $6.36 billion for the second quarter of 2023 and $6.04 billion for the third quarter of 2022. The yield on loans was 5.93% and 5.80% for the third and second quarters of 2023, respectively.

Investment securities averaged $863.0 million for the third quarter of 2023, and yielded 3.60%, compared to an average balance and yield of $861.4 million and 3.39%, respectively, for the second quarter of 2023. The Company purchased additional investments and repositioned out of lower-yielding securities in favor of higher-yielding instruments resulting in the increased average balance and yield. The Company incurred net losses on sales of $5.0 million in the third quarter of 2023. The repositioning is expected to improve the overall margin, liquidity, and capital allocations. Investment securities averaged $749.0 million for the third quarter of 2022.

Average interest-bearing deposits were $5.35 billion for the third quarter of 2023, compared to $5.26 billion for the second quarter of 2023, and $4.92 billion for the third quarter of 2022. Cost of interest-bearing deposits was 2.80% in the third quarter of 2023, which represents a 24 basis point increase from the second quarter of 2023. A competitive market, driven by rising interest rates and increased competition, were contributing factors to the increase in deposit costs.

  For the Three Months Ended
  September 30, June 30, September 30,
(dollars in thousands) 2023 2023 2022
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 $78,391 $1,036 5.24% $67,377 $852 5.07% $195,657 $1,125 2.28%
Investment securities  862,998  7,822 3.60   861,409  7,286 3.39   749,022  4,560 2.44 
Loans  6,297,568  94,118 5.93   6,356,012  91,890 5.80   6,040,358  73,568 4.83 
Loans held for sale  6,078  104 6.80   4,067  59 5.79   6,044  60 3.87 
Nonmarketable equity securities  39,347  710 7.16   45,028  599 5.33   37,765  550 5.78 
Total interest-earning assets $7,284,382 $103,790 5.65% $7,333,893 $100,686 5.51% $7,028,846 $79,863 4.51%
Noninterest-earning assets  622,969      612,238      618,138    
Total assets $7,907,351     $7,946,131     $7,646,984    
                   
Interest-Bearing Liabilities                  
Interest-bearing deposits $5,354,356 $37,769 2.80% $5,259,188 $33,617 2.56% $4,922,345 $10,249 0.83%
Short-term borrowings  20,127  14 0.28   22,018  14 0.26   58,271  28 0.19 
FHLB advances & other borrowings  402,500  4,557 4.49   471,989  5,396 4.59   340,163  2,424 2.83 
Subordinated debt  93,441  1,280 5.43   97,278  1,335 5.51   139,324  2,010 5.77 
Trust preferred debentures  50,379  1,369 10.78   50,218  1,289 10.29   49,751  821 6.54 
Total interest-bearing liabilities $5,920,803 $44,989 3.01% $5,900,691 $41,651 2.83% $5,509,854 $15,532 1.12%
Noninterest-bearing deposits  1,116,988      1,187,584      1,372,626    
Other noninterest-bearing liabilities  97,935      81,065      63,638    
Shareholders’ equity  771,625      776,791      700,866    
Total liabilities and shareholder’s equity $7,907,351     $7,946,131     $7,646,984    
                   
Net Interest Margin   $58,801 3.20%   $59,035 3.23%   $64,331 3.63%
                   
Cost of Deposits     2.32%     2.09%     0.65%

(1)   Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.2 million, $0.2 million and $0.3 million for the three months ended September 30, 2023, June 30, 2023 and September 30, 2022, respectively.



During the nine months ended September 30, 2023, net interest income, on a tax-equivalent basis, decreased to $178.6 million, with a tax-equivalent net interest margin of 3.27%, compared to net interest income, on a tax-equivalent basis, of $183.2 million, and a tax-equivalent net interest margin of 3.60% for the nine months ended September 30, 2022.

The yield on earning assets increased 133 basis points to 5.50% for the nine months ended September 30, 2023 compared to the same period one year prior. However, the cost of interest-bearing liabilities increased at a faster rate during this period, increasing 203 basis points to 2.77% for the nine months ended September 30, 2023.

  For the Nine Months Ended
  September 30, September 30,
(dollars in thousands) 2023 2022
Interest-earning assets Average

Balance
 Interest &

Fees
 Yield/

Rate
 Average

Balance
 Interest &

Fees
 Yield/

Rate
Cash and cash equivalents $76,939 $2,868 4.98% $268,111 $1,764 0.88%
Investment securities  844,946  21,103 3.33   820,328  14,453 2.35 
Loans  6,324,578  274,005 5.79   5,666,874  194,442 4.59 
Loans held for sale  3,900  179 6.14   15,629  357 3.05 
Nonmarketable equity securities  44,034  2,104 6.39   36,832  1,521 5.52 
Total interest-earning assets $7,294,397 $300,259 5.50% $6,807,774 $212,537 4.17%
Noninterest-earning assets  615,383      621,510    
Total assets $7,909,780     $7,429,284    
             
Interest-Bearing Liabilities            
Interest-bearing deposits $5,223,852 $97,791 2.50% $4,717,610 $16,220 0.46%
Short-term borrowings  26,865  53 0.26   62,495  73 0.16 
FHLB advances & other borrowings  471,084  15,959 4.53   319,791  5,071 2.12 
Subordinated debt  96,820  3,985 5.49   139,233  6,032 5.78 
Trust preferred debentures  50,216  3,887 10.35   49,603  1,959 5.28 
Total interest-bearing liabilities $5,868,837 $121,675 2.77% $5,288,732 $29,355 0.74%
Noninterest-bearing deposits  1,184,410      1,402,900    
Other noninterest-bearing liabilities  84,650      70,427    
Shareholders’ equity  771,883      667,225    
Total liabilities and shareholder’s equity $7,909,780     $7,429,284    
             
Net Interest Margin   $178,584 3.27%   $183,182 3.60%
             
Cost of Deposits     2.04%     0.35%

(1)   Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.6 million and $1.0 million for the nine months ended September 30, 2023 and 2022, respectively.



Noninterest Income

Noninterest income was $18.2 million for the third quarter of 2023, compared to $18.8 million for the second quarter of 2023. Noninterest income for the third quarter of 2023 included a one-time enhancement fee of $6.6 million related to the surrender and purchase of company-owned life insurance, partially offset by $5.0 million of losses on the sale of investment securities. 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 losses on the sale of investment securities. Excluding these transactions, noninterest income for the third quarter of 2023 and the second quarter of 2023 was $16.5 million and $18.2 million, respectively. Noninterest income for the third quarter of 2022 was $15.8 million and included $0.1 million loss on the sale of investment securities.

  For the Three Months Ended For the Nine Months Ended
  September 30, June 30, September 30, September 30, September 30,
(in thousands) 2023 2023 2022 2023 2022
Noninterest income          
Wealth management revenue $6,288  $6,269  $6,199  $18,968  $19,481 
Residential mortgage banking revenue  507   540   210   1,452   1,193 
Service charges on deposit accounts  3,149   2,849   2,783   8,744   7,544 
Interchange revenue  3,609   3,696   3,531   10,717   10,401 
Loss on sales of investment securities, net  (4,961)  (869)  (129)  (6,478)  (230)
Gain on repurchase of subordinated debt, net     676      676    
Gain (loss) on sales of other real estate owned, net     819      819   (131)
Impairment on commercial mortgage servicing rights              (1,263)
Company-owned life insurance  7,558   891   929   9,325   2,788 
Other income  2,035   3,882   2,303   8,494   6,269 
Total noninterest income $18,185  $18,753  $15,826  $52,717  $46,052 
                     

Noninterest Expense

Noninterest expense was $42.0 million in the third quarter of 2023, compared to $42.9 million in the second quarter of 2023, and $43.5 million in the third quarter of 2022. The efficiency ratio was 55.82% for the quarter ended September 30, 2023, compared to 55.01% for the quarter ended June 30, 2023, and 54.26% for the quarter ended September 30, 2022.

  For the Three Months Ended For the Nine Months Ended
  September 30, June 30, September 30, September 30, September 30,
(in thousands) 2023 2023 2022 2023 2022
Noninterest expense          
Salaries and employee benefits $22,307 $22,857 $22,889 $69,407 $67,404
Occupancy and equipment  3,730  3,879  3,850  12,052  11,094
Data processing  6,468  6,544  6,093  19,323  18,048
Professional  1,554  1,663  1,693  4,977  5,181
Amortization of intangible assets  1,129  1,208  1,361  3,628  4,077
FDIC insurance  1,107  1,196  977  3,632  2,633
Other expense  5,743  5,547  6,633  16,395  17,282
Total noninterest expense $42,038 $42,894 $43,496 $129,414 $125,719
                

Salaries and employee benefits expenses were $22.3 million in the third quarter of 2023, compared to $22.9 million in both the second quarter of 2023 and the third quarter of 2022. Employees numbered 911 at September 30, 2023, compared to 915 at June 30, 2023, and 930 at September 30, 2022. The third quarter of 2023 included a decline in medical insurance expense of $0.7 million.

Income Tax Expense

Income tax expense was $11.5 million for the third quarter of 2023, as compared to $7.2 million for the second quarter of 2023 and $5.9 million for the third quarter of 2022. The resulting effective tax rates were 39.0%, 25.1% and 19.9% respectively. The third quarter of 2023 included tax charges of $4.5 million associated with the surrender of company-owned life insurance and $1.4 million related to the finalization of the 2022 federal and state tax returns. Exclusive of these items our effective tax rate is 25.1% for the third quarter of 2023.

Capital

At September 30, 2023, 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 September 30, 2023
 Midland States Bank Midland States

Bancorp, Inc.
 Minimum Regulatory

Requirements
(2)
Total capital to risk-weighted assets12.13% 12.84% 10.50%
Tier 1 capital to risk-weighted assets11.21% 10.62% 8.50%
Tier 1 leverage ratio10.21% 9.67% 4.00%
Common equity Tier 1 capital11.21% 8.16% 7.00%
Tangible common equity to tangible assets (1)N/A 6.09% N/A

(1) A non-GAAP financial measure. Refer to page 16 for a reconciliation to the comparable GAAP financial measure.

(2) Includes the capital conservation buffer of 2.5%.

The impact of rising interest rates on the Company’s investment portfolio and cash flow hedges has resulted in a $101.2 million accumulated other comprehensive loss at September 30, 2023, which impacts tangible book value by $4.68 per share.

Stock Repurchase Program

As previously disclosed, on December 6, 2022, 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, 2023. During the third quarter of 2023, the Company repurchased 271,059 shares of its common stock at a weighted average price of $22.14 under its stock repurchase program. As of September 30, 2023, the Company had $10.1 million remaining under the current stock repurchase authorization.

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, 2023, the Company had total assets of approximately $7.98 billion, and its Wealth Management Group had assets under administration of approximately $3.50 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 / or /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, continuing effects of the failures of Silicon Valley Bank and Signature Bank, 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 or (217) 342-7321

Eric T. Lemke, Chief Financial Officer, at or (217) 342-7321

Douglas J. Tucker, SVP and Corporate Counsel, at or (217) 342-7321

 
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
           
(dollars in thousands, except per share data) As of and for the Three Months Ended As of and

for the Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
 2023 2023 2022 2023 2022
Earnings Summary          
Net interest income $58,596  $58,840  $64,024  $177,940  $182,185 
Provision for credit losses  5,168   5,879   6,974   14,182   16,582 
Noninterest income  18,185   18,753   15,826   52,717   46,052 
Noninterest expense  42,038   42,894   43,496   129,414   125,719 
Income before income taxes  29,575   28,820   29,380   87,061   85,936 
Income taxes  11,533   7,245   5,859   25,672   19,783 
Net income  18,042   21,575   23,521   61,389   66,153 
Preferred dividends  2,229   2,228      6,685    
Net income available to common shareholders $15,813  $19,347  $23,521  $54,704  $66,153 
           
Diluted earnings per common share $0.71  $0.86  $1.04  $2.43  $2.92 
Weighted average common shares outstanding - diluted  21,977,196   22,205,079   22,390,438   22,223,986   22,367,095 
Return on average assets  0.91%  1.09%  1.22%  1.04%  1.19%
Return on average shareholders' equity  9.28%  11.14%  13.31%  10.63%  13.26%
Return on average tangible common equity (1)  13.03%  15.99%  20.20%  15.22%  19.06%
Net interest margin  3.20%  3.23%  3.63%  3.27%  3.60%
Efficiency ratio (1)  55.82%  55.01%  54.26%  56.15%  54.34%
           
Adjusted Earnings Performance Summary (1)          
Adjusted earnings available to common shareholders $17,278  $19,488  $23,568  $56,783  $66,574 
Adjusted diluted earnings per common share $0.78  $0.87  $1.04  $2.53  $2.94 
Adjusted return on average assets  0.98%  1.10%  1.22%  1.07%  1.20%
Adjusted return on average shareholders' equity  10.03%  11.21%  13.34%  10.99%  13.34%
Adjusted return on average tangible common equity  14.24%  16.10%  20.24%  15.80%  19.18%
Adjusted pre-tax, pre-provision earnings $33,064  $34,892  $36,415  $100,405  $104,358 
Adjusted pre-tax, pre-provision return on average assets  1.66%  1.76%  1.89%  1.70%  1.88%
           
Market Data          
Book value per share at period end $30.27  $30.49  $28.48     
Tangible book value per share at period end (1) $21.98  $22.24  $20.14     
Tangible book value per share excluding accumulated other comprehensive income at period end (1) $26.66  $26.11  $23.69     
Market price at period end $20.54  $19.91  $23.57     
Common shares outstanding at period end  21,594,546   21,854,800   22,074,740     
           
Capital          
Total capital to risk-weighted assets  12.84%  12.65%  12.79%    
Tier 1 capital to risk-weighted assets  10.62%  10.47%  10.05%    
Tier 1 common capital to risk-weighted assets  8.16%  8.03%  7.56%    
Tier 1 leverage ratio  9.67%  9.57%  9.40%    
Tangible common equity to tangible assets (1)  6.09%  6.19%  5.82%    
           
Wealth Management          
Trust assets under administration $3,501,225  $3,594,727  $3,355,019     

(1) Non-GAAP financial measures. Refer to pages 14 - 16 for a reconciliation to the comparable GAAP financial measures.

 
 
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
           
  As of
  September 30, June 30, March 31, December 31, September 30,
(in thousands) 2023 2023 2023 2022 2022
Assets          
Cash and cash equivalents $132,132  $160,695  $138,310  $160,631  $313,188 
Investment securities  839,344   887,003   821,005   776,860   690,504 
Loans  6,280,883   6,367,344   6,354,271   6,306,467   6,198,451 
Allowance for credit losses on loans  (66,669)  (64,950)  (62,067)  (61,051)  (58,639)
Total loans, net  6,214,214   6,302,394   6,292,204   6,245,416   6,139,812 
Loans held for sale  6,089   5,632   2,747   1,286   4,338 
Premises and equipment, net  82,741   81,006   80,582   78,293   77,519 
Other real estate owned  480   202   6,729   6,729   11,141 
Loan servicing rights, at lower of cost or fair value  20,933   21,611   1,117   1,205   1,297 
Commercial FHA mortgage loan servicing rights held for sale        20,745   20,745   23,995 
Goodwill  161,904   161,904   161,904   161,904   161,904 
Other intangible assets, net  17,238   18,367   19,575   20,866   22,198 
Company-owned life insurance  208,390   152,210   151,319   150,443   149,648 
Other assets  292,460   243,697   233,937   231,123   226,333 
Total assets $7,975,925  $8,034,721  $7,930,174  $7,855,501  $7,821,877 
           
Liabilities and Shareholders' Equity          
Noninterest-bearing demand deposits $1,154,515  $1,162,909  $1,215,758  $1,362,158  $1,362,481 
Interest-bearing deposits  5,250,487   5,263,639   5,209,443   5,002,494   5,032,771 
Total deposits  6,405,002   6,426,548   6,425,201   6,364,652   6,395,252 
Short-term borrowings  17,998   21,783   31,173   42,311   58,518 
FHLB advances and other borrowings  538,000   575,000   482,000   460,000   360,000 
Subordinated debt  93,475   93,404   99,849   99,772   139,370 
Trust preferred debentures  50,457   50,296   50,135   49,975   49,824 
Other liabilities  106,743   90,869   66,173   80,217   79,634 
Total liabilities  7,211,675   7,257,900   7,154,531   7,096,927   7,082,598 
Total shareholders’ equity  764,250   776,821   775,643   758,574   739,279 
Total liabilities and shareholders’ equity $7,975,925  $8,034,721  $7,930,174  $7,855,501  $7,821,877 



 
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
           
  For the Three Months Ended For the Nine Months Ended
  September 30, June 30, September 30, September 30, September 30,
(in thousands, except per share data) 2023 2023 2022 2023 2022
Net interest income:          
Interest income $103,585  $100,491  $79,556  $299,615  $211,540 
Interest expense  44,989   41,651   15,532   121,675   29,355 
Net interest income  58,596   58,840   64,024   177,940   182,185 
Provision for credit losses:          
Provision for credit losses on loans  5,168   5,879   6,974   14,182   15,847 
Provision for credit losses on unfunded commitments              956 
Provision for other credit losses              (221)
Total provision for credit losses  5,168   5,879   6,974   14,182   16,582 
Net interest income after provision for credit losses  53,428   52,961   57,050   163,758   165,603 
Noninterest income:          
Wealth management revenue  6,288   6,269   6,199   18,968   19,481 
Residential mortgage banking revenue  507   540   210   1,452   1,193 
Service charges on deposit accounts  3,149   2,849   2,783   8,744   7,544 
Interchange revenue  3,609   3,696   3,531   10,717   10,401 
Loss on sales of investment securities, net  (4,961)  (869)  (129)  (6,478)  (230)
Gain on repurchase of subordinated debt, net     676      676    
Gain (loss) on sales of other real estate owned, net     819      819   (131)
Impairment on commercial mortgage servicing rights              (1,263)
Company-owned life insurance  7,558   891   929   9,325   2,788 
Other income  2,035   3,882   2,303   8,494   6,269 
Total noninterest income  18,185   18,753   15,826   52,717   46,052 
Noninterest expense:          
Salaries and employee benefits  22,307   22,857   22,889   69,407   67,404 
Occupancy and equipment  3,730   3,879   3,850   12,052   11,094 
Data processing  6,468   6,544   6,093   19,323   18,048 
Professional  1,554   1,663   1,693   4,977   5,181 
Amortization of intangible assets  1,129   1,208   1,361   3,628   4,077 
FDIC insurance  1,107   1,196   977   3,632   2,633 
Other expense  5,743   5,547   6,633   16,395   17,282 
Total noninterest expense  42,038   42,894   43,496   129,414   125,719 
Income before income taxes  29,575   28,820   29,380   87,061   85,936 
Income taxes  11,533   7,245   5,859   25,672   19,783 
Net income  18,042   21,575   23,521   61,389   66,153 
Preferred stock dividends  2,229   2,228      6,685    
Net income available to common shareholders $15,813  $19,347  $23,521  $54,704  $66,153 
           
Basic earnings per common share $0.71  $0.86  $1.04  $2.43  $2.93 
Diluted earnings per common share $0.71  $0.86  $1.04  $2.43  $2.92 



 
MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
           
Adjusted Earnings Reconciliation
           
  For the Three Months Ended For the Nine Months Ended
  September 30, June 30, September 30, September 30, September 30,
(dollars in thousands, except per share data) 2023 2023 2022 2023 2022
Income before income taxes - GAAP $29,575  $28,820  $29,380  $87,061  $85,936 
Adjustments to noninterest income:          
Loss on sales of investment securities, net  4,961   869   129   6,478   230 
(Gain) on repurchase of subordinated debt     (676)     (676)   
Company-owned life insurance enhancement fee  (6,640)        (6,640)   
Total adjustments to noninterest income  (1,679)  193   129   (838)  230 
Adjustments to noninterest expense:          
Integration and acquisition expenses        68      (347)
Total adjustments to noninterest expense        68      (347)
Adjusted earnings pre tax - non-GAAP  27,896   29,013   29,441   86,223   86,513 
Adjusted earnings tax  8,389   7,297   5,873   22,755   19,939 
Adjusted earnings - non-GAAP  19,507   21,716   23,568   63,468   66,574 
Preferred stock dividends  2,229   2,228      6,685    
Adjusted earnings available to common shareholders $17,278  $19,488  $23,568  $56,783  $66,574 
Adjusted diluted earnings per common share $0.78  $0.87  $1.04  $2.53  $2.94 
Adjusted return on average assets  0.98%  1.10%  1.22%  1.07%  1.20%
Adjusted return on average shareholders' equity  10.03%  11.21%  13.34%  10.99%  13.34%
Adjusted return on average tangible common equity  14.24%  16.10%  20.24%  15.80%  19.18%
           
           
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
           
  For the Three Months Ended For the Nine Months Ended
  September 30, June 30, September 30, September 30, September 30,
(dollars in thousands) 2023 2023 2022 2023 2022
Adjusted earnings pre tax - non-GAAP $27,896  $29,013  $29,441  $86,223  $86,513 
Provision for credit losses  5,168   5,879   6,974   14,182   16,582 
Impairment on commercial mortgage servicing rights              1,263 
Adjusted pre-tax, pre-provision earnings - non-GAAP $33,064  $34,892  $36,415  $100,405  $104,358 
Adjusted pre-tax, pre-provision return on average assets  1.66%  1.76%  1.89%  1.70%  1.88%



 
MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
           
Efficiency Ratio Reconciliation
           
  For the Three Months Ended For the Nine Months Ended
  September 30, June 30, September 30, September 30, September 30,
(dollars in thousands) 2023 2023 2022 2023 2022
Noninterest expense - GAAP $42,038  $42,894  $43,496  $129,414  $125,719 
Integration and acquisition expenses        68      (347)
Adjusted noninterest expense $42,038  $42,894  $43,564  $129,414  $125,372 
           
Net interest income - GAAP $58,596  $58,840  $64,024  $177,940  $182,185 
Effect of tax-exempt income  205   195   307   644   997 
Adjusted net interest income  58,801   59,035   64,331   178,584   183,182 
           
Noninterest income - GAAP  18,185   18,753   15,826   52,717   46,052 
Impairment on commercial mortgage servicing rights              1,263 
Loss on sales of investment securities, net  4,961   869   129   6,478   230 
(Gain) on repurchase of subordinated debt     (676)     (676)   
Company-owned life insurance enhancement fee  (6,640)        (6,640)   
Adjusted noninterest income  16,506   18,946   15,955   51,879   47,545 
           
Adjusted total revenue $75,307  $77,981  $80,286  $230,463  $230,727 
           
Efficiency ratio  55.82%  55.01%  54.26%  56.15%  54.34%
           
Return on Average Tangible Common Equity (ROATCE)
           
  For the Three Months Ended For the Nine Months Ended
  September 30, June 30, September 30, September 30, September 30,
(dollars in thousands) 2023 2023 2022 2023 2022
Net income available to common shareholders $15,813  $19,347  $23,521  $54,704  $66,153 
           
Average total shareholders' equity—GAAP $771,625  $776,791  $700,866  $771,883  $667,225 
Adjustments:          
Preferred Stock  (110,548)  (110,548)  (54,072)  (110,548)   
Goodwill  (161,904)  (161,904)  (161,904)  (161,904)  (161,904)
Other intangible assets, net  (17,782)  (18,937)  (22,859)  (18,959)  (23,019)
Average tangible common equity $481,391  $485,402  $462,031  $480,472  $482,302 
ROATCE  13.03%  15.99%  20.20%  15.22%  19.06%



 
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
  September 30, June 30, March 31, December 31, September 30,
(dollars in thousands, except per share data) 2023 2023 2023 2022 2022
Shareholders' Equity to Tangible Common Equity        
Total shareholders' equity—GAAP $764,250  $776,821  $775,643  $758,574  $739,279 
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  (17,238)  (18,367)  (19,575)  (20,866)  (22,198)
Tangible common equity $474,560  $486,002  $483,616  $465,256  $444,629 
           
Less: Accumulated other comprehensive income (AOCI)  (101,181)  (84,719)  (77,797)  (83,797)  (78,383)
Tangible common equity excluding AOCI  575,741   570,721   561,413   549,053   523,012 
           
Total Assets to Tangible Assets:          
Total assets—GAAP $7,975,925  $8,034,721  $7,930,174  $7,855,501  $7,821,877 
Adjustments:          
Goodwill  (161,904)  (161,904)  (161,904)  (161,904)  (161,904)
Other intangible assets, net  (17,238)  (18,367)  (19,575)  (20,866)  (22,198)
Tangible assets $7,796,783  $7,854,450  $7,748,695  $7,672,731  $7,637,775 
           
Common Shares Outstanding  21,594,546   21,854,800   22,111,454   22,214,913   22,074,740 
           
Tangible Common Equity to Tangible Assets  6.09%  6.19%  6.24%  6.06%  5.82%
Tangible Book Value Per Share $21.98  $22.24  $21.87  $20.94  $20.14 
Tangible Book Value Per Share excluding AOCI $26.66  $26.11  $25.39  $24.72  $23.69 

 



EN
26/10/2023

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