Midland States Bancorp, Inc. Announces 2020 Third Quarter Results

Rhea-AI Summary

Midland States Bancorp (MSBI) reported a net income of $86 thousand for Q3 2020, significantly lower than $12.6 million in Q2 2020, impacted by $13.9 million in optimization charges. Adjusted earnings were $12.0 million, or $0.52 per share. Total loans rose 2.1% to $4.94 billion, while deposits increased 1.7% to $5.03 billion. The allowance for credit losses reached 1.07% of loans. Nonperforming loans increased to 1.36% of total loans. The bank remains cautious amid economic recovery and has continued its stock repurchase program, utilizing $13.3 million of the $50 million authorization.

Positive

• Total loans increased by $102 million (2.1%) from the previous quarter.
• Total deposits grew by $85.6 million (1.7%) from the previous quarter.
• Adjusted earnings increased to $12.0 million, or $0.52 per share, excluding optimization charges.
• Net interest income rose by 2.0% to $50 million compared to Q2 2020.

Negative

• Net income dropped to $86 thousand from $12.6 million in Q2 2020 due to optimization charges.
• Nonperforming loans increased to 1.36% of total loans from 1.25% in Q2 2020.
• The allowance for credit losses grew to 1.07%, reflecting heightened risk.

Summary

• Net income of $86 thousand, or $0.00 diluted earnings per share
• Adjusted earnings of $12.0 million, or $0.52 diluted earnings per share, primarily reflects the exclusion of $13.9 million of charges related to branch and facilities optimization plan
• Total loans increased $102.0 million, or 2.1%, from June 30, 2020
• Total deposits increased $85.6 million, or 1.7%, from June 30, 2020
• Allowance for credit losses increased to 1.07% of total loans
• COVID-19 related loan deferral requests declined 68.9% from June 30, 2020

EFFINGHAM, Ill., Oct. 22, 2020 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $86 thousand, or $0.00 diluted earnings per share, for the third quarter of 2020, which includes $13.9 million of charges primarily related to the Company’s previously announced branch and facilities optimization plan. This compares to net income of $12.6 million, or $0.53 diluted earnings per share, for the second quarter of 2020, and net income of $12.7 million, or $0.51 diluted earnings per share, for the third quarter of 2019.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “Excluding the charges related to our branch and facilities optimization plan, we delivered a strong quarter highlighted by solid balance sheet growth, significant contributions from many of our sources of noninterest income, and disciplined expense management. Our diverse lending businesses enabled us to capitalize on pockets of strength in the economy where there is good demand, including equipment financing, small dollar consumer loans, and warehouse lines to commercial FHA lenders. As a result, our total loan balances increased at an annualized rate of more than 8% in the third quarter and helped drive an increase in net interest income.”

“We are seeing general improvement in the financial health of our borrowers as the economy continues to strengthen. Our deferred loans declined from 18.6% of total loans at the end of the second quarter to 5.7% of total loans at September 30, 2020. While the return to scheduled payments by many borrowers is encouraging, we remain cautious about the pace of the economic recovery and continued to add to our loan loss reserves, resulting in our allowance for credit losses increasing to 1.07% of total loans at September 30, 2020, from 0.97% at June 30, 2020.”

“As previously disclosed, during the third quarter we also made adjustments to our operations with the sale of our commercial FHA loan origination platform and the announcement of a series of planned branch and corporate office reductions. We believe the collective impact of these actions will help drive further improvement in our efficiency ratio and provide more operating leverage as we continue to grow our balance sheet in the future, resulting in more consistent financial performance, a higher level of returns, and greater franchise value,” said Mr. Ludwig.

Factors Affecting Comparability

Effective January 1, 2020, the Company adopted the new current expected credit loss (“CECL”) accounting standard, which replaced the incurred loss methodology with an estimated life of loan credit loss methodology.

Adjusted Earnings

Financial results for the third quarter of 2020 were impacted by $13.9 million in charges primarily related to the branch and facilities optimization plan (integration and acquisition expenses), $1.7 million in gains on sales of investment securities, and a $0.2 million loss on residential mortgage servicing rights (“MSRs”) held-for-sale. Excluding these amounts and certain income, adjusted earnings were $12.0 million, or $0.52 diluted earnings per share, for the third quarter of 2020.

Financial results for the second quarter of 2020 were impacted by a $0.4 million loss on residential MSRs held-for-sale and $0.1 million in integration and acquisition expenses. Excluding these amounts and certain income, adjusted earnings were $12.9 million, or $0.55 diluted earnings per share, for the second quarter of 2020.

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

Net Interest Margin

Net interest margin for the third quarter of 2020 was 3.33%, compared to 3.32% for the second quarter of 2020. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 14 and 12 basis points to net interest margin in the third quarter of 2020 and second quarter of 2020, respectively. Excluding the impact of accretion income, net interest margin decreased 1 basis point from the second quarter of 2020, as a decline in the average yield on earning assets was largely offset by a reduction in the average cost of deposits.

Relative to the third quarter of 2019, net interest margin decreased from 3.70%. Accretion income on purchased loan portfolios contributed 20 basis points to net interest margin in the third quarter of 2019. Excluding the impact of accretion income, net interest margin decreased 31 basis points compared to the third quarter of 2019, primarily due to the impact of new subordinated debt issued in September 2019 and a decline in the average yield on earning assets, partially offset by a reduction in the average cost of deposits.  

Net Interest Income

Net interest income for the third quarter of 2020 was $50.0 million, an increase of 2.0% from $49.0 million for the second quarter of 2020. Excluding accretion income, net interest income increased $0.6 million from the prior quarter. Accretion income associated with purchased loan portfolios totaled $2.1 million for the third quarter of 2020, compared with $1.8 million for the second quarter of 2020.

Relative to the third quarter of 2019, net interest income increased $0.5 million, or 1.1%. Accretion income for the third quarter of 2019 was $3.1 million. Excluding the impact of accretion income, net interest income increased primarily due to organic loan growth and a significant decline in cost of funds.

Noninterest Income

Noninterest income for the third quarter of 2020 was $18.9 million, a decrease of 2.5% from $19.4 million for the second quarter of 2020.   Impairment on commercial MSRs impacted noninterest income by $1.4 million and $0.1 million in the third quarter of 2020 and second quarter of 2020, respectively. Excluding the impairment, noninterest income increased due to higher levels of residential mortgage banking revenue, service charges on deposit accounts, and other income.

Relative to the third quarter of 2019, noninterest income decreased 3.5% from $19.6 million. The decrease was primarily attributable to lower commercial FHA revenue and service charges on deposit accounts, partially offset by higher residential mortgage banking revenue.

Wealth management revenue for the third quarter of 2020 was $5.6 million, a decrease of 2.4% from the second quarter of 2020.   Compared to the third quarter of 2019, wealth management revenue decreased 7.3%.

Commercial FHA revenue for the third quarter of 2020 was $0.9 million, compared to $3.4 million in the second quarter of 2020. The Company originated $50.9 million in rate lock commitments during the third quarter of 2020, prior to the sale of the origination platform on August 28, 2020, compared to $134.8 million in the prior quarter.   Compared to the third quarter of 2019, commercial FHA revenue decreased $3.0 million.

Noninterest Expense

Noninterest expense for the third quarter of 2020 was $54.7 million, which included $13.9 million in charges primarily related to the branch and facilities optimization plan (integration and acquisition expenses), and a $0.2 million loss on residential MSRs held-for-sale, compared with $40.8 million in the second quarter of 2020, which included a $0.4 million loss on residential MSRs held-for-sale and $0.1 million in integration and acquisition expenses. Excluding the integration and acquisition expenses and losses on residential MSRs held-for-sale, noninterest expense was relatively unchanged from the prior quarter.

Relative to the third quarter of 2019, noninterest expense increased 13.8% from $48.0 million, which included $5.3 million in integration and acquisition expenses and a $0.1 million gain on residential MSRs held-for-sale. Excluding integration and acquisition expenses and gains/losses on MSRs held-for-sale, noninterest expense decreased 5.1% due principally to the Company’s expense reduction and efficiency improvement initiatives implemented over the past year.

Loan Portfolio

Total loans outstanding were $4.94 billion at September 30, 2020, compared with $4.84 billion at June 30, 2020 and $4.33 billion at September 30, 2019. The increase in total loans from June 30, 2020 was primarily attributable to an increase in equipment finance loans and leases, commercial FHA warehouse lines of credit, and consumer loans.

Equipment finance balances increased $65.0 million from June 30, 2020 to $815.5 million, which are booked within the commercial loans and leases portfolio, reflecting management’s efforts to grow the equipment finance business.  

The increase in total loans from September 30, 2019 was primarily attributable to the growth in equipment finance balances, consumer loans, and loans originated under the Paycheck Protection Program (“PPP”).

Deposits

Total deposits were $5.03 billion at September 30, 2020, compared with $4.94 billion at June 30, 2020, and $4.45 billion at September 30, 2019. The increase in total deposits from the end of the prior quarter was primarily attributable to an increase in commercial FHA servicing deposits.  

Asset Quality

Nonperforming loans totaled $67.4 million, or 1.36% of total loans, at September 30, 2020, compared with $60.5 million, or 1.25% of total loans, at June 30, 2020. The increase in nonperforming loans was primarily attributable to the addition of three commercial real estate loans. At September 30, 2019, nonperforming loans totaled $45.2 million, or 1.04% of total loans.

Net charge-offs for the third quarter of 2020 were $5.3 million, or 0.44% of average loans on an annualized basis, which primarily represents charge-offs taken against the three commercial real estate loans moved to nonperforming status referenced above.  

The Company recorded a provision for credit losses on loans of $11.0 million for the third quarter of 2020, which reflects the higher level of net charge-offs experienced in the quarter.

The Company’s allowance for credit losses on loans was 1.07% of total loans and 78.3% of nonperforming loans at September 30, 2020, compared with 0.97% of total loans and 77.8% of nonperforming loans at June 30, 2020.   Approximately 96.3% of the allowance for credit losses on loans at September 30, 2020 was allocated to general reserves.

Capital

At September 30, 2020, 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:

	Bank Level Ratios as of September 30, 2020	Consolidated Ratios as of September 30, 2020	Minimum Regulatory Requirements (2)
Total capital to risk-weighted assets	11.82%	13.34%	10.50%
Tier 1 capital to risk-weighted assets	10.96%	9.40%	8.50%
Tier 1 leverage ratio	9.01%	7.72%	4.00%
Common equity Tier 1 capital	10.96%	8.18%	7.00%
Tangible common equity to tangible assets (1)	NA	6.61%	NA

      (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%.

Stock Repurchase Program

During the third quarter of 2020, the Company repurchased 352,932 shares of its common stock at a weighted average price of $14.20 under its stock repurchase program, which authorized the repurchase of up to $50 million of its common stock. As of September 30, 2020, the Company had $13.3 million remaining under the current stock repurchase authorization.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, October 23, 2020, to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 1996893. A recorded replay can be accessed through October 30, 2020, by dialing (855) 859-2056; conference ID: 1996893.

A slide presentation relating to the third quarter 2020 results will be accessible prior to the scheduled conference call. This earnings release should be read together with the slide presentation, which contains important information related to the impact of COVID-19. The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website at investors.midlandsb.com under the “News and Events” tab.

About Midland States Bancorp, Inc.

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of September 30, 2020, the Company had total assets of approximately $6.70 billion, and its Wealth Management Group had assets under administration of approximately $3.26 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, 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 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 the effects of the COVID-19 pandemic including its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic; 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," "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)
		For the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands, except per share data)		2020				2020				2020				2019				2019
Earnings Summary
Net interest income		$	49,980			$	48,989			$	46,651			$	48,687			$	49,450
Provision for credit losses on loans			10,970				11,610				10,569				5,305				4,361
Noninterest income			18,919				19,396				8,598				19,014				19,606
Noninterest expense			54,659				40,782				42,675				46,325				48,025
Income before income taxes			3,270				15,993				2,005				16,071				16,670
Income taxes			3,184				3,424				456				3,279				4,015
Net income			86				12,569				1,549				12,792				12,655
Preferred stock dividends, net			-				-				-				-				(22	)
Net income available to common shareholders		$	86			$	12,569			$	1,549			$	12,792			$	12,677
Diluted earnings per common share		$	-			$	0.53			$	0.06			$	0.51			$	0.51
Weighted average shares outstanding - diluted			22,937,837				23,339,964				24,538,002				24,761,960				24,684,529
Return on average assets			0.01	%			0.77	%			0.10	%			0.83	%			0.84		%
Return on average shareholders' equity			0.05	%			8.00	%			0.96	%			7.71	%			7.71		%
Return on average tangible common equity (1)			0.08	%			11.84	%			1.39	%			11.24	%			11.19		%
Net interest margin			3.33	%			3.32	%			3.48	%			3.56	%			3.70		%
Efficiency ratio (1)			58.83	%			58.53	%			63.78	%			59.46	%			60.63		%
Adjusted Earnings Performance Summary
Adjusted earnings (1)		$	12,023			$	12,884			$	2,806			$	16,110			$	16,422
Adjusted diluted earnings per common share (1)		$	0.52			$	0.55			$	0.11			$	0.64			$	0.66
Adjusted return on average assets (1)			0.72	%			0.78	%			0.19	%			1.04	%			1.09		%
Adjusted return on average shareholders' equity (1)			7.56	%			8.20	%			1.73	%			9.71	%			10.01		%
Adjusted return on average tangible common equity (1)			11.04	%			12.14	%			2.53	%			14.15	%			14.52		%
(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)
		For the Quarter Ended
		September 30,					June 30,					March 31,					December 31,					September 30,
(in thousands, except per share data)		2020					2020					2020					2019					2019
Net interest income:
Interest income		$	60,314				$	60,548				$	61,314				$	64,444				$	65,006
Interest expense			10,334					11,559					14,663					15,757					15,556
Net interest income			49,980					48,989					46,651					48,687					49,450
Provision for credit losses on loans			10,970					11,610					10,569					5,305					4,361
Net interest income after provision for credit losses on loans			39,010					37,379					36,082					43,382					45,089
Noninterest income:
Wealth management revenue			5,559					5,698					5,677					5,377					5,998
Commercial FHA revenue			926					3,414					1,267					3,702					3,954
Residential mortgage banking revenue			3,049					2,723					1,755					763					720
Service charges on deposit accounts			2,092					1,706					2,656					2,860					3,008
Interchange revenue			3,283					3,013					2,833					3,053					3,249
Gain on sales of investment securities, net			1,721					-					-					635					25
Impairment on commercial mortgage servicing rights			(1,418	)				(107	)				(8,468	)				(1,613	)				(1,060	)
Other income			3,707					2,949					2,878					4,237					3,712
Total noninterest income			18,919					19,396					8,598					19,014					19,606
Noninterest expense:
Salaries and employee benefits			21,118					20,740					21,063					23,650					25,083
Occupancy and equipment			4,866					4,286					4,869					4,654					4,793
Data processing			5,396					5,300					5,334					6,074					5,271
Professional			1,861					1,606					1,855					1,952					2,348
Amortization of intangible assets			1,557					1,629					1,762					1,804					1,803
Loss (gain) on mortgage servicing rights held for sale			188					391					496					95					(70	)
Impairment related to branch optimization			12,651					60					146					-					3,229
Other expense			7,022					6,770					7,150					8,096					5,568
Total noninterest expense			54,659					40,782					42,675					46,325					48,025
Income before income taxes			3,270					15,993					2,005					16,071					16,670
Income taxes			3,184					3,424					456					3,279					4,015
Net income			86					12,569					1,549					12,792					12,655
Preferred stock dividends, net			-					-					-					-					(22	)
Net income available to common shareholders		$	86				$	12,569				$	1,549				$	12,792				$	12,677
Basic earnings per common share		$	0.00				$	0.53				$	0.06				$	0.52				$	0.51
Diluted earnings per common share		$	0.00				$	0.53				$	0.06				$	0.51				$	0.51

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of
		September 30,					June 30,					March 31,					December 31,					September 30,
(in thousands)		2020					2020					2020					2019					2019
Assets
Cash and cash equivalents		$	461,196				$	519,868				$	449,396				$	394,505				$	409,346
Investment securities			618,974					639,693					661,894					655,054					668,630
Loans			4,941,466					4,839,423					4,376,204					4,401,410					4,328,835
Allowance for credit losses on loans			(52,771	)				(47,093	)				(38,545	)				(28,028	)				(24,917	)
Total loans, net			4,888,695					4,792,330					4,337,659					4,373,382					4,303,918
Loans held for sale			62,500					32,403					113,852					16,431					88,322
Premises and equipment, net			74,967					89,046					90,118					91,055					93,896
Other real estate owned			15,961					12,728					7,892					6,745					4,890
Loan servicing rights, at lower of cost or fair value			42,465					44,239					44,566					53,824					54,124
Mortgage servicing rights held for sale			1,308					1,244					1,460					1,972					1,860
Goodwill			161,904					172,796					172,796					171,758					171,074
Other intangible assets, net			29,938					31,495					33,124					34,886					36,690
Cash surrender value of life insurance policies			145,112					144,215					143,323					142,423					141,510
Other assets			197,025					164,441					152,150					144,982					139,644
Total assets		$	6,700,045				$	6,644,498				$	6,208,230				$	6,087,017				$	6,113,904
Liabilities and Shareholders' Equity
Noninterest-bearing deposits		$	1,355,188				$	1,273,267				$	1,052,726				$	1,019,472				$	1,015,081
Interest-bearing deposits			3,673,548					3,669,840					3,597,914					3,524,782					3,430,090
Total deposits			5,028,736					4,943,107					4,650,640					4,544,254					4,445,171
Short-term borrowings			58,625					77,136					43,578					82,029					122,294
FHLB advances and other borrowings			693,640					693,865					593,089					493,311					559,932
Subordinated debt			169,702					169,610					169,505					176,653					192,689
Trust preferred debentures			48,682					48,551					48,420					48,288					48,165
Other liabilities			78,780					78,640					71,838					80,571					90,131
Total liabilities			6,078,165					6,010,909					5,577,070					5,425,106					5,458,382
Total shareholders’ equity			621,880					633,589					631,160					661,911					655,522
Total liabilities and shareholders’ equity		$	6,700,045				$	6,644,498				$	6,208,230				$	6,087,017				$	6,113,904

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of
		September 30,				June 30,				March 31,				December 31,				September 30,
(in thousands)		2020				2020				2020				2019				2019
Loan Portfolio
Commercial loans and leases		$	1,938,691			$	1,856,435			$	1,439,145			$	1,387,766			$	1,292,511
Commercial real estate			1,496,758				1,495,183				1,507,280				1,526,504				1,622,363
Construction and land development			177,894				207,593				208,361				208,733				215,978
Residential real estate			470,829				509,453				548,014				568,291				587,984
Consumer			857,294				770,759				673,404				710,116				609,999
Total loans		$	4,941,466			$	4,839,423			$	4,376,204			$	4,401,410			$	4,328,835
Deposit Portfolio
Noninterest-bearing demand		$	1,355,188			$	1,273,267			$	1,052,726			$	1,019,472			$	1,015,081
Interest-bearing:
Checking			1,581,216				1,484,728				1,425,022				1,342,788				1,222,599
Money market			826,454				877,675				849,642				787,662				753,869
Savings			580,748				594,685				534,457				522,456				526,938
Time			661,872				689,841				765,870				822,160				833,038
Brokered time			23,258				22,911				22,923				49,716				93,646
Total deposits		$	5,028,736			$	4,943,107			$	4,650,640			$	4,544,254			$	4,445,171

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		For the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2020				2020				2020				2019				2019
Average Balance Sheets
Cash and cash equivalents		$	491,728			$	489,941			$	337,851			$	406,526			$	259,427
Investment securities			628,705				650,356				662,450				631,294				666,157
Loans			4,803,940				4,696,288				4,384,206				4,359,144				4,352,635
Loans held for sale			44,880				99,169				19,844				36,974				31,664
Nonmarketable equity securities			50,765				50,661				45,124				43,745				44,010
Total interest-earning assets			6,020,018				5,986,415				5,449,475				5,477,683				5,353,893
Non-earning assets			625,522				619,411				624,594				649,169				636,028
Total assets		$	6,645,540			$	6,605,826			$	6,074,069			$	6,126,852			$	5,989,921
Interest-bearing deposits		$	3,656,833			$	3,651,406			$	3,549,515			$	3,490,165			$	3,429,063
Short-term borrowings			64,010				59,103				55,616				104,598				124,183
FHLB advances and other borrowings			693,721				692,470				532,733				531,419				591,516
Subordinated debt			169,657				169,560				170,026				182,149				106,090
Trust preferred debentures			48,618				48,487				48,357				48,229				48,105
Total interest-bearing liabilities			4,632,839				4,621,026				4,356,247				4,356,560				4,298,957
Noninterest-bearing deposits			1,303,963				1,280,983				986,178				1,028,670				967,192
Other noninterest-bearing liabilities			75,859				71,853				78,943				83,125				72,610
Shareholders' equity			632,879				631,964				652,701				658,497				651,162
Total liabilities and shareholders' equity		$	6,645,540			$	6,605,826			$	6,074,069			$	6,126,852			$	5,989,921
Yields
Earning Assets
Cash and cash equivalents			0.10	%			0.14	%			1.26	%			1.62	%			2.14	%
Investment securities			2.86	%			3.05	%			3.23	%			3.10	%			3.00	%
Loans			4.57	%			4.64	%			5.01	%			5.22	%			5.31	%
Loans held for sale			2.92	%			4.07	%			3.87	%			4.12	%			3.02	%
Nonmarketable equity securities			5.26	%			5.40	%			5.39	%			5.31	%			5.33	%
Total interest-earning assets			4.01	%			4.10	%			4.56	%			4.70	%			4.85	%
Interest-Bearing Liabilities
Interest-bearing deposits			0.46	%			0.61	%			0.95	%			1.03	%			1.08	%
Short-term borrowings			0.17	%			0.19	%			0.73	%			0.67	%			0.68	%
FHLB advances and other borrowings			1.85	%			1.69	%			2.24	%			2.26	%			2.36	%
Subordinated debt			5.58	%			5.85	%			5.90	%			5.94	%			6.30	%
Trust preferred debentures			4.16	%			4.86	%			6.02	%			6.41	%			6.83	%
Total interest-bearing liabilities			0.89	%			1.01	%			1.35	%			1.43	%			1.44	%
Cost of Deposits			0.34	%			0.45	%			0.74	%			0.80	%			0.84	%
Net Interest Margin			3.33	%			3.32	%			3.48	%			3.56	%			3.70	%

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of and for the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands, except per share data)		2020				2020				2020				2019				2019
Asset Quality
Loans 30-89 days past due		$	28,188			$	36,551			$	40,392			$	29,876			$	23,118
Nonperforming loans			67,443				60,513				58,166				42,082				45,168
Nonperforming assets			84,795				74,707				67,158				50,027				50,058
Net charge-offs			5,292				3,062				12,835				2,194				5,369
Loans 30-89 days past due to total loans			0.57	%			0.76	%			0.92	%			0.68	%			0.53	%
Nonperforming loans to total loans			1.36	%			1.25	%			1.33	%			0.96	%			1.04	%
Nonperforming assets to total assets			1.27	%			1.12	%			1.08	%			0.82	%			0.82	%
Allowance for credit losses to total loans			1.07	%			0.97	%			0.88	%			0.64	%			0.58	%
Allowance for credit losses to nonperforming loans			78.25	%			77.82	%			66.27	%			66.60	%			55.29	%
Net charge-offs to average loans			0.44	%			0.26	%			1.18	%			0.20	%			0.49	%
Wealth Management
Trust assets under administration		$	3,260,893			$	3,253,784			$	2,967,536			$	3,409,959			$	3,281,260
Market Data
Book value per share at period end		$	27.51			$	27.62			$	26.99			$	27.10			$	26.93
Tangible book value per share at period end (1)		$	19.03			$	18.72			$	18.19			$	18.64			$	18.40
Market price at period end		$	12.85			$	14.95			$	17.49			$	28.96			$	26.05
Shares outstanding at period end			22,602,844				22,937,296				23,381,496				24,420,345				24,338,748
Capital
Total capital to risk-weighted assets			13.34	%			13.67	%			13.73	%			14.72	%			14.82	%
Tier 1 capital to risk-weighted assets			9.40	%			9.71	%			9.76	%			10.52	%			10.35	%
Tier 1 leverage ratio			7.72	%			7.75	%			8.39	%			8.74	%			8.77	%
Tier 1 common capital to risk-weighted assets			8.18	%			8.44	%			8.47	%			9.20	%			9.02	%
Tangible common equity to tangible assets (1)			6.61	%			6.67	%			7.08	%			7.74	%			7.58	%
(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures.

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
Adjusted Earnings Reconciliation
		For the Quarter Ended
		September 30,					June 30,					March 31,					December 31,					September 30,
(dollars in thousands, except per share data)		2020					2020					2020					2019					2019
Income before income taxes - GAAP		$	3,270				$	15,993				$	2,005				$	16,071				$	16,670
Adjustments to noninterest income:
Gain on sales of investment securities, net			1,721					-					-					635					25
Other			(17	)				11					(13	)				(6	)				-
Total adjustments to noninterest income			1,704					11					(13	)				629					25
Adjustments to noninterest expense:
Loss (gain) on mortgage servicing rights held for sale			188					391					496					95					(70	)
Loss on repurchase of subordinated debt			-					-					193					1,778					-
Impairment related to branch optimization			12,651					60					146					-					3,229
Integration and acquisition expenses			1,199					(6	)				885					3,332					2,063
Total adjustments to noninterest expense			14,038					445					1,720					5,205					5,222
Adjusted earnings pre tax			15,604					16,427					3,738					20,647					21,867
Adjusted earnings tax			3,581					3,543					932					4,537					5,445
Adjusted earnings - non-GAAP			12,023					12,884					2,806					16,110					16,422
Preferred stock dividends, net			-					-					-					-					(22	)
Adjusted earnings available to common shareholders - non-GAAP		$	12,023				$	12,884				$	2,806				$	16,110				$	16,444
Adjusted diluted earnings per common share		$	0.52				$	0.55				$	0.11				$	0.64				$	0.66
Adjusted return on average assets			0.72		%	-		0.78		%	-		0.19		%	-		1.04		%	-		1.09		%
Adjusted return on average shareholders' equity			7.56		%	-		8.20		%	-		1.73		%	-		9.71		%	-		10.01		%
Adjusted return on average tangible common equity			11.04		%	-		12.14		%	-		2.53		%	-		14.15		%	-		14.52		%

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
Efficiency Ratio Reconciliation
		For the Quarter Ended
		September 30,					June 30,					March 31,					December 31,					September 30,
(dollars in thousands)		2020					2020					2020					2019					2019
Noninterest expense - GAAP		$	54,659				$	40,782				$	42,675				$	46,325				$	48,025
(Loss) gain on mortgage servicing rights held for sale			(188	)				(391	)				(496	)				(95	)				70
Loss on repurchase of subordinated debt			-					-					(193	)				(1,778	)				-
Impairment related to branch optimization			(12,651	)				(60	)				(146	)				-					(3,229	)
Integration and acquisition expenses			(1,199	)				6					(885	)				(3,332	)				(2,063	)
Adjusted noninterest expense		$	40,621				$	40,337				$	40,955				$	41,120				$	42,803
Net interest income - GAAP		$	49,980				$	48,989				$	46,651				$	48,687				$	49,450
Effect of tax-exempt income			430					438					485					474					502
Adjusted net interest income			50,410					49,427					47,136					49,161					49,952
Noninterest income - GAAP		$	18,919				$	19,396				$	8,598				$	19,014				$	19,606
Loan servicing rights impairment			1,418					107					8,468					1,613					1,060
Gain on sales of investment securities, net			(1,721	)				-					-					(635	)				(25	)
Other			17					(11	)				13					6					-
Adjusted noninterest income			18,633					19,492					17,079					19,998					20,641
Adjusted total revenue		$	69,043				$	68,919				$	64,215				$	69,159				$	70,593
Efficiency ratio			58.83		%			58.53		%			63.78		%			59.46		%			60.63		%

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)		2020					2020					2020					2019					2019
Shareholders' Equity to Tangible Common Equity
Total shareholders' equity—GAAP		$	621,880				$	633,589				$	631,160				$	661,911				$	655,522
Adjustments:
Preferred stock			-					-					-					-					-
Goodwill			(161,904	)				(172,796	)				(172,796	)				(171,758	)				(171,074	)
Other intangibles, net			(29,938	)				(31,495	)				(33,124	)				(34,886	)				(36,690	)
Tangible common equity		$	430,038				$	429,298				$	425,240				$	455,267				$	447,758
Total Assets to Tangible Assets:
Total assets—GAAP		$	6,700,045				$	6,644,498				$	6,208,230				$	6,087,017				$	6,113,904
Adjustments:
Goodwill			(161,904	)				(172,796	)				(172,796	)				(171,758	)				(171,074	)
Other intangibles, net			(29,938	)				(31,495	)				(33,124	)				(34,886	)				(36,690	)
Tangible assets		$	6,508,203				$	6,440,207				$	6,002,310				$	5,880,373				$	5,906,140
Common Shares Outstanding			22,602,844					22,937,296					23,381,496					24,420,345					24,338,748
Tangible Common Equity to Tangible Assets			6.61		%			6.67		%			7.08		%			7.74		%			7.58		%
Tangible Book Value Per Share		$	19.03				$	18.72				$	18.19				$	18.64				$	18.40
Return on Average Tangible Common Equity (ROATCE)
		For the Quarter Ended
		September 30,					June 30,					March 31,					December 31,					September 30,
(dollars in thousands)		2020					2020					2020					2019					2019
Net income available to common shareholders		$	86				$	12,569				$	1,549				$	12,792				$	12,677
Average total shareholders' equity—GAAP		$	632,879				$	631,964				$	652,701				$	658,497				$	651,162
Adjustments:
Preferred stock			-					-					-					-					(814	)
Goodwill			(168,771	)				(172,796	)				(171,890	)				(171,082	)				(166,389	)
Other intangibles, net			(30,690	)				(32,275	)				(33,951	)				(35,745	)				(34,519	)
Average tangible common equity		$	433,418				$	426,893				$	446,860				$	451,670				$	449,440
ROATCE			0.08		%			11.84		%			1.39		%			11.24		%			11.19		%

 

FAQ

What were Midland States Bancorp's earnings per share for Q3 2020?

Midland States Bancorp reported adjusted earnings of $0.52 diluted earnings per share for Q3 2020.

How much did total loans increase for MSBI in Q3 2020?

Total loans increased by $102 million, or 2.1%, from June 30, 2020.

What was the net income reported by Midland States Bancorp for Q3 2020?

The net income for Q3 2020 was $86 thousand.

What is the current allowance for credit losses for MSBI?

The allowance for credit losses increased to 1.07% of total loans as of September 30, 2020.

What were the total deposits for Midland States Bancorp in Q3 2020?

Total deposits were reported at $5.03 billion at September 30, 2020.