Second Quarter 2016 Summary
- Successful initial public offering raises net proceeds of $71.7 million
- Net income of $6.8 million, or $0.50 diluted earnings per share
- Total loans increased $145 million, or 28.8% on an annualized basis
- Non-interest income of $14.0 million, or 33.4% of total revenue
- Return on average assets of 0.89%; Return on average equity of 10.18%
EFFINGHAM, Ill., July 28, 2016 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the “Company”) today reported net income of $6.8 million, or $0.50 diluted earnings per share, for the second quarter of 2016, compared with net income of $5.1 million, or $0.42 diluted earnings per share, for the first quarter of 2016, and net income of $6.7 million, or $0.55 diluted earnings per share, for the second quarter of 2015. Net income for the second quarter of 2016 included a $3.0 million charge for the impairment of residential mortgage servicing rights (MSR), compared to $2.0 million in the first quarter of 2016 and a reversal of impairment of $1.0 million in the second quarter of 2015. The effect of changes in residential MSR valuation negatively impacted diluted earnings per share by $0.14 and $0.10 for the second quarter of 2016 and first quarter of 2016, respectively, and positively impacted diluted earnings per share by $0.06 in the second quarter of 2015.
“We were very pleased to complete our initial public offering during the second quarter of 2016,” said Leon J. Holschbach, President and Chief Executive Officer of the Company. “The capital raised through the IPO will support the continued implementation of our organic and acquisitive growth strategies, which we believe will create additional value for our shareholders in the years ahead.
“We had an outstanding quarter of business development and through the first half of 2016 our total loan portfolio increased at an annualized rate of 16%. Our loan production was very well balanced in the second quarter and underscores the diverse business model we have built. We had strong growth in our consumer, equipment leasing, construction, commercial real estate and residential real estate portfolios, and also had a robust quarter of loan production in our commercial FHA lending business.
“We also had a significant increase in our residential mortgage loan production and the net gain on loan sales generated from this business. However, with the continued decline in interest rates, we recorded a $3.0 million impairment of our residential mortgage servicing rights, which offset much of the residential mortgage banking revenue generated this quarter.
“Looking ahead to the remainder of 2016, we believe that our markets are fundamentally healthy and we are seeing positive trends in loan demand and credit quality. We continue to have a robust loan pipeline, which should support continued quality balance sheet growth during the second half of the year,” said Mr. Holschbach.
Net Interest Income
Net interest income for the second quarter of 2016 was $28.0 million, an increase of 16.4% from $24.0 million for the first quarter of 2016. The Company’s net interest income benefits from accretion income associated with purchased loan portfolios. Accretion income totaled $4.9 million for the second quarter of 2016, compared with $1.9 million for the first quarter of 2016. In addition to higher accretion income, the increase in net interest income was primarily attributable to an increase in average loan balances.
Accretion income for the second quarter of 2016 was positively impacted by the payoff of purchased credit impaired loans (PCI) totaling $5.9 million. One of the PCI loans was an FDIC loss share loan, which resulted in the Company recording $1.8 million in net interest income, a $1.5 million expense for the amount payable to the FDIC within noninterest income, and an $808,000 reduction of provision for loan losses.
Relative to the second quarter of 2015, net interest income declined $328,000 due to a decline in accretion income, which totaled $5.9 million for the second quarter of 2015. The decline in accretion income was offset by an increase in average loan balances.
Net Interest Margin
Net interest margin for the second quarter of 2016 was 4.20%, compared to 3.80% for the first quarter of 2016. The Company’s net interest margin benefits from accretion income on purchased loan portfolios. Excluding accretion income, net interest margin was 3.52% for the second quarter of 2016, compared with 3.55% for the first quarter of 2016. The decrease in net interest margin excluding accretion income was primarily attributable to a decline in the average yield on loans.
Relative to the second quarter of 2015, the net interest margin declined from 4.79%, primarily due to lower accretion income. Excluding accretion income, net interest margin declined from 3.88%, which was primarily attributable to lower average yields on loans and investment securities and an increase in cost of funds.
Noninterest Income
Noninterest income for the second quarter of 2016 was $14.0 million, an increase of 11.1% from $12.6 million for the first quarter of 2016. The increase was primarily attributable to higher commercial FHA revenue and lower other-than-temporary impairment recorded on investment securities. This was partially offset by higher FDIC loss-sharing expense related to the $1.5 million payable to the FDIC as discussed above.
Commercial FHA revenue for the second quarter of 2016 was $8.5 million, an increase of 30.1% from $6.6 million in the first quarter of 2016. The Company originated $281.2 million in rate lock commitments during the second quarter of 2016, compared to $227.3 million in the prior quarter.
Residential mortgage banking revenue for the second quarter of 2016 was $1.0 million, a decrease of 6.8% from $1.1 million in the first quarter of 2016. During the second quarter of 2016, the Company recorded mortgage servicing rights impairment of $3.0 million due to a decline in long-term rates and the impact on prepayment speed assumptions compared to a $2.0 million impairment charge in the first quarter of 2016.
Relative to the second quarter of 2015, noninterest income declined 1.2% from $14.2 million. The decline was primarily due to lower residential mortgage banking revenue and higher FDIC loss-sharing expense, which was partially offset by higher commercial FHA revenue.
Noninterest Expense
Noninterest expense for the second quarter of 2016 was $30.9 million, an increase of 11.8% from $27.6 million for the first quarter of 2016. The increase was primarily driven by higher salaries resulting from annual salary increases that took effect in the second quarter, and higher bonus accrual. During the second quarter of 2016, the Company also recorded a $511,000 write-off of accounting discount related to the early payoff of subordinated debt.
Relative to the second quarter of 2015, noninterest expense was essentially unchanged. Higher salaries and benefits expense and the write-off of accounting discount related to the payoff of subordinated debt in the second quarter of 2016 were offset by a decline in professional fees.
Loan Portfolio
Total loans outstanding were $2.16 billion at June 30, 2016, compared with $2.02 billion at March 31, 2016, and $1.91 billion at June 30, 2015. The $145 million increase in the loan portfolio during the second quarter of 2016 was driven primarily by a $46.1 million increase in consumer loans, a $32.3 million increase in commercial real estate loans, a $22.2 million increase in construction and land development loans, a $21.0 million increase in residential real estate loans, and an $18.9 million increase in equipment lease financing loans.
Purchased Credit Impaired Loans
Purchased credit impaired (PCI) loans totaled $28.6 million at June 30, 2016, compared to $35.3 million at the end of the prior quarter and $42.5 million at June 30, 2015. The decreases in PCI loans were primarily due to repayments and pay-offs of PCI loans as the Company did not complete any bank acquisitions during 2015 or the first half of 2016.
Deposits
Total deposits were $2.35 billion at June 30, 2016, compared with $2.39 billion at March 31, 2016, and $2.24 billion at June 30, 2015. The decrease in total deposits from March 31, 2016 was primarily due to declines in non-interest bearing demand deposits and money market accounts, which were partially offset by an increase in NOW accounts. The decrease in demand deposits was primarily attributable to fluctuations in Commercial FHA servicing deposits caused by the timing of loan payoffs.
Asset Quality
Non-performing loans totaled $18.4 million, or 0.85% of total loans, at June 30, 2016, compared with $18.8 million, or 0.93% of total loans, at March 31, 2016.
Net charge-offs for the second quarter of 2016 were $448,000, or 0.09% of average loans on an annualized basis.
The Company recorded a provision for loan losses of $629,000 for the second quarter of 2016, primarily to reflect the growth in the loan portfolio. During the second quarter of 2016, the Company recorded a recovery of $808,000 on a PCI loan, which reduced the level of provision required for the quarter.
The Company’s allowance for loan losses was 0.68% of total loans and 80.0% of non-performing loans at June 30, 2016, compared with 0.72% and 77.6%, respectively, at March 31, 2016. Including the fair market value discounts recorded in connection with acquired loan portfolios, the allowance for loan losses to total loans ratio was 1.13% at June 30, 2016, compared with 1.18% at March 31, 2016.
Capital
At June 30, 2016, the Company exceeded all regulatory capital requirements under Basel III and was considered to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:
| June 30, 2016 | Well Capitalized Regulatory Requirements | |||||
| Total capital to risk-weighted assets | 13.91 | % | 10.00 | % | ||
| Tier 1 capital to risk-weighted assets | 11.23 | % | 8.00 | % | ||
| Tier 1 leverage ratio | 9.77 | % | 5.00 | % | ||
| Tier 1 common capital to risk-weighted assets | 9.24 | % | 6.50 | % | ||
| Tangible common equity to tangible assets | 8.89 | % | NA | |||
Conference Call, Webcast and Slide Presentation
The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, July 29, 2016. During the call, management will review the second quarter results and operational highlights. The call can be accessed via telephone at (877) 516-3531 (passcode: 49066877). A recorded replay can be accessed through August 5, 2016 by dialing (855) 859-2056 (passcode: 49066877).
A slide presentation relating to the second quarter results will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website.
About Midland States Bancorp, Inc.
Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. Midland had assets of approximately $3.0 billion, and its Midland Wealth Management Group had assets under administration of approximately $1.2 billion as of June 30, 2016. Midland provides a full range of commercial and consumer banking products and services, merchant credit card services, trust and investment management, and insurance and financial planning services. In addition, commercial equipment leasing services are provided through Heartland Business Credit, and multi-family and healthcare facility FHA financing is provided through Love Funding, Midland's non-bank subsidiaries. Midland has more than 80 locations across the United States. For additional information, visit www.midlandsb.com or follow Midland on LinkedIn at https://www.linkedin.com/company/midland-states-bank.
Non-GAAP Financial Measures
Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures include “Adjusted Earnings,” “Adjusted Diluted Earnings Per Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Yields on Loans Excluding Accretion Income, ” “Net Interest Margin Excluding Accretion Income,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes that 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.
Forward-Looking Statements
Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements," including but not limited to statements about the Company’s expected loan production and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe" or "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) | |||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||
| (in thousands, except per share data) | 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||||
| Earnings Summary | |||||||||||||||||||||||
| Net interest income | $ | 27,989 | $ | 24,041 | $ | 26,452 | $ | 25,437 | $ | 28,317 | |||||||||||||
| Provision for loan losses | 629 | 1,125 | 1,052 | 6,699 | 2,379 | ||||||||||||||||||
| Noninterest income | 14,024 | 12,618 | 12,799 | 14,464 | 14,197 | ||||||||||||||||||
| Noninterest expense | 30,911 | 27,639 | 27,692 | 27,823 | 30,703 | ||||||||||||||||||
| Income before income taxes | 10,473 | 7,895 | 10,507 | 5,379 | 9,432 | ||||||||||||||||||
| Income taxes | 3,683 | 2,777 | 2,811 | 1,928 | 2,762 | ||||||||||||||||||
| Net income | 6,790 | 5,118 | 7,696 | 3,451 | 6,670 | ||||||||||||||||||
| Net income (loss) attributable to noncontrolling | |||||||||||||||||||||||
| interest in subsidiaries | 1 | (1 | ) | 1 | 6 | 17 | |||||||||||||||||
| Net income attributable to Midland | |||||||||||||||||||||||
| States Bancorp, Inc. | $ | 6,789 | $ | 5,119 | $ | 7,695 | $ | 3,445 | $ | 6,653 | |||||||||||||
| Diluted earnings per common share | $ | 0.50 | $ | 0.42 | $ | 0.63 | $ | 0.28 | $ | 0.55 | |||||||||||||
| Weighted average shares outstanding - diluted | 13,635,074 | 12,229,293 | 12,181,664 | 12,130,529 | 12,098,476 | ||||||||||||||||||
| Return on average assets | 0.89 | % | 0.70 | % | 1.06 | % | 0.49 | % | 0.97 | % | |||||||||||||
| Return on average shareholders' equity | 10.18 | % | 8.69 | % | 13.19 | % | 5.88 | % | 11.74 | % | |||||||||||||
| Return on average tangible common | |||||||||||||||||||||||
| shareholders' equity | 12.67 | % | 11.22 | % | 17.26 | % | 7.72 | % | 15.56 | % | |||||||||||||
| Net interest margin | 4.20 | % | 3.80 | % | 4.19 | % | 4.18 | % | 4.79 | % | |||||||||||||
| Efficiency ratio | 67.09 | % | 67.72 | % | 68.83 | % | 64.32 | % | 67.61 | % | |||||||||||||
| Adjusted Earnings Performance Summary | |||||||||||||||||||||||
| Adjusted earnings | $ | 7,107 | $ | 5,767 | $ | 7,525 | $ | 4,638 | $ | 8,026 | |||||||||||||
| Adjusted diluted earnings per common share | $ | 0.52 | $ | 0.47 | $ | 0.61 | $ | 0.38 | $ | 0.66 | |||||||||||||
| Adjusted return on average assets | 0.93 | % | 0.79 | % | 1.04 | % | 0.66 | % | 1.17 | % | |||||||||||||
| Adjusted return on average shareholders' equity | 10.66 | % | 9.79 | % | 12.90 | % | 7.92 | % | 14.16 | % | |||||||||||||
| Adjusted return on average tangible common | |||||||||||||||||||||||
| shareholders' equity | 13.27 | % | 12.64 | % | 16.77 | % | 10.39 | % | 18.77 | % | |||||||||||||
| Net interest margin excluding accretion income | 3.52 | % | 3.55 | % | 3.56 | % | 3.83 | % | 3.88 | % | |||||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||||
| (in thousands, except per share data) | 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||||||||||||
| Net interest income: | |||||||||||||||||||||||||||||||
| Total interest income | $ | 32,115 | $ | 27,967 | $ | 30,300 | $ | 28,949 | $ | 31,242 | |||||||||||||||||||||
| Total interest expense | 4,126 | 3,926 | 3,848 | 3,512 | 2,925 | ||||||||||||||||||||||||||
| Net interest income | 27,989 | 24,041 | 26,452 | 25,437 | 28,317 | ||||||||||||||||||||||||||
| Provision for loan losses | 629 | 1,125 | 1,052 | 6,699 | 2,379 | ||||||||||||||||||||||||||
| Net interest income after provision | |||||||||||||||||||||||||||||||
| for loan losses | 27,360 | 22,916 | 25,400 | 18,738 | 25,938 | ||||||||||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||||||||||
| Commercial FHA revenue | 8,538 | 6,562 | 3,045 | 5,914 | 4,101 | ||||||||||||||||||||||||||
| Residential mortgage banking revenue | 1,045 | 1,121 | 3,328 | 3,490 | 4,832 | ||||||||||||||||||||||||||
| Wealth management revenue | 1,870 | 1,785 | 1,831 | 1,808 | 1,857 | ||||||||||||||||||||||||||
| Service charges on deposit accounts | 965 | 907 | 979 | 1,022 | 950 | ||||||||||||||||||||||||||
| Interchange revenue | 945 | 964 | 858 | 895 | 863 | ||||||||||||||||||||||||||
| FDIC loss sharing expense | (1,608 | ) | (53 | ) | (212 | ) | (57 | ) | (204 | ) | |||||||||||||||||||||
| Gain on sales of investment securities, net | 72 | 204 | 33 | 1 | - | ||||||||||||||||||||||||||
| Other than temporary impairment on | |||||||||||||||||||||||||||||||
| investment securities | - | (824 | ) | - | (299 | ) | - | ||||||||||||||||||||||||
| Other income | 2,197 | 1,952 | 2,937 | 1,690 | 1,798 | ||||||||||||||||||||||||||
| Total noninterest income | 14,024 | 12,618 | 12,799 | 14,464 | 14,197 | ||||||||||||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||||||||||
| Salaries and employee benefits | 17,020 | 15,387 | 13,725 | 14,932 | 16,437 | ||||||||||||||||||||||||||
| Occupancy and equipment | 3,233 | 3,310 | 3,424 | 3,114 | 3,317 | ||||||||||||||||||||||||||
| Data processing | 2,624 | 2,620 | 2,546 | 2,541 | 2,626 | ||||||||||||||||||||||||||
| Professional | 1,573 | 1,701 | 2,079 | 2,075 | 2,183 | ||||||||||||||||||||||||||
| Intangible assets amortization | 519 | 580 | 598 | 597 | 602 | ||||||||||||||||||||||||||
| Other | 5,942 | 4,041 | 5,320 | 4,564 | 5,538 | ||||||||||||||||||||||||||
| Total noninterest expense | 30,911 | 27,639 | 27,692 | 27,823 | 30,703 | ||||||||||||||||||||||||||
| Income before income taxes | 10,473 | 7,895 | 10,507 | 5,379 | 9,432 | ||||||||||||||||||||||||||
| Income taxes | 3,683 | 2,777 | 2,811 | 1,928 | 2,762 | ||||||||||||||||||||||||||
| Net income | 6,790 | 5,118 | 7,696 | 3,451 | 6,670 | ||||||||||||||||||||||||||
| Net income (loss) attributable to | |||||||||||||||||||||||||||||||
| noncontrolling interest in subsidiaries | 1 | (1 | ) | 1 | 6 | 17 | |||||||||||||||||||||||||
| Net income attributable to Midland | |||||||||||||||||||||||||||||||
| States Bancorp, Inc. | $ | 6,789 | $ | 5,119 | $ | 7,695 | $ | 3,445 | $ | 6,653 | |||||||||||||||||||||
| Basic earnings per common share | $ | 0.51 | $ | 0.43 | $ | 0.64 | $ | 0.29 | $ | 0.56 | |||||||||||||||||||||
| Diluted earnings per common share | $ | 0.50 | $ | 0.42 | $ | 0.63 | $ | 0.28 | $ | 0.55 | |||||||||||||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||||||||||||
| As of | ||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||||||||
| (in thousands) | 2016 | 2016 | 2015 | 2015 | 2015 | |||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 123,366 | $ | 162,416 | $ | 212,475 | $ | 206,664 | $ | 172,230 | ||||||||||||||||||||
| Investment securities available-for-sale at fair value | 238,781 | 232,074 | 236,627 | 211,359 | 207,848 | |||||||||||||||||||||||||
| Investment securities held to maturity at amortized cost | 84,756 | 88,085 | 87,521 | 92,011 | 94,637 | |||||||||||||||||||||||||
| Loans | 2,161,041 | 2,016,034 | 1,995,589 | 1,972,844 | 1,909,943 | |||||||||||||||||||||||||
| Allowance for loan losses | (14,752 | ) | (14,571 | ) | (15,988 | ) | (15,157 | ) | (16,206 | ) | ||||||||||||||||||||
| Total loans, net | 2,146,289 | 2,001,463 | 1,979,601 | 1,957,687 | 1,893,737 | |||||||||||||||||||||||||
| Loans held for sale, at fair value | 101,782 | 103,365 | 54,413 | 53,032 | 75,480 | |||||||||||||||||||||||||
| Premises and equipment, net | 72,147 | 72,421 | 73,133 | 73,362 | 73,263 | |||||||||||||||||||||||||
| Other real estate owned | 3,540 | 4,740 | 5,472 | 6,471 | 5,926 | |||||||||||||||||||||||||
| Mortgage servicing rights at lower of cost or market | 62,808 | 65,486 | 66,651 | 65,417 | 64,921 | |||||||||||||||||||||||||
| Intangible assets | 5,905 | 6,424 | 7,004 | 7,601 | 8,199 | |||||||||||||||||||||||||
| Goodwill | 46,519 | 46,519 | 46,519 | 47,102 | 47,102 | |||||||||||||||||||||||||
| Cash surrender value of life insurance policies | 73,665 | 53,173 | 52,729 | 52,271 | 51,814 | |||||||||||||||||||||||||
| Other assets | 62,226 | 61,914 | 62,679 | 59,331 | 58,424 | |||||||||||||||||||||||||
| Total assets | $ | 3,021,784 | $ | 2,898,080 | $ | 2,884,824 | $ | 2,832,308 | $ | 2,753,581 | ||||||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 528,966 | $ | 546,664 | $ | 543,401 | $ | 512,632 | $ | 566,966 | ||||||||||||||||||||
| Interest-bearing deposits | 1,825,586 | 1,843,046 | 1,824,247 | 1,791,846 | 1,668,944 | |||||||||||||||||||||||||
| Total deposits | 2,354,552 | 2,389,710 | 2,367,648 | 2,304,478 | 2,235,910 | |||||||||||||||||||||||||
| Short-term borrowings | 125,014 | 101,649 | 107,538 | 108,823 | 117,314 | |||||||||||||||||||||||||
| FHLB advances and other borrowings | 97,588 | 40,133 | 40,178 | 50,225 | 50,264 | |||||||||||||||||||||||||
| Subordinated debt | 54,459 | 61,903 | 61,859 | 61,814 | 61,853 | |||||||||||||||||||||||||
| Trust preferred debentures | 37,229 | 37,142 | 37,057 | 36,973 | 37,142 | |||||||||||||||||||||||||
| Other liabilities | 36,627 | 28,982 | 37,488 | 38,370 | 22,523 | |||||||||||||||||||||||||
| Total liabilities | 2,705,469 | 2,659,519 | 2,651,768 | 2,600,683 | 2,525,006 | |||||||||||||||||||||||||
| Midland States Bancorp, Inc. shareholders’ equity | 316,268 | 238,386 | 232,880 | 231,415 | 228,371 | |||||||||||||||||||||||||
| Noncontrolling interest in subsidiaries | 47 | 175 | 176 | 210 | 204 | |||||||||||||||||||||||||
| Total shareholders’ equity | 316,315 | 238,561 | 233,056 | 231,625 | 228,575 | |||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 3,021,784 | $ | 2,898,080 | $ | 2,884,824 | $ | 2,832,308 | $ | 2,753,581 | ||||||||||||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||||
| As of | |||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||
| (in thousands) | 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||
| Loan Portfolio | |||||||||||||||||||||
| Commercial loans | $ | 489,228 | $ | 484,618 | $ | 499,573 | $ | 521,983 | $ | 544,014 | |||||||||||
| Commercial real estate loans | 929,399 | 897,099 | 876,784 | 866,027 | 842,907 | ||||||||||||||||
| Construction and land development loans | 181,667 | 159,507 | 150,266 | 131,083 | 121,314 | ||||||||||||||||
| Residential real estate loans | 179,184 | 158,221 | 163,224 | 168,129 | 158,798 | ||||||||||||||||
| Consumer loans | 205,060 | 158,938 | 161,512 | 157,521 | 122,116 | ||||||||||||||||
| Lease financing loans | 176,503 | 157,651 | 144,230 | 128,101 | 120,794 | ||||||||||||||||
| Total loans | $ | 2,161,041 | $ | 2,016,034 | $ | 1,995,589 | $ | 1,972,844 | $ | 1,909,943 | |||||||||||
| Purchase credit impaired loans | $ | 28,642 | $ | 35,262 | $ | 38,477 | $ | 39,992 | $ | 42,454 | |||||||||||
| Deposit Portfolio | |||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 528,966 | $ | 546,664 | $ | 543,401 | $ | 512,632 | $ | 566,966 | |||||||||||
| NOW accounts | 627,003 | 612,475 | 621,925 | 623,494 | 557,197 | ||||||||||||||||
| Money market accounts | 374,537 | 415,130 | 377,654 | 350,398 | 360,303 | ||||||||||||||||
| Savings accounts | 164,792 | 163,163 | 155,778 | 154,632 | 160,504 | ||||||||||||||||
| Time deposits | 431,173 | 433,386 | 446,621 | 426,762 | 404,361 | ||||||||||||||||
| Brokered deposits | 228,081 | 218,892 | 222,269 | 236,560 | 186,579 | ||||||||||||||||
| Total deposits | $ | 2,354,552 | $ | 2,389,710 | $ | 2,367,648 | $ | 2,304,478 | $ | 2,235,910 | |||||||||||
| MIDLAND STATES BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in thousands) | 2016 | 2016 | 2015 | 2015 | 2015 | |||||||||||||||
| Average Balance Sheets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 232,362 | $ | 223,951 | $ | 184,072 | $ | 131,272 | $ | 170,046 | ||||||||||
| Investment securities | 338,224 | 327,267 | 345,114 | 317,886 | 319,294 | |||||||||||||||
| Loans | 2,171,814 | 2,063,568 | 2,039,046 | 2,032,122 | 1,940,698 | |||||||||||||||
| Total interest-earning assets | 2,742,400 | 2,614,786 | 2,568,232 | 2,481,280 | 2,430,038 | |||||||||||||||
| Non-earning assets | 324,880 | 317,648 | 312,154 | 314,959 | 314,518 | |||||||||||||||
| Total assets | $ | 3,067,280 | $ | 2,932,434 | $ | 2,880,386 | $ | 2,796,239 | $ | 2,744,556 | ||||||||||
| Interest-bearing deposits | $ | 1,844,493 | $ | 1,832,599 | $ | 1,813,974 | $ | 1,733,899 | $ | 1,680,728 | ||||||||||
| Short-term borrowings | 114,651 | 120,753 | 118,118 | 121,453 | 111,237 | |||||||||||||||
| FHLB advances and other borrowings | 185,195 | 99,499 | 48,583 | 54,056 | 73,517 | |||||||||||||||
| Subordinated debt | 61,677 | 61,878 | 61,835 | 62,830 | 22,785 | |||||||||||||||
| Trust preferred debentures | 37,182 | 37,094 | 37,013 | 37,083 | 37,075 | |||||||||||||||
| Total interest-bearing liabilities | 2,243,198 | 2,151,823 | 2,079,523 | 2,009,321 | 1,925,342 | |||||||||||||||
| Noninterest-bearing deposits | 522,632 | 511,019 | 529,196 | 509,259 | 555,287 | |||||||||||||||
| Other noninterest-bearing liabilities | 33,188 | 32,671 | 40,247 | 45,379 | 36,591 | |||||||||||||||
| Shareholders' equity | 268,262 | 236,921 | 231,420 | 232,280 | 227,336 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,067,280 | $ | 2,932,434 | $ | 2,880,386 | $ | 2,796,239 | $ | 2,744,556 | ||||||||||
| Yields | ||||||||||||||||||||
| Cash and cash equivalents | 0.50 | % | 0.50 | % | 0.27 | % | 0.25 | % | 0.22 | % | ||||||||||
| Investment securities | 5.12 | % | 5.31 | % | 5.02 | % | 5.33 | % | 5.37 | % | ||||||||||
| Loans | 5.22 | % | 4.68 | % | 5.15 | % | 4.94 | % | 5.70 | % | ||||||||||
| Total interest-earning assets | 4.81 | % | 4.40 | % | 4.79 | % | 4.74 | % | 5.27 | % | ||||||||||
| Interest-bearing deposits | 0.50 | % | 0.49 | % | 0.48 | % | 0.44 | % | 0.42 | % | ||||||||||
| Short-term borrowings | 0.24 | % | 0.23 | % | 0.20 | % | 0.18 | % | 0.21 | % | ||||||||||
| FHLB advances and other borrowings | 0.56 | % | 0.55 | % | 0.87 | % | 0.81 | % | 1.27 | % | ||||||||||
| Subordinated debt | 6.87 | % | 6.87 | % | 6.79 | % | 6.66 | % | 7.68 | % | ||||||||||
| Trust preferred debentures | 4.95 | % | 4.80 | % | 4.60 | % | 3.96 | % | 4.83 | % | ||||||||||
| Total interest-bearing liabilities | 0.74 | % | 0.73 | % | 0.73 | % | 0.69 | % | 0.61 | % | ||||||||||
| Net interest margin | 4.20 | % | 3.80 | % | 4.19 | % | 4.18 | % | 4.79 | % | ||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) | |||||||||||||||||||||||||||
| As of and for the Quarter Ended | |||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||
| (in thousands, except per share data) | 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||||||||
| Asset Quality | |||||||||||||||||||||||||||
| Loans 30-89 days past due | $ | 10,453 | $ | 6,616 | $ | 10,120 | $ | 11,079 | $ | 7,143 | |||||||||||||||||
| Nonperforming loans | 18,430 | 18,787 | 24,891 | 24,223 | 36,048 | ||||||||||||||||||||||
| Nonperforming assets | 21,469 | 22,312 | 29,206 | 30,118 | 41,388 | ||||||||||||||||||||||
| Net charge-offs (recoveries) | 448 | 2,542 | 220 | 7,748 | (578 | ) | |||||||||||||||||||||
| Loans 30-89 days past due to total loans | 0.48 | % | 0.33 | % | 0.51 | % | 0.56 | % | 0.37 | % | |||||||||||||||||
| Nonperforming loans to total loans | 0.85 | % | 0.93 | % | 1.25 | % | 1.23 | % | 1.89 | % | |||||||||||||||||
| Nonperforming assets to total assets | 0.71 | % | 0.77 | % | 1.01 | % | 1.06 | % | 1.50 | % | |||||||||||||||||
| Allowance for loan losses to total loans | 0.68 | % | 0.72 | % | 0.80 | % | 0.77 | % | 0.85 | % | |||||||||||||||||
| Allowance for loan losses to | |||||||||||||||||||||||||||
| nonperforming loans | 80.04 | % | 77.56 | % | 64.23 | % | 62.57 | % | 44.96 | % | |||||||||||||||||
| Net charge-offs to average loans | 0.09 | % | 0.51 | % | 0.04 | % | 1.57 | % | (0.14 | ) | % | ||||||||||||||||
| Wealth Management | |||||||||||||||||||||||||||
| Trust assets under administration | $ | 1,198,044 | $ | 1,189,693 | $ | 1,181,128 | $ | 1,145,056 | $ | 1,183,807 | |||||||||||||||||
| Market Data | |||||||||||||||||||||||||||
| Book value per share | $ | 20.53 | $ | 20.19 | $ | 19.74 | $ | 19.68 | $ | 19.42 | |||||||||||||||||
| Tangible book value per share | $ | 17.13 | $ | 15.71 | $ | 15.20 | $ | 15.03 | $ | 14.72 | |||||||||||||||||
| Shares outstanding at period end | 15,402,946 | 11,804,779 | 11,797,404 | 11,760,589 | 11,759,138 | ||||||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||||||
| Basic | 13,358,289 | 11,957,381 | 11,924,072 | 11,911,414 | 11,899,919 | ||||||||||||||||||||||
| Diluted | 13,635,074 | 12,229,293 | 12,181,664 | 12,130,529 | 12,098,476 | ||||||||||||||||||||||
| Capital | |||||||||||||||||||||||||||
| Total capital to risk-weighted assets | 13.91 | % | 11.67 | % | 11.82 | % | 11.43 | % | 11.71 | % | |||||||||||||||||
| Tier 1 capital to risk-weighted assets | 11.23 | % | 8.48 | % | 8.62 | % | 8.19 | % | 8.32 | % | |||||||||||||||||
| Tier 1 leverage ratio | 9.77 | % | 7.25 | % | 7.49 | % | 7.41 | % | 7.52 | % | |||||||||||||||||
| Tier 1 common capital to | |||||||||||||||||||||||||||
| risk-weighted assets | 9.24 | % | 6.40 | % | 6.50 | % | 6.16 | % | 6.27 | % | |||||||||||||||||
| Tangible common equity to tangible assets | 8.89 | % | 6.52 | % | 6.33 | % | 6.36 | % | 6.41 | % | |||||||||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||||
| (in thousands, except per share data) | 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||||||||||||
| Adjusted Earnings Reconciliation | |||||||||||||||||||||||||||||||
| Income before income taxes - GAAP | $ | 10,473 | $ | 7,895 | $ | 10,507 | $ | 5,379 | $ | 9,432 | |||||||||||||||||||||
| Adjustments to other income: | |||||||||||||||||||||||||||||||
| Gain on sales of investment securities, net | 72 | 204 | 33 | 1 | - | ||||||||||||||||||||||||||
| Other-than-temporary impairment | |||||||||||||||||||||||||||||||
| on investment securities | - | (824 | ) | - | (299 | ) | - | ||||||||||||||||||||||||
| FDIC loss-sharing expense | - | - | (212 | ) | (57 | ) | (204 | ) | |||||||||||||||||||||||
| Amortization of FDIC indemnification asset, net | - | - | (39 | ) | (121 | ) | (120 | ) | |||||||||||||||||||||||
| Reversal of contingent consideration accrual | 350 | - | - | - | - | ||||||||||||||||||||||||||
| Other income | - | - | - | 12 | - | ||||||||||||||||||||||||||
| Total adjusted other income | 422 | (620 | ) | (218 | ) | (464 | ) | (324 | ) | ||||||||||||||||||||||
| Adjustments to other expense: | |||||||||||||||||||||||||||||||
| Expenses associated with payoff | |||||||||||||||||||||||||||||||
| of subordinated debt | 511 | - | - | - | - | ||||||||||||||||||||||||||
| Integration and acquisition expenses | 406 | 385 | 214 | 898 | 1,910 | ||||||||||||||||||||||||||
| Total adjusted other expense | 917 | 385 | 214 | 898 | 1,910 | ||||||||||||||||||||||||||
| Adjusted earnings pre tax | 10,968 | 8,900 | 10,939 | 6,741 | 11,666 | ||||||||||||||||||||||||||
| Adjusted earnings tax | 3,861 | 3,133 | 3,414 | 2,103 | 3,640 | ||||||||||||||||||||||||||
| Adjusted earnings - non-GAAP | $ | 7,107 | $ | 5,767 | $ | 7,525 | $ | 4,638 | $ | 8,026 | |||||||||||||||||||||
| Adjusted diluted EPS | $ | 0.52 | $ | 0.47 | $ | 0.61 | $ | 0.38 | $ | 0.66 | |||||||||||||||||||||
| Adjusted return on average assets | 0.93 | % | 0.79 | % | 1.04 | % | 0.66 | % | 1.17 | % | |||||||||||||||||||||
| Adjusted return on average | |||||||||||||||||||||||||||||||
| shareholders' equity | 10.66 | % | 9.79 | % | 12.90 | % | 7.92 | % | 14.16 | % | |||||||||||||||||||||
| Adjusted return on average | |||||||||||||||||||||||||||||||
| tangible common equity | 13.27 | % | 12.64 | % | 16.77 | % | 10.39 | % | 18.77 | % | |||||||||||||||||||||
| Yield on Loans | |||||||||||||||||||||||||||||||
| Reported yield on loans | 5.22 | % | 4.68 | % | 5.15 | % | 4.94 | % | 5.70 | % | |||||||||||||||||||||
| Effect of accretion income on acquired loans | (0.85 | ) | % | (0.30 | ) | % | (0.78 | ) | % | (0.41 | ) | % | (1.13 | ) | % | ||||||||||||||||
| Yield on loans excluding accretion income | 4.37 | % | 4.38 | % | 4.37 | % | 4.53 | % | 4.57 | % | |||||||||||||||||||||
| Net Interest Margin | |||||||||||||||||||||||||||||||
| Reported net interest margin | 4.20 | % | 3.80 | % | 4.19 | % | 4.18 | % | 4.79 | % | |||||||||||||||||||||
| Effect of accretion income on acquired loans | (0.68 | ) | % | (0.25 | ) | % | (0.63 | ) | % | (0.35 | ) | % | (0.91 | ) | % | ||||||||||||||||
| Net interest margin excluding accretion income | 3.52 | % | 3.55 | % | 3.56 | % | 3.83 | % | 3.88 | % | |||||||||||||||||||||
| MIDLAND STATES BANCORP, INC. | |||||||||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||||||||||||||
| 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, | |||||||||||||||||||||||||||
| (in thousands, except per share data) | 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||||||||||||
| Shareholders' Equity to Tangible Common Equity: | |||||||||||||||||||||||||||||||
| Total shareholders' equity—GAAP | $ | 316,315 | $ | 238,561 | $ | 233,056 | $ | 231,625 | $ | 228,575 | |||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||
| Noncontrolling interest in subsidiaries | (47 | ) | (175 | ) | (176 | ) | (210 | ) | (204 | ) | |||||||||||||||||||||
| Goodwill | (46,519 | ) | (46,519 | ) | (46,519 | ) | (47,102 | ) | (47,102 | ) | |||||||||||||||||||||
| Other intangibles | (5,905 | ) | (6,424 | ) | (7,004 | ) | (7,601 | ) | (8,199 | ) | |||||||||||||||||||||
| Tangible common equity | $ | 263,844 | $ | 185,443 | $ | 179,357 | $ | 176,712 | $ | 173,070 | |||||||||||||||||||||
| Total Assets to Tangible Assets: | |||||||||||||||||||||||||||||||
| Total assets—GAAP | 3,021,784 | 2,898,080 | 2,884,824 | 2,832,308 | 2,753,581 | ||||||||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||
| Goodwill | (46,519 | ) | (46,519 | ) | (46,519 | ) | (47,102 | ) | (47,102 | ) | |||||||||||||||||||||
| Other intangibles | (5,905 | ) | (6,424 | ) | (7,004 | ) | (7,601 | ) | (8,199 | ) | |||||||||||||||||||||
| Tangible assets | $ | 2,969,360 | $ | 2,845,137 | $ | 2,831,301 | $ | 2,777,605 | $ | 2,698,280 | |||||||||||||||||||||
| Common Shares Outstanding | 15,402,946 | 11,804,779 | 11,797,404 | 11,760,589 | 11,759,138 | ||||||||||||||||||||||||||
| Tangible Common Equity to Tangible Assets | 8.89 | % | 6.52 | % | 6.33 | % | 6.36 | % | 6.41 | % | |||||||||||||||||||||
| Tangible Book Value Per Share | $ | 17.13 | $ | 15.71 | $ | 15.20 | $ | 15.03 | $ | 14.72 | |||||||||||||||||||||
| Return on Average Tangible Common Equity (ROATCE) | |||||||||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||||
| (in thousands, except per share data) | 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||||||||||||
| Net Income | $ | 6,789 | $ | 5,119 | $ | 7,695 | $ | 3,445 | $ | 6,653 | |||||||||||||||||||||
| Average total shareholders' equity—GAAP | $ | 268,262 | $ | 236,921 | $ | 231,420 | $ | 232,287 | $ | 227,336 | |||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||
| Noncontrolling interest in subsidiaries | (121 | ) | (184 | ) | (204 | ) | (207 | ) | (175 | ) | |||||||||||||||||||||
| Goodwill | (46,519 | ) | (46,519 | ) | (46,997 | ) | (47,102 | ) | (47,102 | ) | |||||||||||||||||||||
| Other intangibles | (6,184 | ) | (6,740 | ) | (7,324 | ) | (7,917 | ) | (8,553 | ) | |||||||||||||||||||||
| Average tangible common equity | $ | 215,438 | $ | 183,478 | $ | 176,895 | $ | 177,061 | $ | 171,506 | |||||||||||||||||||||
| ROATCE | 12.67 | % | 11.22 | % | 17.26 | % | 7.72 | % | 15.56 | % | |||||||||||||||||||||