EX-99.1 2 exh_991.htm PRESS RELEASE EdgarFiling

EXHIBIT 99.1

Midland States Bancorp, Inc. Announces 2017 Fourth Quarter Results

Highlights

· Net income of $2.0 million, or $0.10 diluted earnings per share, included the following significant items

  • $0.23 per diluted share in tax expense due to the revaluation of deferred tax assets 
      
  • $0.08 per diluted share of integration and acquisition expenses

· Two charge-offs drive $4.6 million increase in provision for loan losses compared to prior quarter, impacting EPS by $0.14 per diluted share

· Total loans increase at 9% annualized rate

· Efficiency ratio improves to 64.6% from 69.0% in third quarter 2017

· Acquisition of Alpine Bancorporation expected to close by the end of February 2018

EFFINGHAM, Ill., Jan. 25, 2018 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the “Company”) today reported financial results for the fourth quarter of 2017, which included $2.7 million, or $0.08 per diluted share, in integration and acquisition expenses, and $4.5 million, or $0.23 per diluted share, in tax expense related to the revaluation of the Company’s net deferred tax assets as a result of the decrease in the federal corporate tax rate.  Inclusive of these expenses, Midland reported net income of $2.0 million, or $0.10 diluted earnings per share, for the fourth quarter of 2017.  This compares to net income of $2.0 million, or $0.10 diluted earnings per share, for the third quarter of 2017, and net income of $11.6 million, or $0.72 diluted earnings per share, for the fourth quarter of 2016. 

“While our fourth quarter results were negatively impacted by the revaluation of our deferred tax assets, our level of profitability will benefit from a lower effective tax rate going forward,” said Leon J. Holschbach, President and Chief Executive Officer of the Company.  “During the fourth quarter, we saw an improvement in balance sheet growth driven by strong loan production across our portfolio and solid inflows of core deposits.  We had 9% annualized loan growth in the quarter with strong increases coming in our commercial, construction and consumer loan portfolios.  As we continue to realize the synergies from the Centrue acquisition, we are also seeing an improvement in our efficiency ratio.   

“In 2018, we will be focused on integrating our acquisition of Alpine Bancorporation, capturing the synergies we project from this transaction, and expanding our core community banking and wealth management businesses.  With the higher earnings resulting from the lowering of our effective tax rate, we intend to strengthen our capital base following the Alpine acquisition, as well as continue to deliver strong dividend growth to our shareholders.  Over the past 15 years, we have increased our dividend at an annual rate of more than 10%.  With the greater earnings power we are projecting following the Alpine acquisition and the lower effective tax rate, we believe we will maintain our strong track record of returning capital to our shareholders.”

Adjusted Earnings

Financial results for the fourth quarter of 2017 included $4.5 million of additional tax expense related to the revaluation of the Company’s net deferred tax assets, $2.7 million in integration and acquisition-related expenses, and $0.4 million in loss on mortgage servicing rights (“MSRs”) held-for-sale.  Financial results for the third quarter of 2017 included $8.3 million in integration and acquisition-related expenses and $3.6 million in loss on MSRs held-for-sale.

Excluding these expenses, adjusted earnings were $8.4 million, or $0.42 diluted earnings per share, for the fourth quarter of 2017, compared with adjusted earnings of $9.2 million, or $0.46 diluted earnings per share, for the third quarter of 2017.  The decline in adjusted earnings per share is primarily attributable to an increase in the provision for loan losses.  Adjusted pre-tax pre-provision earnings were $16.9 million for the fourth quarter of 2017, compared with $15.6 million for the third quarter of 2017.  A reconciliation of adjusted earnings and adjusted pre-tax pre-provision earnings to net income according to generally accepted accounting principles (“GAAP”) is provided in the financial tables at the end of this press release.

Net Interest Income

Net interest income for the fourth quarter of 2017 was $36.0 million, a decrease of 2.0% from $36.8 million for the third quarter of 2017.  The decrease in net interest income was primarily attributable to a decline in net interest margin.

The Company’s net interest income benefits from accretion income associated with purchased loan portfolios.  Accretion income totaled $2.7 million for the fourth quarter of 2017, compared with $3.0 million for the third quarter of 2017. 

Relative to the fourth quarter of 2016, net interest income increased $10.1 million, or 38.8%.  Accretion income for the fourth quarter of 2016 was $2.2 million.  The increase in net interest income resulted from a $12.5 million increase in interest income on loans due primarily to growth in the average balance of loans.  This increase was offset in part by a $3.4 million increase in interest expense primarily due to interest-bearing deposits from Centrue combined with increased usage of FHLB advances and subordinated debt.

Net Interest Margin

Net interest margin for the fourth quarter of 2017 was 3.73%, compared to 3.78% for the third quarter of 2017.  The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 26 and 27 basis points to net interest margin in the fourth and third quarters of 2017, respectively.  Excluding the impact of accretion income, the decrease in net interest margin was attributable to the addition of $40 million of subordinated debt issued in preparation for the acquisition of Alpine Bancorporation.

Relative to the fourth quarter of 2016, the net interest margin increased from 3.70%.  Accretion income on purchased loan portfolios contributed 28 basis points to net interest margin in the fourth quarter of 2016.  Excluding the impact of accretion income, the increase in net interest margin was primarily driven by higher average loans yields. 

Noninterest Income

Noninterest income for the fourth quarter of 2017 was $14.0 million, a decrease of 9.1% from $15.4 million for the third quarter of 2017.  This decrease was primarily attributable to lower commercial FHA and residential mortgage banking revenue.

Wealth management revenue for the fourth quarter of 2017 was $3.6 million, an increase of 3.2% from $3.5 million in the third quarter of 2017.  Compared to the fourth quarter of 2016, wealth management revenue increased 43.8%, which was attributable to 12% organic growth in assets under management and the acquisition of CedarPoint Investment Advisors in March 2017.

Commercial FHA revenue for the fourth quarter of 2017 was $3.1 million, a decrease of 17.2% from $3.8 million in the third quarter of 2017.  The Company originated $98.5 million in rate lock commitments during the fourth quarter of 2017, compared to $112.5 million in the prior quarter.  Compared to the fourth quarter of 2016, commercial FHA revenue decreased 15.6%.

Residential mortgage banking revenue for the fourth quarter of 2017 was $1.6 million, a decrease of 32.8% from $2.3 million in the third quarter of 2017.  Compared to the fourth quarter of 2016, residential mortgage banking revenue decreased 75.1%, primarily due to the recapture of previously recorded mortgage servicing rights impairment totaling $3.6 million during the fourth quarter of 2016.

Relative to the fourth quarter of 2016, noninterest income decreased 54.1% from $30.5 million.  During the fourth quarter of 2016, the Company recognized a gain of $14.4 million related to the sale of collateralized mortgage obligations (“CMOs”).

Noninterest Expense

Noninterest expense for the fourth quarter of 2017 was $36.2 million, compared with $48.4 million for the third quarter of 2017.  Noninterest expense for the fourth and third quarters of 2017 included $2.7 million and $8.3 million in integration and acquisition-related expenses, respectively, and $0.4 million and $3.6 million losses on MSRs held-for-sale, respectively.  Excluding these expenses, noninterest expense decreased $3.4 million, or 9.3%, from the prior quarter.  The decrease was attributable to a decline in salaries and employee benefits expense due to a 5.7% decrease in FTEs resulting from the continued integration of Centrue, as well as reduced variable compensation in the commercial FHA and residential mortgage businesses.

Relative to the fourth quarter of 2016, noninterest expense excluding integration and acquisition-related expenses, branch network optimization plan charges, loss share agreement termination expenses, and the loss on mortgage servicing rights held-for-sale increased 8.6% from $30.4 million.  The increase was primarily due to personnel and facilities added in the two acquisitions completed over the past year, partially offset by cost savings resulting from the Company’s Operational Excellence initiative. 

Income Tax Expense

Income tax expense was $5.8 million for the fourth quarter of 2017, compared to $0.3 million for the third quarter of 2017. 

On December 22, 2017, “H.R.1”, formerly known as the “Tax Cuts and Jobs Act”, was signed into law. Among other items, H.R.1 reduces the federal corporate tax rate to 21% effective January 1, 2018.  As a result, Midland concluded that the reduction in the federal corporate tax rate required the revaluation of the Company’s net deferred tax assets.  The Company’s net deferred tax assets represents net operating loss carryforwards that will be used to reduce corporate taxes expected to be paid in the future as well as differences between the carrying amounts and tax bases of assets and liabilities carried on the Company’s balance sheet.  The Company performed an analysis and determined that the value of the deferred tax assets had declined by $4.5 million.   To reflect the decline in the value of the deferred tax assets, the Company recorded additional tax expense of $4.5 million during the fourth quarter of 2017.

For 2018, the Company expects its effective tax rate to be approximately 23%.

Loan Portfolio

Total loans outstanding were $3.23 billion at December 31, 2017, compared with $3.16 billion at September 30, 2017 and $2.32 billion at December 31, 2016.  The increase in total loans from September 30, 2017 was primarily attributable to increases in the commercial, construction and consumer loan portfolios.  The increase in total loans from December 31, 2016, was due to 9.8% organic growth and the addition of $679.9 million of loans from Centrue. 

Deposits

Total deposits were $3.13 billion at December 31, 2017, compared with $3.11 billion at September 30, 2017, and $2.40 billion at December 31, 2016.  The increase in total deposits from September 30, 2017 was primarily attributable to growth throughout the commercial, retail and servicing portfolios, which was partially offset by the continued reduction of brokered deposits.

Asset Quality

Non-performing loans totaled $26.8 million, or 0.83% of total loans, at December 31, 2017, compared with $33.4 million, or 1.06% of total loans, at September 30, 2017, and $31.6 million, or 1.36% of total loans, at December 31, 2016.  The decrease in non-performing loans during the fourth quarter of 2017 was primarily driven by charge-offs.

Net charge-offs for the fourth quarter of 2017 were $6.5 million, or 0.81% of average loans on an annualized basis.  The net charge-offs were primarily related to two commercial real estate loans.

The Company recorded a provision for loan losses of $6.1 million for the fourth quarter of 2017, which was driven by the growth in total loans outstanding and the net charge-offs taken in the quarter.  The Company’s allowance for loan losses was 0.51% of total loans and 61.4% of non-performing loans at December 31, 2017, compared with 0.53% of total loans and 50.4% of non-performing loans at September 30, 2017.  Fair market value discounts recorded in connection with acquired loan portfolios represented 0.51% of total loans at December 31, 2017, compared with 0.45% at September 30, 2017.

Capital

At December 31, 2017, 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:

 December 31, 2017Well Capitalized
Regulatory Requirements
 Total capital to risk-weighted assets13.26%10.00%
 Tier 1 capital to risk-weighted assets10.19%8.00%
 Tier 1 leverage ratio8.63%5.00%
 Common equity Tier 1 capital8.45%6.50%
 Tangible common equity to tangible assets7.70%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, January 26, 2018 to discuss its financial results.  The call can be accessed via telephone at (877) 516-3531 (passcode: 5699319).  A recorded replay can be accessed through February 2, 2018 by dialing (855) 859-2056; passcode: 5699319.

A slide presentation relating to the fourth quarter 2017 results will be accessible prior to the scheduled conference call.  The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website.

About Midland States Bancorp, Inc.

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank.  As of December 31, 2017, the Company had total assets of $4.4 billion and its Wealth Management Group had assets under administration of approximately $2.1 billion.  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 financing is provided through Midland Equipment Finance, and multi-family and healthcare facility FHA financing is provided through Love Funding. 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,” “Adjusted Pre-Tax, Pre-Provision Earnings,” “Efficiency Ratio,” “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. 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," including but not limited to statements about the Company’s expected loan production, operating expenses 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.

CONTACTS:
Jeffrey G. Ludwig, Chief Financial Officer, at jludwig@midlandsb.com or (217) 342-7321
Douglas J. Tucker, Sr. V.P., Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321


MIDLAND STATES BANCORP, INC. 
CONSOLIDATED FINANCIAL SUMMARY (unaudited) 
                     
  For the Quarter Ended 
  December 31,  September 30,  June 30,  March 31,  December 31, 
(dollars in thousands, except per share data) 2017  2017  2017  2017  2016
Earnings Summary                    
Net interest income $  36,036  $  36,765  $  29,400   $   27,461   $   25,959 
Provision for loan losses    6,076     1,489     458     1,533     2,445 
Noninterest income    13,998     15,403     13,619     16,342     30,486 
Noninterest expense    36,192     48,363     37,645     30,797     34,090 
Income before income taxes    7,766     2,316     4,916     11,473     19,910 
Income taxes    5,775     280     1,377     2,983     8,327 
Net income  $  1,991  $  2,036  $  3,539   $   8,490   $   11,583 
                     
Diluted earnings per common share $0.10  $0.10  $0.20  $0.52  $0.72 
Weighted average shares outstanding - diluted  19,741,833   19,704,217   17,320,089   16,351,637   16,032,016 
Return on average assets  0.18%  0.18%  0.39%  1.05%  1.44%
Return on average shareholders' equity  1.74%  1.78%  3.93%  10.58%  14.05%
Return on average tangible common shareholders' equity  2.33%  2.39%  4.91%  12.78%  16.84%
Net interest margin  3.73%  3.78%  3.70%  3.87%  3.70%
Efficiency ratio  64.64%  69.00%  66.54%  66.34%  76.64%
                     
Adjusted Earnings Performance Summary                    
Adjusted earnings $8,403  $9,173  $8,076  $9,243  $6,302 
Adjusted diluted earnings per common share $0.42  $0.46  $0.46  $0.56  $0.39 
Adjusted return on average assets  0.76%  0.82%  0.89%  1.14%  0.78%
Adjusted return on average shareholders' equity  7.34%  8.03%  8.97%  11.52%  7.64%
Adjusted return on average tangible common shareholders' equity  9.83%  10.77%  11.21%  13.91%  9.16%
                     

 

                     
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
  
  For the Quarter Ended 
  December 31,  September 30,  June 30,  March 31,  December 31, 
(in thousands, except per share data) 2017  2017  2017  2017  2016
Net interest income:                    
Total interest income $43,500  $43,246  $34,528  $31,839  $29,981 
Total interest expense  7,464   6,481   5,128   4,378   4,022 
Net interest income  36,036   36,765   29,400   27,461   25,959 
Provision for loan losses  6,076   1,489   458   1,533   2,445 
Net interest income after provision for loan losses  29,960   35,276   28,942   25,928   23,514 
Noninterest income:                    
Commercial FHA revenue  3,127   3,777   4,153   6,695   3,704 
Residential mortgage banking revenue  1,556   2,317   2,330   2,916   6,241 
Wealth management revenue  3,587   3,475   3,406   2,872   2,495 
Service charges on deposit accounts  1,828   2,133   1,122   892   988 
Interchange revenue  1,538   1,724   1,114   977   921 
Gain on sales of investment securities, net  2   98   55   67   14,387 
Other income  2,360   1,879   1,439   1,923   1,750 
Total noninterest income  13,998   15,403   13,619   16,342   30,486 
Noninterest expense:                    
Salaries and employee benefits  17,344   22,411   21,842   17,115   17,326 
Occupancy and equipment  3,859   4,144   3,472   3,184   3,266 
Data processing  3,640   5,786   2,949   2,796   2,828 
Professional  3,611   4,151   3,142   2,992   2,898 
Amortization of intangible assets  1,035   1,187   579   525   534 
Loss on mortgage servicing rights held for sale  442   3,617   -   -   - 
Other  6,261   7,067   5,661   4,185   7,238 
Total noninterest expense  36,192   48,363   37,645   30,797   34,090 
Income before income taxes  7,766   2,316   4,916   11,473   19,910 
Income taxes  5,775   280   1,377   2,983   8,327 
Net income $1,991  $2,036  $3,539  $8,490  $11,583 
                     
Basic earnings per common share $0.10  $0.10  $0.21  $0.54  $0.74 
Diluted earnings per common share $0.10  $0.10  $0.20  $0.52  $0.72 
                     

 

                    
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                    
  At Quarter Ended
  December 31,  September 30,  June 30,  March 31,  December 31, 
(in thousands) 2017  2017  2017  2017  2016
Assets                   
Cash and cash equivalents $215,202   $183,572   $334,356   $218,096   $190,716 
Investment securities available-for-sale at fair value  450,525    396,985    385,340    259,332    246,339 
Investment securities held to maturity at amortized cost    -     70,867    75,371    76,276    78,672 
Loans  3,226,678    3,157,972    3,184,063    2,454,950    2,319,976 
Allowance for loan losses  (16,431)   (16,861)   (15,424)   (15,805)   (14,862)
Total loans, net  3,210,247    3,141,111    3,168,639    2,439,145    2,305,114 
Loans held for sale at fair value  50,089    35,874    41,689    39,900    70,565 
Premises and equipment, net  76,162    80,941    76,598    66,914    66,692 
Other real estate owned  5,708    6,379    7,036    3,680    3,560 
Mortgage servicing rights at lower of cost or market  56,352    56,299    70,277    68,557    68,008 
Mortgage servicing rights held for sale  10,176    10,618      -       -       -  
Intangible assets  16,932    17,966    18,459    8,633    7,187 
Goodwill  98,624    97,351    96,940    50,807    48,836 
Cash surrender value of life insurance policies  113,366    112,591    111,802    74,806    74,226 
Other assets  109,318    137,207    105,135    67,431    73,808 
Total assets $4,412,701   $4,347,761   $4,491,642   $3,373,577   $3,233,723 
                    
Liabilities and Shareholders' Equity                   
Noninterest bearing deposits $724,443   $674,118   $780,803   $528,021   $562,333 
Interest bearing deposits  2,406,646    2,440,349    2,552,228    1,999,455    1,842,033 
Total deposits  3,131,089    3,114,467    3,333,031    2,527,476    2,404,366 
Short-term borrowings  156,126    153,443    170,629    124,035    131,557 
FHLB advances and other borrowings  496,436    488,870    400,304    250,353    237,518 
Subordinated debt  93,972    54,581    54,556    54,532    54,508 
Trust preferred debentures  45,379    45,267    45,156    37,496    37,405 
Other liabilities  40,154    40,444    36,014    45,352    46,599 
Total liabilities  3,963,156    3,897,072    4,039,690    3,039,244    2,911,953 
Total shareholders’ equity  449,545    450,689    451,952    334,333    321,770 
Total liabilities and shareholders’ equity $4,412,701   $4,347,761   $4,491,642   $3,373,577   $3,233,723 
                    

 

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                     
  As of 
  December 31,  September 30,  June 30,  March 31,  December 31, 
(in thousands) 2017  2017  2017  2017  2016
Loan Portfolio                    
Commercial loans $555,930  $513,544  $571,111  $475,408  $457,827 
Commercial real estate loans  1,440,011   1,472,284   1,470,487   997,200   969,615 
Construction and land development loans  200,587   182,513   176,098   171,047   177,325 
Residential real estate loans  453,552   445,747   428,464   277,402   253,713 
Consumer loans  371,455   343,038   335,902   337,081   270,017 
Lease financing loans  205,143   200,846   202,001   196,812   191,479 
Total loans $3,226,678  $3,157,972  $3,184,063  $2,454,950  $2,319,976 
                     
                     
Deposit Portfolio                    
Noninterest-bearing demand deposits $724,443  $674,118  $780,803  $528,021  $562,333 
Checking accounts  785,935   800,649   841,640   751,193   656,248 
Money market accounts  646,426   633,844   578,077   415,322   399,851 
Savings accounts  281,212   278,977   291,912   169,715   166,910 
Time deposits  502,810   493,777   525,647   394,508   400,304 
Brokered deposits  190,263   233,102   314,952   268,717   218,720 
Total deposits $3,131,089  $3,114,467  $3,333,031  $2,527,476  $2,404,366 
                     

 

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                     
  For the Quarter Ended 
  December 31,  September 30,  June 30,  March 31,  December 31, 
(in thousands) 2017  2017  2017  2017  2016
Average Balance Sheets                    
Cash and cash equivalents $173,540  $202,407  $192,483  $163,595  $140,439 
Investment securities  461,475   474,216   362,268   328,880   315,511 
Loans  3,198,036   3,173,027   2,620,875   2,361,380   2,299,115 
Loans held for sale  40,615   46,441   61,759   73,914   86,665 
Nonmarketable equity securities  33,703   31,224   22,246   20,047   18,927 
Total interest-earning assets  3,907,369   3,927,315   3,259,631   2,947,816   2,860,657 
Non-earning assets  497,502   498,364   372,525   336,761   337,566 
Total assets $4,404,871  $4,425,679  $3,632,156  $3,284,577  $3,198,223 
Interest-bearing deposits $2,433,461  $2,527,490  $2,116,564  $1,896,569  $1,838,760 
Short-term borrowings  181,480   182,015   146,144   143,583   151,191 
FHLB advances and other borrowings  472,709   434,860   290,401   248,045   183,614 
Subordinated debt  88,832   54,570   54,542   54,518   54,495 
Trust preferred debentures  45,312   45,201   39,179   37,443   37,357 
Total interest-bearing liabilities  3,221,794   3,244,136   2,646,830   2,380,158   2,265,417 
Noninterest-bearing deposits  684,907   688,986   579,977   525,868   562,958 
Other noninterest-bearing liabilities  44,202   39,240   44,014   53,109   41,962 
Shareholders' equity  453,968   453,317   361,335   325,442   327,886 
Total liabilities and shareholders' equity $4,404,871  $4,425,679  $3,632,156  $3,284,577  $3,198,223 
                     
Yields                    
Cash and cash equivalents  1.28%  1.19%  1.02%  0.77%  0.53%
Investment securities  3.01%  2.86%  3.33%  3.21%  3.10%
Loans  4.88%  4.90%  4.71%  4.91%  4.65%
Loans held for sale  3.62%  3.74%  4.67%  4.22%  4.22%
Nonmarketable equity securities  4.78%  4.20%  4.31%  4.41%  3.85%
Total interest-earning assets  4.48%  4.44%  4.33%  4.47%  4.26%
Interest-bearing deposits  0.58%  0.53%  0.53%  0.51%  0.48%
Short-term borrowings  0.26%  0.22%  0.23%  0.23%  0.22%
FHLB advances and other borrowings  1.42%  1.36%  1.16%  0.93%  0.78%
Subordinated debt  6.46%  6.40%  6.40%  6.40%  6.41%
Trust preferred debentures  5.75%  5.60%  5.37%  5.12%  4.99%
Total interest-bearing liabilities  0.92%  0.79%  0.78%  0.75%  0.71%
Net interest margin  3.73%  3.78%  3.70%  3.87%  3.70%
                     

 

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                     
  As of and for the Quarter Ended 
  December 31,  September 30,  June 30,  March 31,  December 31, 
(dollars in thousands, except per share data) 2017  2017  2017  2017  2016
Asset Quality                    
Loans 30-89 days past due $15,405  $13,526  $13,566  $14,075  $10,767 
Nonperforming loans  26,760   33,431   27,615   28,933   31,603 
Nonperforming assets  30,894   38,109   33,150   31,684   34,550 
Net charge-offs   6,506   52   839   590   3,142 
Loans 30-89 days past due to total loans  0.48%  0.43%  0.43%  0.57%  0.46%
Nonperforming loans to total loans  0.83%  1.06%  0.87%  1.18%  1.36%
Nonperforming assets to total assets  0.70%  0.88%  0.74%  0.94%  1.07%
Allowance for loan losses to total loans  0.51%  0.53%  0.48%  0.64%  0.64%
Allowance for loan losses to nonperforming loans  61.40%  50.43%  55.81%  54.62%  47.03%
Net charge-offs to average loans  0.81%  0.01%  0.13%  0.10%  0.54%
                     
Wealth Management                    
Trust assets under administration $2,051,249  $2,001,106  $1,929,513  $1,869,314  $1,658,235 
                     
Market Data                    
Book value per share at period end $23.35  $23.45  $23.51  $21.19  $20.78 
Tangible book value per share at period end $17.31  $17.41  $17.47  $17.42  $17.16 
Market price at period end $32.48  $31.68  $33.52  $34.39  $36.18 
Shares outstanding at period end  19,122,049   19,093,153   19,087,409   15,780,651   15,483,499 
                     
Capital                    
Total capital to risk-weighted assets  13.26%  12.21%  11.98%  13.48%  13.85%
Tier 1 capital to risk-weighted assets  10.19%  10.20%  10.05%  10.97%  11.27%
Tier 1 leverage ratio  8.63%  8.54%  10.45%  9.61%  9.76%
Common equity Tier 1 capital ratio  8.45%  8.50%  8.36%  9.10%  9.35%
Tangible common equity to tangible assets  7.70%  7.85%  7.62%  8.29%  8.36%
                     


MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
                    
                    
Adjusted Earnings Reconciliation                   
                    
 For the Quarter Ended 
 December 31,  September 30,  June 30,  March 31,  December 31, 
(in thousands, except per share data)2017  2017  2017  2017   2016
Income before income taxes - GAAP$7,766   $2,316  $4,916   $11,473   $19,910 
Adjustments to noninterest income:                      
Gain on sales of investment securities, net 2    98   55    67    14,387 
Gain (loss) on sale of other assets 37    45   (91)   (58)   - 
Total adjustments to noninterest income 39    143   (36)   9    14,387 
Adjustments to noninterest expense:                      
Net expense from loss share termination agreement -    -   -    -    351 
Branch network optimization plan charges 371    336   1,236    9    2,099 
Loss on mortgage servicing rights held for sale 442    3,617   -    -    - 
Integration and acquisition expenses 2,315    7,967   6,214    1,242    1,200 
Total adjustments to noninterest expense 3,128    11,920   7,450    1,251    3,650 
Adjusted earnings pre tax 10,855    14,093   12,402    12,715    9,173 
Adjusted earnings tax (a) 6,992    4,920   4,326    3,472    2,871 
Revaluation of net deferred tax assets (4,540)   -   -    -    - 
Adjusted earnings - non-GAAP$8,403   $9,173  $8,076   $9,243   $6,302 
Adjusted diluted EPS$0.42   $0.46  $0.46   $0.56   $0.39 
Adjusted return on average assets 0.76 %  0.82%  0.89 %  1.14 %  0.78%
Adjusted return on average shareholders' equity 7.34 %  8.03%  8.97 %  11.52 %  7.64%
Adjusted return on average tangible common equity 9.83 %  10.77%  11.21 %  13.91 %  9.16%
                    
                    
(a) Tax rate applied to adjustments changed for prior 2017 quarters to statutory tax rate for fiscal 2017. 
                    
                    
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation                   
                    
 For the Quarter Ended 
 December 31,  September 30,  June 30,  March 31,  December 31, 
(in thousands)2017  2017  2017  2017  2016
Adjusted earnings pre tax$10,855   $14,093  $12,402   $12,715   $9,173 
Provision for loan losses 6,076    1,489   458    1,533    2,445 
Adjusted pre-tax, pre-provision earnings - non-GAAP$16,931   $15,582  $12,860   $14,248   $11,618 
                       


MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
                     
                     
Efficiency Ratio Reconciliation                    
  For the Quarter Ended 
  December 31,  September 30,  June 30,  March 31,  December 31, 
(in thousands) 2017  2017  2017  2017  2016
Noninterest expense - GAAP $36,192   $48,364   $37,644   $30,798   $34,090  
Net expense from loss-share termination agreement  -    -    -    -    (351) 
Branch network optimization plan charges  (371)   (336)   (1,236)   (9)   (2,099) 
Loss on mortgage servicing rights held for sale  (442)   (3,617)   -    -    -  
Integration and acquisition expenses  (2,315)   (7,967)   (6,214)   (1,242)   (1,200) 
Adjusted noninterest expense $33,064   $36,444   $30,194   $29,547   $30,440  
                     
Net interest income - GAAP $36,036   $36,765   $29,400   $27,461   $25,959  
Effect of tax-exempt income 659    687    674    671    620  
Adjusted net interest income  36,695    37,452    30,074    28,132    26,579  
                     
Noninterest income - GAAP $13,998   $15,403   $13,619   $16,342   $30,485  
Mortgage servicing rights impairment (recovery)  494    104    1,650    76    (2,958) 
Gain on sales of investment securities, net (2)   (98)   (55)   (67)   (14,387) 
Other income (37)   (45)   91    58    -  
Adjusted noninterest income  14,453    15,364    15,305    16,409    13,140  
                     
Adjusted total revenue $51,148   $52,816   $45,379   $44,541   $39,719  
                     
Efficiency ratio  64.64 %  69.00 %  66.54 %  66.34 %  76.64 %
                     

 

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  
  December 31,  September 30,  June 30,  March 31,  December 31, 
(dollars in thousands, except per share data) 2017  2017  2017  2017  2016
                     
Shareholders' Equity to Tangible Common Equity                    
Total shareholders' equity—GAAP $449,545   $450,689   $451,952   $334,333   $321,770  
Adjustments:                    
Preferred stock  (2,970)   (3,015)   (3,134)   -    -  
Goodwill  (98,624)   (97,351)   (96,940)   (50,807)   (48,836) 
Other intangibles  (16,932)   (17,966)   (18,459)   (8,633)   (7,187) 
Tangible common equity $331,019   $332,357   $333,419   $274,893   $265,747  
                     
Total Assets to Tangible Assets:                    
Total assets—GAAP  4,412,701    4,347,761    4,491,642    3,373,577    3,233,723  
Adjustments:                    
Goodwill  (98,624)   (97,351)   (96,940)   (50,807)   (48,836) 
Other intangibles  (16,932)   (17,966)   (18,459)   (8,633)   (7,187) 
Tangible assets $4,297,145   $4,232,444   $4,376,243   $3,314,137   $3,177,700  
                     
Common Shares Outstanding  19,122,049    19,093,153    19,087,409    15,780,651    15,483,499  
                     
Tangible Common Equity to Tangible Assets  7.70 %  7.85 %  7.62 %  8.29 %  8.36 %
Tangible Book Value Per Share $17.31   $17.41   $17.47   $17.42   $17.16  
                     
                     
Return on Average Tangible Common Equity (ROATCE)                 
  As of  
  December 31,  September 30,  June 30,  March 31,  December 31, 
(in thousands) 2017  2017  2017  2017  2016
                     
Net Income $1,991   $2,036   $3,539   $8,490   $11,583  
                     
Average total shareholders' equity—GAAP $453,968   $453,317   $361,335   $325,442   $327,886  
Adjustments:                    
Goodwill  (97,406)   (97,129)   (61,424)   (48,836)   (46,594) 
Other intangibles  (17,495)   (18,153)   (10,812)   (7,144)   (7,718) 
Average tangible common equity $339,067   $338,035   $289,099   $269,462   $273,574  
ROATCE  2.33 %  2.39 %  4.91 %  12.78 %  16.84 %