Friday, January 24, 2025
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Midland States Bancorp, Inc. Announces 2024 Fourth Quarter Results

Fourth Quarter 2024 Highlights:

  • Net loss available to common shareholders of $54.8 million, or $2.52 per diluted share
  • Adjusted pre-tax, pre-provision earnings of $21.5 million, compared to $27.5 million in prior quarter
  • Sold $87.1 million LendingPoint consumer loan portfolio, recognizing net charge-offs and provision for credit losses of $17.3 million
  • Committed to a plan to sell $371.7 million Greensky portfolio, recognizing net charge-offs and provision for credit losses of $33.4 million
  • Net charge-offs on loans of $102.7 million and provision for credit losses on loans of $93.5 million to address credit issues in the loan portfolio including credit losses for LendingPoint and Greensky portfolios
  • Net interest margin of 3.19%, compared to 3.10% in prior quarter
  • Wealth management revenue of $7.7 million, compared to $7.1 million in prior quarter
  • Common equity tier 1 capital ratio of 8.37%, compared to 9.00% at September 30, 2024 and 8.40% at December 31, 2023
  • Total risk-based capital ratio of 13.38%, compared to 13.98% at September 30, 2024 and 13.20% at December 31, 2023

EFFINGHAM, Ill., Jan. 23, 2025 (GLOBE NEWSWIRE) — Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net loss available to common shareholders of $54.8 million, or $2.52 per diluted share, for the fourth quarter of 2024, compared to net income of $16.2 million, or $0.74 per diluted share, for the third quarter of 2024. This also compares to net income available to common shareholders of $18.5 million, or $0.84 per diluted share, for the fourth quarter of 2023.

During the fourth quarter of 2024, the Company took several actions to address its credit quality issues and exit its non-core consumer loan portfolios. Our deteriorating credit quality issues were primarily within three sectors of our business: non-core consumer loans, Specialty Finance Group, and Midland Equipment Financing.

In the quarter, the Company decided to accelerate the reduction of our non-core consumer loan portfolio through sales. These loans were originated by our Fintech partners, LendingPoint and Greensky. As a result of LendingPoint’s system conversion in the third quarter of 2023, our portfolio experienced significant credit deterioration and servicing-related deficiencies. In December 2024, we sold our $87.1 million LendingPoint portfolio, recognizing net charge-offs and provision for credit losses of $17.3 million on the sale. We also committed to a plan to sell $371.7 million of our Greensky consumer loan portfolio and recognized net charge-offs and provision for credit losses of $33.4 million when these loans were transferred to held for sale. We expect to provide partial financing on the sale with senior secured loans to a special purpose entity with credit subordination and a 20% risk weighting.

The Specialty Finance Group provides bridge loan financing for commercial real estate projects, primarily multi-family and healthcare. These projects can include construction and seek short term financing in anticipation of obtaining permanent secondary market financing. The loans are typically outside of the Company’s primary market areas. We completed a strategic review of this portfolio including obtaining updated appraisals on loans that had shown elevated credit risk in the third and fourth quarters. As a result of this review, five loans with balances of $57.8 million were moved from substandard to non-performing with recognized charge-offs of $6.6 million. In addition, updated appraisals were obtained for five non-performing loans with balances of $55.8 million which resulted in charge-offs of $18.8 million recognized in the fourth quarter of 2024. In addition, we recognized impairment expense on an OREO property related to a former assisted living loan of $2.1 million in the fourth quarter of 2024.

The strategic review also included all criticized loans, construction loans and loans that failed our stress test in all portfolios, including our community bank. This resulted in charge-offs of almost all specific reserves. In addition, the Company tightened credit standards going forward and will not originate new construction loans in the Specialty Finance Group. Our strategic actions around credit administration will better position the Company going forward.

The equipment finance portfolio includes loans and leases originated to customers throughout the United States. During 2024, we experienced elevated charge-offs primarily within the trucking industry. Charge-offs in this portfolio were $15.3 million in the fourth quarter of 2024 as we evaluated equipment values for nonaccrual assets. Nonaccrual loans and leases in the finance portfolio decreased to $11.3 million from $21.4 million at September 30, 2024. Additionally, based on further deterioration in the industry, we evaluated salvage values of the leases and loans related to this industry, along with the carrying values of repossessed and off-lease equipment, and recognized impairment expense of $7.6 million.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “Improving credit quality is our number one priority and in the fourth quarter we took significant steps to reduce credit risk and address our underlying credit issues. During the quarter we made the difficult decision to exit our non-core consumer portfolio and charge-off deteriorating credits in an effort to better position the Company to grow our core community banking business. Our team also reviewed our credit risk appetite profile and tightened standards going forward. On a positive note, substandard accruing loans decreased significantly in the quarter with minimal downgrades to substandard accruing. Delinquencies decreased during the quarter as well.

“We are seeing positive trends in new client additions in both our community bank and wealth management, net interest margin expanded in the quarter and with the actions we took in the quarter to reduce credit risk, we believe we are well positioned to deliver solid financial performance in 2025. We will continue to make investments in talent, technology, and marketing to further enhance our ability to generate profitable growth in the coming years,” said Mr. Ludwig.

Balance Sheet Highlights

Total assets were $7.53 billion at December 31, 2024, compared to $7.75 billion at September 30, 2024, and $7.87 billion at December 31, 2023. At December 31, 2024, portfolio loans were $5.17 billion, compared to $5.75 billion at September 30, 2024, and $6.13 billion at December 31, 2023.

Loans

During the fourth quarter of 2024, outstanding loans declined by $581.2 million, or 10.1%, from September 30, 2024, primarily as a result of the Company’s decision to sell the Greensky and LendingPoint consumer loan portfolios, and the continuation of the Company’s plan to decrease its equipment financing portfolio to focus on commercial loan opportunities in our community banking regions.

Consumer loans decreased $506.0 million to $157.2 million at December 31, 2024, primarily due to the loan portfolio sale, transfer to held for sale, and loan paydowns. Equipment finance loan and lease balances decreased $51.7 million during the fourth quarter of 2024 as the Company continued to reduce its concentration of this product within the overall loan portfolio. Equipment financing and consumer loans comprised 15.6% and 3.0%, respectively, of the loan portfolio at December 31, 2024, compared to 15.0% and 11.5%, respectively, at September 30, 2024.

    As of
    December 31,   September 30,   June 30,   March 31,   December 31,
(in thousands)   2024   2024   2024   2024   2023
Loan Portfolio                    
Commercial loans   $ 921,930   $ 863,922   $ 939,458   $ 913,564   $ 951,387
Equipment finance loans     416,969     442,552     461,409     494,068     531,143
Equipment finance leases     391,390     417,531     428,659     455,879     473,350
Commercial FHA warehouse lines     8,004     50,198         8,035    
Total commercial loans and leases     1,738,293     1,774,203     1,829,526     1,871,546     1,955,880
Commercial real estate     2,591,664     2,510,472     2,421,505     2,397,113     2,406,845
Construction and land development     299,842     422,253     476,528     474,128     452,593
Residential real estate     380,557     378,657     378,393     378,583     380,583
Consumer     157,218     663,234     746,042     837,092     935,178
Total loans   $ 5,167,574   $ 5,748,819   $ 5,851,994   $ 5,958,462   $ 6,131,079


Loan Quality

Substandard accruing loans decreased $88.7 million to $78.8 million at December 31, 2024, as compared to September 30, 2024. This decrease was the result of a payoff of a $15.4 million relationship and the transfer of $75.1 million of problem loans to nonaccrual status. No significant new substandard loans were identified during the quarter.

Nonperforming loans increased $25.6 million to $140.1 million at December 31, 2024, as compared to September 30, 2024. Charged off nonperforming loans in the fourth quarter of 2024 totaled $48.9 million, partially offsetting the amount of loans transferred to nonaccrual status in the quarter.

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

  December 31,   September 30,   June 30,   March 31,   December 31,
    2024       2024       2024       2024       2023  
Asset Quality                    
Loans 30-89 days past due   $ 36,522     $ 55,329     $ 54,045     $ 58,854     $ 82,778  
Nonperforming loans     140,138       114,556       112,124       104,979       56,351  
Nonperforming assets     148,290       126,771       123,774       116,721       67,701  
Substandard accruing loans     78,800       167,549       135,555       149,049       184,224  
Net charge-offs     102,660       11,379       2,874       4,445       5,117  
Loans 30-89 days past due to total loans     0.71 %     0.96 %     0.92 %     0.99 %     1.35 %
Nonperforming loans to total loans     2.71 %     1.99 %     1.92 %     1.76 %     0.92 %
Nonperforming assets to total assets     1.97 %     1.64 %     1.60 %     1.49 %     0.86 %
Allowance for credit losses to total loans     1.46 %     1.49 %     1.58 %     1.31 %     1.12 %
Allowance for credit losses to nonperforming loans     53.81 %     74.90 %     82.22 %     74.35 %     121.56 %
Net charge-offs to average loans     7.23 %     0.78 %     0.20 %     0.30 %     0.33 %

The Company recognized provision expense for credit losses on loans of $93.5 million in the fourth quarter of 2024, and recorded net loan charge-offs of $102.7 million. Provision expense for credit losses on loans was $5.0 million and $7.0 million in the third quarter of 2024 and fourth quarter of 2023, respectively. For the year ended December 31, 2024, the Company recognized provision expense for credit losses of $129.3 million and recorded net charge-offs of $121.4 million.

The allowance for credit losses on loans totaled $75.4 million at December 31, 2024, compared to $85.8 million at September 30, 2024, and $68.5 million at December 31, 2023. The allowance as a percentage of total loans was 1.46% at December 31, 2024, compared to 1.49% at September 30, 2024, and 1.12% at December 31, 2023.

Deposits

Total deposits were $6.20 billion at December 31, 2024, compared with $6.26 billion at September 30, 2024. Noninterest-bearing deposits increased $4.9 million while interest-bearing deposits decreased $64.5 million. Brokered time deposits represented 4.2% of total deposits at December 31, 2024.

    As of
    December 31,   September 30,   June 30,   March 31,   December 31,
(in thousands)   2024   2024   2024   2024   2023
Deposit Portfolio                    
Noninterest-bearing demand   $ 1,055,564   $ 1,050,617   $ 1,108,521   $ 1,212,382   $ 1,145,395
Interest-bearing:                    
Checking     2,378,256     2,389,970     2,343,533     2,394,163     2,511,840
Money market     1,173,630     1,187,139     1,143,668     1,128,463     1,135,629
Savings     507,305     510,260     538,462     555,552     559,267
Time     822,981     849,413     852,415     845,190     862,865
Brokered time     259,507     269,437     131,424     188,234     94,533
Total deposits   $ 6,197,243   $ 6,256,836   $ 6,118,023   $ 6,323,984   $ 6,309,529


Results of Operations Highlights

Net Interest Income and Margin

During the fourth quarter of 2024, net interest income and net interest margin, on a tax-equivalent basis, increased to $56.3 million and 3.19%, respectively, compared to $55.2 million and 3.10%, respectively, in the third quarter of 2024. The actions taken by the Federal Reserve Bank to lower short term interest rates resulted in lower funding costs for the Company. Net interest income and net interest margin, on a tax-equivalent basis, were $58.3 million and 3.21%, respectively, in the fourth quarter of 2023.

Average interest-earning assets for the fourth quarter of 2024 were $7.01 billion, compared to $7.07 billion for the third quarter of 2024. The yield on interest-earning assets decreased 11 basis points to 5.80% compared to the third quarter of 2024, due in part to interest reversals of $1.5 million on substandard loans transferred to nonaccrual status in the fourth quarter and the impact of interest rate cuts enacted by the Federal Reserve Bank. Interest-earning assets averaged $7.20 billion for the fourth quarter of 2023.

Average loans were $5.65 billion for the fourth quarter of 2024, compared to $5.78 billion for the third quarter of 2024 and $6.20 billion for the fourth quarter of 2023. The yield on loans was 6.04% for the fourth quarter of 2024, compared to 6.15% for the third quarter of 2024 and 6.00% for the fourth quarter of 2023.

Investment securities averaged $1.21 billion for the fourth quarter of 2024, and yielded 4.73%, compared to an average balance and yield of $1.16 billion and 4.71%, respectively, for the third quarter of 2024. Investment securities averaged $883.2 million and yielded 4.16% for the fourth quarter of 2023. The Company purchased additional higher-yielding investments during 2024, resulting in the increased average balance and yield.

Average interest-bearing liabilities for the fourth quarter of 2024 were $5.69 billion, compared to $5.76 billion for the third quarter of 2024. The cost of funds decreased 24 basis points to 3.21% compared to the third quarter of 2024. Interest-bearing liabilities averaged $5.88 billion for the fourth quarter of 2023.

Average interest-bearing deposits were $5.24 billion for the fourth quarter of 2024, compared to $5.13 billion for the third quarter of 2024, and $5.30 billion for the fourth quarter of 2023. Cost of interest-bearing deposits was 3.04% in the fourth quarter of 2024, which represented a 21 basis point decrease from the third quarter of 2024, due to the recent rate cuts enacted by the Federal Reserve Bank.

    For the Three Months Ended
(dollars in thousands)   December 31, 2024   September 30, 2024   December 31, 2023
Interest-earning assets   Average
Balance
  Interest &
Fees
  Yield/
Rate
  Average
Balance
  Interest &
Fees
  Yield/
Rate
  Average
Balance
  Interest &
Fees
  Yield/
Rate
Cash and cash equivalents   $ 96,676   $ 1,101   4.53 %   $ 75,255   $ 1,031   5.45 %   $ 77,363   $ 1,054   5.41 %
Investment securities(1)     1,213,248     14,417   4.73       1,162,751     13,752   4.71       883,153     9,257   4.16  
Loans(1)(2)     5,652,586     85,877   6.04       5,783,408     89,344   6.15       6,196,362     93,757   6.00  
Loans held for sale     12,854     129   4.00       7,505     124   6.57       4,429     81   7.26  
Nonmarketable equity securities     35,171     632   7.15       41,137     788   7.62       41,192     715   6.89  
Total interest-earning assets     7,010,535     102,156   5.80       7,070,056     105,039   5.91       7,202,499     104,864   5.78  
Noninterest-earning assets     669,300             653,279             695,293        
Total assets   $ 7,679,835           $ 7,723,335           $ 7,897,792        
                                     
Interest-Bearing Liabilities                                    
Interest-bearing deposits   $ 5,241,702   $ 40,016   3.04 %   $ 5,132,640   $ 41,970   3.25 %   $ 5,295,296   $ 39,156   2.93 %
Short-term borrowings     31,853     214   2.68       53,577     602   4.47       13,139     15   0.47  
FHLB advances & other borrowings     284,033     2,880   4.03       428,739     4,743   4.40       430,207     4,750   4.38  
Subordinated debt     80,410     1,498   7.41       89,120     1,228   5.48       93,512     1,281   5.43  
Trust preferred debentures     51,132     1,292   10.05       50,990     1,341   10.46       50,541     1,402   11.00  
Total interest-bearing liabilities     5,689,130     45,900   3.21       5,755,066     49,884   3.45       5,882,695     46,604   3.14  
Noninterest-bearing deposits     1,066,520             1,075,712             1,142,062        
Other noninterest-bearing liabilities     117,478             97,235             108,245        
Shareholders’ equity     806,707             795,322             764,790        
Total liabilities and shareholder’s equity   $ 7,679,835           $ 7,723,335           $ 7,897,792        
                                     
Net Interest Margin       $ 56,256   3.19 %       $ 55,155   3.10 %       $ 58,260   3.21 %
                                     
Cost of Deposits           2.52 %           2.69 %           2.41 %

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

For the year ended December 31, 2024, net interest income, on a tax-equivalent basis, decreased to $222.8 million, with a tax-equivalent net interest margin of 3.15%, compared to net interest income, on a tax-equivalent basis, of $236.8 million, and a tax-equivalent net interest margin of 3.26% for the year ended December 31, 2023.

The yield on earning assets increased 26 basis points to 5.83% for the year ended December 31, 2024 compared to the prior year. However, the cost of interest-bearing liabilities increased at a faster rate during this period, increasing 44 basis points to 3.31% for the year ended December 31, 2024.

    For the Years Ended
(dollars in thousands)   December 31, 2024   December 31, 2023
Interest-earning assets   Average
Balance
  Interest &
Fees
  Yield/Rate   Average
Balance
  Interest &
Fees
  Yield/Rate
Cash and cash equivalents   $ 76,675   $ 3,958   5.16 %   $ 77,046   $ 3,922   5.09 %
Investment securities(1)     1,116,186     51,682   4.63       854,576     30,361   3.55  
Loans(1)(2)     5,840,216     353,447   6.05       6,292,260     367,762   5.84  
Loans held for sale     7,185     392   5.45       4,034     260   6.45  
Nonmarketable equity securities     39,108     3,070   7.85       43,318     2,819   6.51  
Total interest-earning assets     7,079,370     412,549   5.83       7,271,234     405,124   5.57  
Noninterest-earning assets     665,308             635,490        
Total assets   $ 7,744,678           $ 7,906,724        
                         
Interest-Bearing Liabilities                        
Interest-bearing deposits   $ 5,167,787   $ 160,676   3.11 %   $ 5,241,723   $ 136,947   2.61 %
Short-term borrowings     45,251     1,960   4.33       23,406     68   0.29  
FHLB advances & other borrowings     381,525     16,495   4.32       460,781     20,709   4.49  
Subordinated debt     89,028     5,271   5.92       95,986     5,266   5.49  
Trust preferred debentures     50,938     5,380   10.56       50,298     5,289   10.52  
Total interest-bearing liabilities     5,734,529     189,782   3.31       5,872,194     168,279   2.87  
Noninterest-bearing deposits     1,106,388             1,173,873        
Other noninterest-bearing liabilities     109,777             90,562        
Shareholders’ equity     793,984             770,095        
Total liabilities and shareholders’ equity   $ 7,744,678           $ 7,906,724        
                         
Net Interest Margin       $ 222,767   3.15 %       $ 236,845   3.26 %
                         
Cost of Deposits           2.56 %           2.13 %

(1) Interest income and average rates for tax-exempt loans and investment securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.8 million for each of the years ended December 31, 2024 and 2023, respectively.
(2) Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

Noninterest Income

Noninterest income was $19.6 million for the fourth quarter of 2024, compared to $19.3 million for the third quarter of 2024. Noninterest income for the fourth quarter of 2023 was $20.5 million, and included incremental servicing revenues of $2.2 million and $1.6 million related to our commercial FHA servicing portfolio and the Greensky portfolio, respectively. Also included was a $1.1 million one-time gain from the sale of Visa B stock, offset by $2.9 million of losses on the sale of investment securities. Excluding these transactions, noninterest income for the fourth quarter of 2024, the third quarter of 2024, and the fourth quarter of 2023 was $19.6 million, $19.3 million, and $18.5 million, respectively.

    For the Three Months Ended   For the Years Ended
    December 31,   September 30,   December 31,   December 31,   December 31,
(in thousands)     2024       2024       2023       2024       2023  
Noninterest income                    
Wealth management revenue   $ 7,660     $ 7,104     $ 6,604     $ 28,697     $ 25,572  
Service charges on deposit accounts     3,506       3,411       3,246       13,154       11,990  
Interchange revenue     3,528       3,506       3,585       13,955       14,302  
Residential mortgage banking revenue     637       697       451       2,418       1,903  
Income on company-owned life insurance     1,975       1,982       1,753       7,683       4,439  
Loss on sales of investment securities, net     (34 )     (44 )     (2,894 )     (230 )     (9,372 )
Other income     2,289       2,683       7,768       12,066       17,756  
Total noninterest income   $ 19,561     $ 19,339     $ 20,513     $ 77,743     $ 66,590  

Wealth management revenue totaled $7.7 million in the fourth quarter of 2024, an increase of $0.6 million, or 7.8%, as compared to the third quarter of 2024, due to increases in trust and estate fees. Assets under administration were $4.15 billion at December 31, 2024 compared to $4.27 billion and $3.73 billion at September 30, 2024 and December 31, 2023, respectively.

Income on company-owned life insurance income totaled $2.0 million, $2.0 million and $1.8 million for the fourth quarter of 2024, the third quarter of 2024, and the fourth quarter of 2023, respectively.

On a full year basis, noninterest income increased $11.2 million, or 16.7%. Wealth management revenue increased $3.1 million due to increases in assets under administration and estate fees. Income on company-owned life insurance increased $3.2 million. The Company surrendered certain low-yielding life insurance policies and purchased additional policies in the third quarter of 2023, resulting in the increase in revenue. In 2024, we recognized net losses on the sales of investment securities of $0.2 million compared to $9.4 million in 2023, as we took advantage of certain market conditions last year to reposition out of lower yielding securities into other structures, which resulted in improved overall margin, liquidity and capital allocations. Several one-time transactions were recognized in other noninterest income in 2023, including incremental servicing revenues of $2.2 million and $1.6 million related to our commercial FHA servicing portfolio and the Greensky portfolio, respectively. In addition, the Company recognized a $1.1 million one-time gain from the sale of Visa B stock, a gain of $0.7 million on the redemption of subordinated debt and a gain of $0.8 million on the sale of OREO.

Noninterest Expense

Noninterest expense was $54.2 million in the fourth quarter of 2024, compared to $46.7 million in the third quarter of 2024 and $44.5 million in the fourth quarter of 2023. Noninterest expense for the fourth quarter of 2024 included $7.6 million of impairment on equipment financing operating lease collateral and surrendered equipment, and $2.1 million of impairment on an OREO property. Excluding these items, noninterest expense for the fourth quarter of 2024, the third quarter of 2024, and the fourth quarter of 2023 was $44.5 million, $46.7 million, and $44.5 million, respectively.

On a full year basis, in addition to the fourth quarter expenses previously described, costs related to upgrades to our ATM fleet, loan collection expenses, and settlement of various lawsuits drove the increase in noninterest expense as compared to the prior year.

The efficiency ratio for the quarter ended December 31, 2024 was 71.42% compared to 62.76% for the quarter ended September 30, 2024, and 55.22% for the fourth quarter of 2023.

    For the Three Months Ended   For the Years Ended
    December 31,   September 30,   December 31,   December 31,   December 31,
(in thousands)   2024   2024   2023   2024   2023
Noninterest expense                    
Salaries and employee benefits   $ 22,283   $ 24,382   $ 24,031   $ 93,639   $ 93,438
Occupancy and equipment     4,286     4,393     3,934     16,785     15,986
Data processing     7,278     6,955     6,963     28,160     26,286
Professional services     1,580     1,744     2,072     7,822     7,049
Amortization of intangible assets     952     951     1,130     4,008     4,758
Impairment on leased assets and surrendered assets     7,601             7,601    
FDIC insurance     1,383     1,402     1,147     5,278     4,779
Other expense     8,820     6,906     5,211     29,969     21,606
Total noninterest expense   $ 54,183   $ 46,733   $ 44,488   $ 193,262   $ 173,902


Income Tax Expense

Income tax benefit was $19.6 million for the fourth quarter of 2024, compared to expenses of $4.1 million for the third quarter of 2024 and $6.4 million for the fourth quarter of 2023. The resulting effective tax rates were 27.2%, 18.1% and 23.7%, respectively.

Capital

At December 31, 2024, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

  As of December 31, 2024
  Midland States Bank   Midland States Bancorp, Inc.   Minimum Regulatory Requirements(2)
Total capital to risk-weighted assets 12.75%   13.38%   10.50%
Tier 1 capital to risk-weighted assets 11.54%   11.11%   8.50%
Common equity Tier 1 capital to risk-weighted assets 11.54%   8.37%   7.00%
Tier 1 leverage ratio 9.71%   9.36%   4.00%
Tangible common equity to tangible assets(1) N/A   6.14%   N/A

(1) A non-GAAP financial measure. Refer to page 17 for a reconciliation to the comparable GAAP financial measure.
(2) Includes the capital conservation buffer of 2.5%, as applicable.

The impact of rising interest rates on the Company’s investment portfolio and cash flow hedges resulted in an accumulated other comprehensive loss of $82.0 million at December 31, 2024, which reduced tangible book value by $3.81 per share.

Stock Repurchase Program

As previously disclosed, on December 5, 2023, the Company’s board of directors authorized a new share repurchase program, pursuant to which the Company was authorized to repurchase up to $25.0 million of common stock through December 31, 2024. During the fourth quarter of 2024, the Company did not repurchased any shares of its common stock. The program terminated effective December 31, 2024.

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, 2024, the Company had total assets of approximately $7.53 billion, and its Wealth Management Group had assets under administration of approximately $4.15 billion. The Company provides a full range of commercial and consumer banking products and services and business equipment financing, merchant credit card services, trust and investment management, insurance and financial planning services. For additional information, visit https://www.midlandsb.com/ or https://www.linkedin.com/company/midland-states-bank.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP.

These non-GAAP financial measures include “Adjusted Earnings,” “Adjusted Earnings Available to Common Shareholders,” “Adjusted Diluted Earnings Per Common Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Adjusted Pre-Tax, Pre-Provision Earnings,” “Adjusted Pre-Tax, Pre-Provision Return on Average Assets,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share,” “Tangible Book Value Per Share excluding Accumulated Other Comprehensive Income,” and “Return on Average Tangible Common Equity.” The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, the measures in this press release may not be comparable to other similarly titled measures as presented by other companies.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company’s plans, objectives, future performance, goals and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, the impact of inflation, increased deposit volatility and potential regulatory developments; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; changes to U.S. tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “will,” “propose,” “may,” “plan,” “seek,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “continue,” or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

CONTACTS:
Jeffrey G. Ludwig, President and CEO, at [email protected] or (217) 342-7321
Eric T. Lemke, Chief Financial Officer, at [email protected] or (217) 342-7321

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
                     
    As of and for the Three Months Ended   As of and
for the Years Ended
(dollars in thousands, except per share data)    December 31,
2024 
  September 30,
 2024 
  December 31,
 2023 
   December 31,
2024 
   December 31,
2023 
Earnings Summary                    
Net interest income   $ 56,035     $ 54,950     $ 58,077     $ 221,957     $ 236,017  
Provision for credit losses     93,540       5,000       6,950       129,340       21,132  
Noninterest income     19,561       19,339       20,513       77,743       66,590  
Noninterest expense     54,183       46,733       44,488       193,262       173,902  
(Loss) income before income taxes     (72,127 )     22,556       27,152       (22,902 )     107,573  
Income tax (benefit) expense     (19,586 )     4,080       6,441       (9,472 )     32,113  
Net (loss) income     (52,541 )     18,476       20,711       (13,430 )     75,460  
Preferred dividends     2,228       2,229       2,228       8,913       8,913  
Net (loss) income available to common shareholders   $ (54,769 )   $ 16,247     $ 18,483     $ (22,343 )   $ 66,547  
                     
Diluted (loss) earnings per common share   $ (2.52 )   $ 0.74     $ 0.84     $ (1.05 )   $ 2.97  
Weighted average common shares outstanding – diluted     21,753,711       21,678,242       21,822,328       21,737,958       22,124,402  
(Loss) return on average assets   (2.72 )%     0.95 %     1.04 %   (0.17 )%     0.95 %
(Loss) return on average shareholders’ equity   (25.91 )%     9.24 %     10.74 %   (1.69 )%     9.80 %
(Loss) return on average tangible common equity(1)   (41.76 )%     12.69 %     15.41 %   (4.40 )%     13.89 %
Net interest margin     3.19 %     3.10 %     3.21 %     3.15 %     3.26 %
Efficiency ratio(1)     71.42 %     62.76 %     55.22 %     64.31 %     55.91 %
                     
Adjusted Earnings Performance Summary(1)                    
Adjusted (loss) earnings available to common shareholders   $ (54,735 )   $ 16,223     $ 19,793     $ (22,344 )   $ 76,576  
Adjusted diluted (loss) earnings per common share   $ (2.52 )   $ 0.74     $ 0.89     $ (1.05 )   $ 3.42  
Adjusted (loss) return on average assets   (2.72 )%     0.95 %     1.11 %   (0.17 )%     1.08 %
Adjusted (loss) return on average shareholders’ equity   (25.89 )%     9.23 %     11.42 %   (1.69 )%     11.10 %
Adjusted (loss) return on average tangible common equity   (41.74 )%     12.67 %     16.51 %   (4.40 )%     15.98 %
Adjusted pre-tax, pre-provision earnings   $ 21,460     $ 27,523     $ 35,898     $ 106,437     $ 136,303  
Adjusted pre-tax, pre-provision return on average assets     1.11 %     1.42 %     1.80 %     1.37 %     1.72 %
                     
Market Data                    
Book value per share at period end   $ 29.10     $ 33.08     $ 31.61          
Tangible book value per share at period end(1)   $ 21.01     $ 24.90     $ 23.35          
Tangible book value per share excluding accumulated other comprehensive income at period end(1)   $ 24.82     $ 27.74     $ 26.91          
Market price at period end   $ 24.40     $ 22.38     $ 27.56          
Common shares outstanding at period end     21,494,485       21,393,905       21,551,402          
                     
Capital                    
Total capital to risk-weighted assets     13.38 %     13.98 %     13.20 %        
Tier 1 capital to risk-weighted assets     11.11 %     11.65 %     10.91 %        
Common equity tier 1capital to risk-weighted assets     8.37 %     9.00 %     8.40 %        
Tier 1 leverage ratio     9.36 %     10.10 %     9.71 %        
Tangible common equity to tangible assets(1)     6.14 %     7.03 %     6.55 %        
                     
Wealth Management                    
Trust assets under administration   $ 4,153,080     $ 4,268,539     $ 3,733,355          

(1) Non-GAAP financial measures. Refer to pages 15 – 17 for a reconciliation to the comparable GAAP financial measures.

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                     
    As of
    December 31,   September 30,   June 30,   March 31,   December 31,
(in thousands)     2024       2024       2024       2024       2023  
Assets                    
Cash and cash equivalents   $ 114,766     $ 121,873     $ 124,646     $ 167,316     $ 135,061  
Investment securities     1,212,366       1,216,795       1,099,654       1,044,900       920,396  
Loans     5,167,574       5,748,819       5,851,994       5,958,462       6,131,079  
Allowance for credit losses on loans     (75,414 )     (85,804 )     (92,183 )     (78,057 )     (68,502 )
Total loans, net     5,092,160       5,663,015       5,759,811       5,880,405       6,062,577  
Loans held for sale     346,565       8,001       5,555       5,043       3,811  
Premises and equipment, net     85,710       84,672       83,040       81,831       82,814  
Other real estate owned     6,413       8,646       8,304       8,920       9,112  
Loan servicing rights, at lower of cost or fair value     17,842       18,400       18,902       19,577       20,253  
Goodwill     161,904       161,904       161,904       161,904       161,904  
Other intangible assets, net     12,100       13,052       14,003       15,019       16,108  
Company-owned life insurance     211,168       209,193       207,211       205,286       203,485  
Other assets     268,061       245,932       274,244       241,608       251,347  
Total assets   $ 7,529,055     $ 7,751,483     $ 7,757,274     $ 7,831,809     $ 7,866,868  
                     
Liabilities and Shareholders’ Equity                    
Noninterest-bearing demand deposits   $ 1,055,564     $ 1,050,617     $ 1,108,521     $ 1,212,382     $ 1,145,395  
Interest-bearing deposits     5,141,679       5,206,219       5,009,502       5,111,602       5,164,134  
Total deposits     6,197,243       6,256,836       6,118,023       6,323,984       6,309,529  
Short-term borrowings     87,499       13,849       7,208       214,446       34,865  
FHLB advances and other borrowings     258,000       425,000       600,000       255,000       476,000  
Subordinated debt     77,749       82,744       91,656       93,617       93,546  
Trust preferred debentures     51,205       51,058       50,921       50,790       50,616  
Other liabilities     121,246       103,737       103,694       102,966       110,459  
Total liabilities     6,792,942       6,933,224       6,971,502       7,040,803       7,075,015  
Total shareholders’ equity     736,113       818,259       785,772       791,006       791,853  
Total liabilities and shareholders’ equity   $ 7,529,055     $ 7,751,483     $ 7,757,274     $ 7,831,809     $ 7,866,868  

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                     
    For the Three Months Ended   For the Years Ended
    December 31,   September 30,   December 31,   December 31,   December 31,
(in thousands, except per share data)     2024       2024       2023       2024       2023  
Net interest income:                    
Interest income   $ 101,935     $ 104,834     $ 104,681     $ 411,739     $ 404,296  
Interest expense     45,900       49,884       46,604       189,782       168,279  
Net interest income     56,035       54,950       58,077       221,957       236,017  
Provision for credit losses on loans     92,270       5,000       6,950       128,270       21,132  
Provision for credit losses on unfunded commitments     1,270                   1,070        
Total provision for credit losses     93,540       5,000       6,950       129,340       21,132  
Net interest income after provision for credit losses     (37,505 )     49,950       51,127       92,617       214,885  
Noninterest income:                    
Wealth management revenue     7,660       7,104       6,604       28,697       25,572  
Service charges on deposit accounts     3,506       3,411       3,246       13,154       11,990  
Interchange revenue     3,528       3,506       3,585       13,955       14,302  
Residential mortgage banking revenue     637       697       451       2,418       1,903  
Income on company-owned life insurance     1,975       1,982       1,753       7,683       4,439  
Loss on sales of investment securities, net     (34 )     (44 )     (2,894 )     (230 )     (9,372 )
Other income     2,289       2,683       7,768       12,066       17,756  
Total noninterest income     19,561       19,339       20,513       77,743       66,590  
Noninterest expense:                    
Salaries and employee benefits     22,283       24,382       24,031       93,639       93,438  
Occupancy and equipment     4,286       4,393       3,934       16,785       15,986  
Data processing     7,278       6,955       6,963       28,160       26,286  
Professional services     1,580       1,744       2,072       7,822       7,049  
Amortization of intangible assets     952       951       1,130       4,008       4,758  
Impairment on leased assets and surrendered assets     7,601                   7,601        
FDIC insurance     1,383       1,402       1,147       5,278       4,779  
Other expense     8,820       6,906       5,211       29,969       21,606  
Total noninterest expense     54,183       46,733       44,488       193,262       173,902  
(Loss) income before income taxes     (72,127 )     22,556       27,152       (22,902 )     107,573  
Income tax (benefit) expense     (19,586 )     4,080       6,441       (9,472 )     32,113  
Net (loss) income     (52,541 )     18,476       20,711       (13,430 )     75,460  
Preferred stock dividends     2,228       2,229       2,228       8,913       8,913  
Net (loss) income available to common shareholders   $ (54,769 )   $ 16,247     $ 18,483     $ (22,343 )   $ 66,547  
                     
Basic (loss) earnings per common share   $ (2.52 )   $ 0.74     $ 0.84     $ (1.05 )   $ 2.97  
Diluted (loss) earnings per common share   $ (2.52 )   $ 0.74     $ 0.84     $ (1.05 )   $ 2.97  

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
                     
Adjusted Earnings Reconciliation
                     
    For the Three Months Ended   For the Years Ended
(dollars in thousands, except per share data)    December 31,
2024 
  September 30,
2024 
  December 31,
 2023 
  December 31,
 2024 
  December 31,
 2023 
(Loss) income before income tax (benefit) expense – GAAP   $ (72,127 )   $ 22,556     $ 27,152     $ (22,902 )   $ 107,573  
Adjustments to noninterest income:                    
Loss on sales of investment securities, net     34       44       2,894       230       9,372  
(Gain) on sale of Visa B shares                 (1,098 )           (1,098 )
Loss (gain) on repurchase of subordinated debt     13       (77 )           (231 )     (676 )
Total adjustments to noninterest income     47       (33 )     1,796       (1 )     7,598  
Adjusted (loss) earnings pre tax – non-GAAP     (72,080 )     22,523       28,948       (22,903 )     115,171  
Adjusted (loss) earnings tax (benefit) expense     (19,573 )     4,071       6,927       (9,472 )     29,682  
Adjusted (loss) earnings – non-GAAP     (52,507 )     18,452       22,021       (13,431 )     85,489  
Preferred stock dividends     2,228       2,229       2,228       8,913       8,913  
Adjusted (loss) earnings available to common shareholders   $ (54,735 )   $ 16,223     $ 19,793     $ (22,344 )   $ 76,576  
Adjusted diluted (loss) earnings per common share   $ (2.52 )   $ 0.74     $ 0.89     $ (1.05 )   $ 3.42  
Adjusted (loss) return on average assets   (2.72 )%     0.95 %     1.11 %   (0.17 )%     1.08 %
Adjusted (loss) return on average shareholders’ equity   (25.89 )%     9.23 %     11.42 %   (1.69 )%     11.10 %
Adjusted (loss) return on average tangible common equity   (41.74 )%     12.67 %     16.51 %   (4.40 )%     15.98 %
 
                     
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
                     
    For the Three Months Ended   For the Years Ended
    December 31,   September 30,   December 31,   December 31,   December 31,
(dollars in thousands)     2024       2024       2023       2024       2023  
Adjusted (loss) earnings pre tax – non-GAAP   $ (72,080 )   $ 22,523     $ 28,948     $ (22,903 )   $ 115,171  
Provision for credit losses     93,540       5,000       6,950       129,340       21,132  
Adjusted pre-tax, pre-provision earnings – non-GAAP   $ 21,460     $ 27,523     $ 35,898     $ 106,437     $ 136,303  
Adjusted pre-tax, pre-provision return on average assets     1.11 %     1.42 %     1.80 %     1.37 %     1.72 %

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
                     
Efficiency Ratio Reconciliation
                     
    For the Three Months Ended   For the Years Ended
    December 31,   September 30,   December 31,   December 31,   December 31,
(dollars in thousands)     2024       2024       2023       2024       2023  
Noninterest expense – GAAP   $ 54,183     $ 46,733     $ 44,488     $ 193,262     $ 173,902  
                     
Net interest income – GAAP   $ 56,035     $ 54,950     $ 58,077     $ 221,957     $ 236,017  
Effect of tax-exempt income     221       205       183       810       828  
Adjusted net interest income     56,256       55,155       58,260       222,767       236,845  
                     
Noninterest income – GAAP     19,561       19,339       20,513       77,743       66,590  
Loss on sales of investment securities, net     34       44       2,894       230       9,372  
(Gain) on sale of Visa B shares                 (1,098 )           (1,098 )
Loss (gain) on repurchase of subordinated debt     13       (77 )           (231 )     (676 )
Adjusted noninterest income     19,608       19,306       22,309       77,742       74,188  
                     
Adjusted total revenue   $ 75,864     $ 74,461     $ 80,569     $ 300,509     $ 311,033  
                     
Efficiency ratio     71.42 %     62.76 %     55.22 %     64.31 %     55.91 %
                     
Return on Average Tangible Common Equity
                     
    For the Three Months Ended   For the Years Ended
    December 31,   September 30,   December 31,   December 31,   December 31,
(dollars in thousands)     2024       2024       2023       2024       2023  
Net (loss) income available to common shareholders   $ (54,769 )   $ 16,247     $ 18,483     $ (22,343 )   $ 66,547  
                     
Average total shareholders’ equity—GAAP   $ 806,707     $ 795,322     $ 764,790     $ 793,984     $ 770,095  
Adjustments:                    
Preferred Stock     (110,548 )     (110,548 )     (110,548 )     (110,548 )     (110,548 )
Goodwill     (161,904 )     (161,904 )     (161,904 )     (161,904 )     (161,904 )
Other intangible assets, net     (12,551 )     (13,506 )     (16,644 )     (14,011 )     (18,376 )
Average tangible common equity   $ 521,704     $ 509,364     $ 475,694     $ 507,521     $ 479,267  
(Loss) return on average tangible common equity   (41.76)        %     12.69 %     15.41 %   (4.40)        %     13.89 %

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
(dollars in thousands, except per share data)    December 31,
2024 
   September 30,
2024 
  June 30,
 2024 
  March 31,
 2024 
  December 31,
 2023 
Shareholders’ Equity to Tangible Common Equity                
Total shareholders’ equity—GAAP   $ 736,113     $ 818,259     $ 785,772     $ 791,006     $ 791,853  
Adjustments:                    
Preferred Stock     (110,548 )     (110,548 )     (110,548 )     (110,548 )     (110,548 )
Goodwill     (161,904 )     (161,904 )     (161,904 )     (161,904 )     (161,904 )
Other intangible assets, net     (12,100 )     (13,052 )     (14,003 )     (15,019 )     (16,108 )
Tangible common equity     451,561       532,755       499,317       503,535       503,293  
                     
Less: Accumulated other comprehensive loss (AOCI)     (81,960 )     (60,640 )     (82,581 )     (81,419 )     (76,753 )
Tangible common equity excluding AOCI   $ 533,521     $ 593,395     $ 581,898     $ 584,954     $ 580,046  
                     
Total Assets to Tangible Assets:                    
Total assets—GAAP   $ 7,529,055     $ 7,751,483     $ 7,757,274     $ 7,831,809     $ 7,866,868  
Adjustments:                    
Goodwill     (161,904 )     (161,904 )     (161,904 )     (161,904 )     (161,904 )
Other intangible assets, net     (12,100 )     (13,052 )     (14,003 )     (15,019 )     (16,108 )
Tangible assets   $ 7,355,051     $ 7,576,527     $ 7,581,367     $ 7,654,886     $ 7,688,856  
                     
Common Shares Outstanding     21,494,485       21,393,905       21,377,215       21,485,231       21,551,402  
                     
Tangible Common Equity to Tangible Assets     6.14 %     7.03 %     6.59 %     6.58 %     6.55 %
Tangible Book Value Per Share   $ 21.01     $ 24.90     $ 23.36     $ 23.44     $ 23.35  
Tangible Book Value Per Share, excluding AOCI   $ 24.82     $ 27.74     $ 27.22     $ 27.23     $ 26.91  

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