Midland States Sees $74MM Increase in EF Balance in Q2/2019



Midland States Bancorp reported net income of $16.4 million, or $0.67 diluted earnings per share, for the second quarter of 2019.

This compares to net income of $14.0 million, or $0.57 diluted earnings per share, for the first quarter of 2019, and net income of $12.8 million, or $0.52 diluted earnings per share, for the second quarter of 2018, which included $2.0 million in integration and acquisition expenses.

Jeffrey G. Ludwig, Midland States president and CEO, said, “We continue to execute well on our strategic priorities and deliver solid financial results for our shareholders. We had another strong quarter of production in our equipment finance business, generated significant non-interest income from a diverse range of business lines, and continued to drive improved efficiencies throughout our organization. We were very pleased to complete our acquisition of HomeStar Financial Group in just over three months after announcing the transaction. With its leading market position in Kankakee, Illinois, attractive deposit base, excess liquidity, and strong team of community bankers, we believe that HomeStar adds significant value to our franchise.”

Net interest income for the second quarter of 2019 was $46.1 million, an increase of 1.0% from $45.6 million for the first quarter of 2019. Excluding accretion income, net interest income decreased $0.4 million from the prior quarter. Accretion income associated with purchased loan portfolios totaled $3.4 million for the second quarter of 2019, compared with $2.5 million for the first quarter of 2019.
Relative to the second quarter of 2018, net interest income decreased $2.2 million, or 4.6%. Accretion income for the second quarter of 2018 was $5.5 million. Excluding the impact of accretion income, net interest income was relatively unchanged compared to the second quarter of 2018.

Total loans outstanding were $4.07 billion at June 30, 2019, compared with $4.09 billion at March 31, 2019 and $4.10 billion at June 30, 2018. The decrease in total loans from March 31, 2019 was primarily attributable to declines in the commercial real estate and residential real estate portfolios, which was partially offset by organic growth in commercial loans and leases and construction and land development loans.

Equipment finance balances increased $74.0 million from March 31, 2019, which are booked within the commercial loans and leases portfolio, reflecting management’s efforts to grow the equipment finance business.

The decrease in total loans from June 30, 2018 was primarily attributable to a decline in commercial real estate and residential real estate loans, partially offset by organic growth in commercial loans and leases and consumer loans.

Nonperforming loans totaled $50.7 million, or 1.24% of total loans, at June 30, 2019, compared with $49.3 million, or 1.20% of total loans, at March 31, 2019, and $28.3 million, or 0.69% of total loans, at June 30, 2018.

Net charge-offs for the second quarter of 2019 were $1.2 million, or 0.12% of average loans on an annualized basis.

The Company recorded a provision for loan losses of $4.1 million for the second quarter of 2019, which included a specific reserve for one credit placed on non-accrual during the prior quarter. The Company’s allowance for loan losses was 0.64% of total loans and 51.2% of nonperforming loans at June 30, 2019, compared with 0.56% of total loans and 46.9% of nonperforming loans at March 31, 2019. Fair market value discounts recorded in connection with acquired loan portfolios represented 0.39% of total loans at June 30, 2019, compared with 0.47% of total loans at March 31, 2019.

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