Midland States Bancorp, Inc. (NASDAQ:MSBI) Q4 2019 Earnings Conference Call - Final Transcript

Jan 24, 2020 • 08:30 am ET


Midland States Bancorp, Inc. (NASDAQ:MSBI) Q4 2019 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter 2019 Midland States Bancorp Incorporated Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Mr. Tony Rossi of Financial Profiles. Sir, you may begin.

Tony Rossi

Thank you, Crystal. Good morning, everyone and thank you for joining us today for the Midland States Bancorp fourth quarter 2019 earnings call. Joining us from Midland's management team are Jeff Ludwig, President and Chief Executive Officer and Eric Lemke, Chief Financial Officer. We will be using a slide presentation as part of our discussion this morning. If you've not done so already, please visit the Webcast and Presentations page of Midland's Investor Relations website to download a copy of the presentation. The management team will discuss the fourth quarter results and then we will open up the call for questions.

Before we begin, I'd like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial condition of Midland States Bancorp that involve risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the company's website. The company disclaims any obligation to update any forward-looking statements made during the call. Additionally, management may refer to non-GAAP measures, which are intended to supplement, but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today as well as the reconciliation of the GAAP to non-GAAP measures.

And with that, I'd like to turn the call over to Jeff. Jeff?

Jeffrey G. Ludwig

Good morning everyone. Welcome to the Midland States earnings call.

I'm going to start on slide three with the highlights of the fourth quarter. We generated $0.51 in earnings per share, which included a $1.6 million valuation adjustment to mortgage servicing rights in our commercial FHA business, which impacted earnings per share by $0.05. During the fourth quarter, we also recorded integration and acquisition expense, a loss on the repurchase of subordinated debt and a net gain on security sales. On an adjusted basis, we had $0.64 in earnings per share.

We ended the year with a strong quarter in business development. Our total loans increased at an annualized rate of 6.7%. We had another good quarter of commercial loan growth, driven primarily by our equipment finance business, which continues to produce loans and leases with the more attractive risk adjusted yields that we are targeting. Over the course of 2019, we successfully executed on our balance sheet management strategies. Towards that end, this put us in a favorable position from a liquidity