Midland States Bancorp, Inc. (NASDAQ:MSBI) Q2 2020 Earnings Conference Call - Final Transcript

Jul 24, 2020 • 08:30 am ET


Midland States Bancorp, Inc. (NASDAQ:MSBI) Q2 2020 Earnings Conference Call - Final Transcript


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Good morning, ladies and gentlemen and welcome to the Q2 2020 Midland States Bancorp Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to your host, Tony Rossi from Financial Profiles.

Tony Rossi

Thank you. Whitney.

Good morning, everyone, and thank you for joining us today for the Midland States Bancorp second quarter 2020 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 Webcasts and Presentations page of Midland's Investor Relations website to download a copy of the presentation.

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, including those related to the impact of the COVID-19 pandemic. 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.

As we always do on these calls, I'm going to start on page 3. But I want to go somewhat out of order for a minute because of the heightened focus on asset quality and loan loss reserves during this pandemic. The good news is that for now we are just not seeing the type of asset quality deterioration that some might have expected, and our diversified revenue helped maintain total revenue. The bad news, of quarters, is that we are not fully through the pandemic, and sitting here today, it is hard to know if things are going to get better or worse in the coming months.

Also, given that some states are now delaying or canceling the reopening plans, we believe it is prudent to take a more cautious view of our seasonal modeling. In broad terms, it now appears that a slower recovery is far more likely than a quick V-shape return to more normalized economic activity. Principally based on that more cautious view, we have increased our reserves by 22 basis points to 1.21% of total loans, excluding loans with government guarantees or other credit enhancements such as our GreenSky portfolio. We will address these topics in greater detail as we go through the deck, including providing a good look at