MSBI - Earnings call transcript Q2 2021 | Midland States Bancorp, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Second Quarter Midland States Bancorp, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. to conference like host, to now Mr. would turn over the your I Rossi. Tony Please go ahead.

Tony Rossi

Good and second morning joining Deb. you, Thank everyone for call. Midland earnings us thank the States XXXX Bancorp quarter today for you

Joining us Jeff and Financial Executive Chief Chief team and Lemke, Ludwig, Eric President Officer; Officer. Midland’s from management are

morning. be using as We slide will part of presentation a our discussion this

copy page site so If please visit a Presentations not to and Web Relations done already, the at have Investor you Webcast Midland’s presentation. of download the

Before materially The I’d conference to the disclaims different actual cause discussed you call factors These pandemic. related any condition that during are available remind contains company’s and those the from forward-looking to statements including Bancorp of forward-looking to expressed on SEC which performance the future COVID-XX to we are such Various respect by made call. involve or impact filings, like factors company to the results begin, any site. uncertainties, be obligation implied the that risks Midland update States could forward-looking statements. this any statements future in company’s and financial the with results of Web

discussed be to And the as over well information reconciliation GAAP as for intended The the quantitative to to comparable I’d directly that, with measures. today, the management on like contains to which Jeff? financial release Additionally, not the the substitute may other non-GAAP to to available non-GAAP measures. and measures Jeff. the press supplement call refer are of most but GAAP Web site turn

Jeff Ludwig

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

on the Slide start with X going of the second quarter. We’re highlights to

of we over the we basis, and more resources On level of mix see that consistent a of to GAAP per focus improving income we revenue on more million implemented targeted the attention diluted strategic or share. through past $XX.X profitability $X.XX return generated a higher creating our net to years We businesses, and couple of higher initiatives the efficiencies. continue

enabled in seeing of for quarterly XX.X% highest and and company. returns that transactions, As month, level These which the our second we to last earnings quarter improved results, coming treatment were higher announced stemming equity on to improvement has we include an above equity prior in levels to items the quarter, coming tax tax positively a benefit million diluted settlement or advance negatively. prior a both When in a the tax these goal prepayment of on generated. the the also from incurred the $XX.X the are per us pursuing significantly tangible with related represents number impacted of our of than of a history profitability progress had of issue, of historically FDIC-assisted The the fees which had have and we return both return benefit, professional our at in adjusted we share, FHLB gains significant our items on still excluded, make strengthen we and in XX.X% that earnings $X.XX We're the penalty. quarter common on ratios. capital at

the now above back second basis During tangible increased ratio common quarter, XX points and X%. our equity is

improving, excess continue have demand liquidity. we is to While loan significant

our impact seeing higher flexibility points. an million our sub our approximately costs offset and of GreenSky seeing reduce cost interest see rate are which utilize And margin and real million we funding X.XX% quality that portfolios, expense positively X.XX%. a we took excess finance, portion to eliminate will debt funding real on aggregate, the are construction continue to long-term improving, loans our of million had that have and opportunity partnership to commercial steadily high In conditions net most higher give positive other quarter. the elimination has equipment of economic we during of basis us this we activity. some demand, XX advance an impact a interest add to second annually by production interest higher to $X.X high With the where of in of of residential the levels estate, of including interest use loans FHLB a the adjusted estate of risk our sources, rate So portfolio, attractive notably continue refinancing we runoff to of the $XX liquidity with to level loan yields an XX

rate the increased Excluding PPP X%, loans loans end and at an which our credit, annualized of total our range. of at high FHA commercial was of warehouse lines expected

level a that seeing opening issuance, debit the driving A for with card of in economic fees. revenue. issuing XX% The cards we income, debit accounted of prior general strong are our combined quarter nearly online are increase higher through activity, portion which is is account in to over total and the interchange non-interest of increased increase increase attributed increase our platform. in a We more XX% the

of the the per last XXXX, about typically revenue interchange our During quarter. normalized million range $X is year, in

million we we During is strong and is million in enhancing the return run which year revenue. incremental than quarter that areas a capabilities. a one have interchange XXXX, the in where of investment expanding are rate second the will just our per digital made result seeing more This $X we in banking had X.X on in revenue, of

revenues impact than their to we to wealth our business as of Our under development quarter. and the revenue non-interest largely revenue, strong in further contribution due acquisition ATG month by XX% administration acquisition Trust $X.X positively one June. Company also should wealth received which from assets quarter leveraging management enhance also completing sources increase This increase income ATG our efforts. $X was million And management to our we was the the after referral a management the our wealth for get full in billion, to and more begin beginning brought the impacted this of

the an in efforts on had items Moving our line loans these we've impact to provided Slide X, second update quarter. that and the various PPP on

As $XXX the end PPP million We to in $XX our about $X down continued, quarter, from the total quarter. second of during loans our quarter. a that balances forgiveness million the recognized we the declined the recognize in second at million bit fees million process brought by prior $X.X the and

of June As X.X XX, we recognized. be had in fees to still million

Turning we’ll on provide X, Slide to an deferrals. our loan update

number seen to able At partial have borrowers XX% at June of X.X% form payment, payments of additional performance. we as get a scheduled hotel recall, XXX or the year. prior may quarter the bit deferred Most making point, loans other of of with in details in to those you quarter. through certain three-month increase borrowers second the the end help on at deferrals to significant loans. the going deferrals XX% of loan their a payments. of partial last their turn soft total up As with decrease had granted to from just of some quarter make remaining resume expired, an a provide we XX, deferrals additional while of part over total we resulted have this interest-only call in I'm the million to And borrowers some been have or XX% now This deferrals Eric

Eric Lemke

Thanks, portfolio. a we'll our Jeff, at Slide X, again take everyone. look starting and loan and I'm good on morning,

higher from in balances was to and the real Our commercial the in we PPP $XX construction from due commercial decline a production increases and are these the the warehouse total million resulting This residential $XX activity, estate offset FHA loans period seeing million estate due forgiveness the the portfolios to This loans runoff quarter. the portfolio refinancing continued decreased loan areas in real end in level of the end of on lines. equipment during financing, of quarter.

portfolio GreenSky portfolio. to the mentioned, At to runoff million. in offset residential Jeff real down balances PPP help As June loans through added the the $XXX we to estate our XX, were partnership of our consumer

commercial an equipment and or lines, $XX provided growth warehouse we've on credit quarter, portfolio. update our rate On for Excluding finance X%. by X.X% PPP Slide million, total X, annualized increased loans an the of loans

end the the XX% XX, million deferrals, of As we represents quarter. last of $XX June which of since had decline the of

see deferrals XX% improve. as borrowers partial deferrals payment. a we return others deferral of deferrals, make form to partial as decline $XX had remaining Along well seen XX, and from payments, the loan down other of steady ground the the a as at X, we're form and in payment, some the recovery payment, of making trends on in of of is borrowers this We've of making Slide to prior prior And borrowers transportation industry borrowers were million to partial the At the deferral end schedule the XX% portfolio, in business hotel/motel XX% more of a now the with provided travel that from recreational of quarter. percentage continue some We our starting which higher XX% remain June of On transit in an making on or XX, are portfolio up payment. our of end we've seeing this the also at in and quarter. a overview portfolio. interest-only June

on GreenSky. extremely Slide loans has at an that only June $XXX,XXX XX, update portfolio deferred relationship Looking This provided we X, consumer we've the through well we the the just performed with throughout points just our had have also this one-tenth loans, At to pandemic. loan total basis of of which loans. better the than we've delinquency total has the historical in range of seen that portfolio. rate represents even in X% portfolio, to The declined XX portfolio

escrow escrow the the in at to And that our account $XX.X is any account principal of the performance, cover to the increased to second balances. addition quarter. deficiency million In end strong available

commercial X.X% prior decline latest at XX, Slide spend FHA of stimulus to in deposits million, as the decrease quarter. decreased to $XXX a Turning payments. servicing deposit attributable largely outflows or consumers the deposits. deposits was This our round we'll look retail Total and from

Looking cost have quarter, opportunities to additional reprice to third deposits. will time we ahead the higher

a $XXX have average X.XX%. rate CDs weighted at maturing of of million We

should renew deposit a As we see costs. these our deposits current impact rates, positive at on

net and the Looking trends at we'll margin. walk Slide XX, interest income in our through

decreased the in unfavorable back the X.X% of quarter. on recovery the due that quarter, previously from assets fees, prior the we mix income first prepayment interest net lower a loan primarily in interest charged-off and Our earning recognized an of to shift

balances. interest would added portfolio reduce we our excess we the last to our As cash earnings on call, we do net and to indicated help support income investment

from As by million investment a $XX the the quarter. portfolio prior end of result, the increased

identified a securities and repositioning we prepay that in investment portfolio mortgage-backed We also the to potential did had few obligations thought term. mortgage the as in little we short collateralized a the

we in those and those in time felt proceeds reinvested at good harvested market. the the securities what a we we So was gains had

level well as declined earning in the reflects interest we mix subordinated a equivalents cash investment prepayment of to shift unfavorable deploying FHLB quarter, and to advance the as margin debt. increase accretion of and basis in of our Excluding for for higher shift of prior income, the mix cash it primarily the The that most the portfolio XX held our due net points, assets. of the redemption

interest low sources starting end the the excluding X.XX%. the net in the impact we'll that third of we quarter. the and in this our the margin We income, elimination believe margin the at seen benefit higher point, Our was for interest see of of funding have quarter, PPP net cost

we see interest benefit in in positioned year second the providing increase some also net So we're the believe over the well additional margin to loan with growth, half margin. to an our of expansion

in contribution primarily second look prior under business. XX, our had the Trust XX.X% resulted from organic Slide We than increased basis, quarter. assets compared On rights administration, our increase of impairments assets both lower XX.X% non-interest on in the commercial quarter. the wealth $XXX,XXX to to XX, to second in increase an in million. million income. quarters, quarter quarter, trends our in management by in $XXX look Slide The in We of we'll at about revenue million under income the assets in We servicing the recorded $XX.X approximately at the prior we'll with and mortgage non-interest prior the the up quarter. our administration $XXX acquisition ATG On impairment one-month higher administration under ATG Company. a due the had a Turning

and Excluding and real interchange the prior impairments, non-interest owned. of XX.X% due gains as investment these quarter, to the income higher well sale primarily securities our as levels estate wealth management other increased revenue, on from of

entered as mortgage quarter, banking fairly refinancing purchase with stronger a was period revenue higher market. residential we Our housing the in volumes by as prior decline held offset the seasonally steady production the for

of in FHLB expense. $X.X our Turning and tax as to million we'll acquisition million in a look XX, professional a of penalty our quarter included prepayment Slide non-interest advance. is million $X.X take the at for classified second The the incurred non-interest integration settlement, fees part under expense $XX.X expense, and which

small acquisition $X.X incurred in in was and Excluding and driven amount benefits our expense we've increase resulting non-interest that increased by an amounts incentive the the compensation. integration these higher of expense by expense salaries This and quarter, primarily million. from

with expect would the the rate million addition forward, our of year. Going Trust operating million to be $XX during of the run $XX half and we expense ATG Company, between second

to fully by integrate year, XXXX. that business, that we the later in realize and some to enhancements be some expenses end we ATG end as eliminate see low closer additional from costs from would rollouts and efficiency range However, expect also the the technology of of

asset quality Turning trends. to look Slide at XX, we'll our

to due portfolio. three increased non-performing the the the $X.X loans of of hotel/motel our addition primarily quarter, loans million from Our from end prior

largely we are taking All pick longer prolonged loans to period non-accrual deterioration to of the for the we of OREO for in reserve specific a travelers With the collateralized loans Chicago the Chicago, of during million on collateral Two cater value. that number business able and to minimal. travel these up to a We on are these to reflect believe recognized of small business borrowers. loan put of these hotels the the loss recovery $X.X We loans the due properties gain. quarter area. operate well second is that in borrowers for third were sell a potential

same the specific increase X.X despite due assets loss. our losses or We charge-offs in non-performing commercial XX net buckets for And negative recorded relationship various in to had that decline the X loans of in end result, the first million the reserve make loans, zero which We non-performing by show ACL non-accrual available to losses economic provision the million terms also of As and in of increased changes OREO. a negative credit June only $XXX,XXX. the on portfolio was half million against and placed Approximately was held charge-offs credit driven by in was in one on points during a primarily improved in ACL quarter the reserves. $XXX,XXX that to XX, due this quarter. provision, the our provision $X.X approximately quarter, for securities, our mix, we related our on of the those the of reported basis average for At of we improvement credit components losses unfunded a up commitments favorable forecasts allocated Slide forecasts. sale for economic a our of general in of change XX% quarter. XX, from On prior to provision

charge-offs on portfolio. the Our in ACL million, portfolio economic ACL specific improvement a combination and show reserves, on we driven XX, $X was And of forecasts. by favorable changes Slide which by out in decreased broken our

held. the where loans pandemic, reserve that, in are The We turn with quarter call continue other the And estate over I'll strong. to Jeff. portfolios back hotel/motel most the real financing and Jeff? to commercial keep portfolio impacted remained elevated by this portfolios trends credit came particularly where the reserves in equipment release

Jeff Ludwig

tailwind XX% and our line of credit. mix variant. for This of XX% in this should And second to decline commitments, we warehouse to should range. demand. return in on XX lines Thanks, improving, of of assets few related We'll to stood We increased the in level profitability. loan the loans, a a XX% expect earning trend positioned FHA had One and to higher loan credit a lines. in reductions future conditions on that At normalized commercial the be are the increases a believe rate Economic wrap $X.XX growth shift the problem continued to strong utilization a in growth, outlook. a with to we The with Eric. second up very the our we Delta further utilization to any setbacks steadily a half Slide will historical are quarter, a we year. on end of see of rates we emergence more deliver and believe potential favorable the loan average borrowing continue commercial excluding billion of at comments compared lead well deferrals

to As $XXX more utilization normalized of this recover, loans our could level, continues $XXX to million return add a and the economy our independent production. of rates balance to the million loan to another sheet, new

the bankers of more the We're reflects St. year, several past to development about there's us current finance. starting at it real as the of loan the at Northern we've seeing, of demand the by to to in Overall, also XX% in end slow lot made the loan Louis. the market areas bankers and specialty have as Looking group, Illinois. size in recently, including within activity finance level that bank made after agribusiness, additions pipeline was of talked Louis, the a We're estate, seasonally other being given is added in of a pipeline is up. million specialty the This group. over areas a about increase opportunity share. the equipment commercial first seeing bank are we And new than More grow start some higher SBA, contributions opportunities higher that finance to pick the we have $XXX and previously months. quarter. our about business for we in market, production the the growth community high in the well St. added We've our new

new experienced in have larger, productive we in added more a build to and Louis, a have St. president commercial order bankers We team. market

that organic success that think are initial It's having still positive. Louis this can market, in seeing future. drive our wealth and we in more result, of but And we in a more early cross selling St. our a higher services. results results opportunities initiative, building in our the the in help presence we growth lending management As are are level

seeing the of benefits improved are We investments. our efficiencies technology from

leverage on this set, down improving capital expense On We us of And indicated increased We've that we technology. costs help and bottom profitability scheduled to business since earlier. later other optimizing higher the and the out internally that move our in our the that final have note, a of provided take continue towards some on year will goals to our priority range Eric capital building of significant targeted we rollouts additional some the model, ratios. and operations focus ratios. be we reflected our XXXX, progress would our level while which is beginning made

we have a an improve at internal can It's makes many our resume that market performance, are to still low While point growth initiatives rate in believe we to consolidation where small now consider active for working we sense And it M&A we where M&A. are banks opportunities. on be is further we low to environment a for pushing more environment, us. we participant selling. The want the evaluating

present So we Operator, we that momentum call. enhance of that, small could not where franchise we'll our have. we shareholders. to there would answer scale open questions the positive the happy are economic and value for and opportunities you of on have a executing might believe our disrupt transactions compelling a With please strategic rationale, to generate open trend, are any built, the return and our that be good

Operator

Instructions]. [Operator

of first Perito from KBW. Michael question the line comes with Your

Michael Perito

morning. Good Hi.

Jeff Ludwig

Mike. morning, Good

Michael Perito

wanted start clarify me. to just comments for few I -- the the on questions guide. there. I to A expense wanted just the

million in like guiding capturing quarter, So where you like to you XX the more that third to a were But expect that guess higher exit the $XX million be is quarter what than I could higher be which Is XX the million expenses sounds million. the comments for little sounds -- million, last by to is it of number. prepared accurately? between the the the that and remarks to closer year, XX XX

Jeff Ludwig

exactly how see it of right Yes, now. think that's I we sort

Michael Perito

$XX just on to as should invest thinking of do growth, things? about or far as you rate be with million run the growth you it that continue decent to Okay. What's number? add how a XX rate, see we And as do you docket think what those of that lenders point, and I that the you guys today Jeff, plus guess off of, term longer million look on and have kind minus

Eric Lemke

done were adding this And lot of the we've year Yes. a trading we’re sort is bankers what of up.

adding of new not sort net So bankers. we're

our were than So we staff ago. a productive in commercial a more we're lot today year

a think better I frankly, less bankers. bankers lineup have We of and

expense And we've that. we necessarily than a hold of got -- positive. think still that is So think we've we in increase haven't wouldn't of thinking we in think expenses added be new I so a as sort which still It’s think line, X% added these forward. bankers, of something as expenses I real less sort forward, -- I I going

Michael Perito

yet Got the longer there what it really of three And -- mentioned or reserves? will more amount could it give just is, wondering could like a been of still sounds just the that what's bit a charged take you how wrong, the wondering recover kind I guys recovery I'm a that on little That's today, confidence like was will little if correct decent -- terms you piece, were it. kind helpful. they in if expand of hotel/motel guys just the you off what think properties a sounded on further? that credit time, exposure but maybe hasn't just any bit like on then can more me And is color if have of or performance you just you but period. or I

Jeff Ludwig

in sort they They're rates their lagging of are Yes. market, business that need cash which more where the still travel to flow. be occupancy

in good We're positions. we as good feel two collateral them of we pretty So said, about.

The aside not specific X.X million on about put we and reserves. much so did third one, maybe

we're we appropriately go off future. in We but anything charged reserved where feel haven't handle these to at point, the properties this that

Michael Perito

that specific $X.X the on million, is the So reserve one property?

Jeff Ludwig

Yes.

Michael Perito

Jeff, property, credit or of what's of the size that that And rather?

Jeff Ludwig

balance. a $X million, loan $X probably It's million

Michael Perito

it. Got

continue was curious -- terms end just if was and growth I in the they And prepared the were additional the I and pipeline then you helpful the to second quarter. side, figure comments better utilization that FHA for the of just just helpful. upside. a is all you moving of kind if the And and it something then could comment this up kind expect line appetite Okay, on kind was the of forward? also that we elevated if should be remarks could to back the lending, commercial and it of the to level consumer on in for set at similarly of potential could lines, tailwind contribute loan what that a or and is did wondering normalize us to consider

Jeff Ludwig

really Yes. at the us And -- think I quarter. That's of where forecast. I to balances the a that hard we average come did one would average of sort business, for in quarter-over-quarter. sort down for look the

average was our in million in range that think the probably I $XXX second quarter.

a we're of I good be little maybe I tailwind. bit there -- probably don't right could think where spot. at a now is

drop -- our a a move could or the that at dollars looking on rates small, income that going $XXX,XXX look right? line more. more the to As hundreds But that around. margin impact some to in we with have quarter-over-quarter, are balances we're few margin those We in some difference net partners refinancing as draw interest fairly is create need

average balances the provide at better quarter. it when maybe is like of looks -- sheet, the it's should end we balance at bigger spot some like. could impact do and that disclosure a on to they of the it move what looks you're sense what only have So a give you And looking not

tailwind, would last up margin a of So, terms the I say back significant even it if quarter to in wouldn't it be a was $XXX,XXX. averages, few goes where

Michael Perito

terms in then And it. GreenSky? Got of

Jeff Ludwig

Yes.

last what about the part So of course were position we the increase this of year. to quarter remaining talked XXX XX that was we like between over million think and I going million

GreenSky think roughly was quarter. million I $XX this up

more So as we more forward. move we and increases still have

of runoff. some as lot So offsetting where are consumers that Residential nice will down, either resi if not at of I consumer it's really residential a what's would the I'm happen and sort looked runoff. it's we to that would sort with be -- sure of lending are. offsetting But going rates but It tailwind. slow the that be

Michael Perito

helpful. it, for taking you, Thank I questions. my it. appreciate Got guys,

Jeff Ludwig

Thanks, Mike.

Operator

comes Race And your Nathan with Sandler. question of line Piper from next the

Nathan Race

Yes. Hi, guys. Good morning.

Jeff Ludwig

Good morning, Nathan.

Nathan Race

starting Maybe kind ATG a of they fair in back valuations on or quarter. revenue line to assume for remain we equity half quarterly in where another about for income wealth on just month, are, quarter the this related fee that of only is year just so market the and assuming a should on it the basis? that With in XXX,XXX in layer

Jeff Ludwig

fair think I Yes, a that's position.

Nathan Race

so Okay, great. And sequentially that's maybe environment on and some a going expect back that half the 'XX there. stimulus of you spending, kind on How of revert back And forth? that to normalized just obviously, more card revenue attributable then what seen just just the line, do card we’ve is nice basis? of line much back efforts to pent-up to growth maybe to

Jeff Ludwig

front, in lot on level And a to But their going of think opening, there's We have attached get pent-up that to within not -- I I there. think going don't the think usage. probably with card on of this retail might cards company the see we checking some we've account. and consumers’ demand account a hands so. there's card a online activation higher get do had effort

we think and we've being here got used. do lot I see cards more that activated So a

progress the made So we've down. good that 'XX, of some do I And comes over even think spending is really for since that well end going the higher. We revenue 'XX. that if think bodes be to

Nathan Race

the sounds to trough revenue of income like spread growth this changing just Thanks, of margin And It Jeff. a kind expectations core outlook we've gears That's hit the on Understood. core back helpful. net interest on and the half maybe the ex-PPP. year.

here of warehouse curious in just with liquidity, bottom in so up pretty this into going obviously forth excess see as variability March. level if expectations the loan the imagine you terms in lines securities we the to and loan They is curious pipeline forward? XQ? the It on ongoing end frame a kind of loans and sounds growth perspective. like I'm how growth some Just guys of from into of extent from I both layer obviously strong of redeployment elevated But line some should some NII kind to well growth compared

Jeff Ludwig

take we nice shot loan add see the we some pipelines growth nice going the and or is We should liability $X good had that quarter Yes. loan going Nathan, to did quarter second restructure heading first ex-PPP growth. in that. million which third But the should the to close at -- got help it. we've should add fairly quarter, a into third so quarter, into the I’ll

sort So PPP of the think that's we it's million we in a plus margin X dollars. forgiveness, --

Nathan Race

you. Got

last first in the Okay, tied credit believe was to And helpful. curious non-performing to one one, the on quarter. that that's the moved it quarter. I the maybe in just just charge-off

So just any helpful? be additional details on that would one

Jeff Ludwig

a at dug the was wasn't loan this on receivables And an an charge-off. non-accrual. point, on some it there. and it's think in of put bit acquired it at take operating had inventory business as appropriate the to level the have where We've thought what we little Yes, going now could company we fraud in that

that that we've the we're work I think we continuing that to on of but now, that work feel of out. losses to credit sort taken on as credit

Nathan Race

it, helpful. now. step very back for Got you, guys. I will Thank

Jeff Ludwig

Thanks.

Operator

[Operator Instructions].

comes McEvoy Terry Stephens. next from with question Your

Unidentified Analyst

couple for on Good quick. A morning. Brandon It’s Terry. questions Rood of [ph]

you It M&A. maybe some comments like bit one, maybe of kind was might following fee about well about just to kind first as acquisitions be more bank smaller of last Can generating. as seemed talk you open a The that? there your

Jeff Ludwig

streamlining sort to be we've last really building that in, lot part progress the commercial to we on planned begin to the into and we're not didn't like in, next technology impactful build the on it feel more and months feel to businesses very internally of things And there's we've we for small, to pipelines. some of ATG was But year year. of end line, -- our and businesses in this getting a efficiencies internally. the made efficiencies, back did got we we and want the sort want exiting think XX made be I Yes, right, out of and --

at and So had will could we our of and be the company. folks that be on same less will disruptive It are to way. small, of in to still the sort looking market the internally, there continue work banking sort are initiatives

Unidentified Analyst

for that. Okay. Thank you

impairment tied out? commercial I kind quarters. The looking rates servicing your around guess that at, model of here. that they past bounced couple one Is how we can just interest or of the Another rights, wherever the quarter on forward finish to

Jeff Ludwig

Yes. let me when out, you that figure Well, know. you

when portfolio tied is low, to are it's interest there's So going I rights. portfolio. rates and mortgage rates, the are commercial right. going loan more servicing in it on -- And think more tied on to the modifications These refinancing in

sort refinance when are for a to to rate. there's lower opportunity So borrowers an of rates lower,

happening And down. we of so be, or driving within of the that seeing that to We the that asset then amortization level business the higher so have going a been offset are further write sort but in are payoffs running of Funding be higher, Since paydowns to asset the anymore, not not some on. what book we're going we're of amortize that might what that's we're that have mostly estimate to we book the is Love the adding paydowns valuation. that that off, the think to

Unidentified Analyst

Sure.

you. on One last Okay. deposits. one Thank

deposits You the quantify maybe much this bit Can down said commercial they due deposits deposits. was retail X.X% How the versus you quarter and the FHA a the two? came FHA? retail last between little driven about from to

Jeff Ludwig

book. the The servicing vast majority of it was

Unidentified Analyst

Okay.

Jeff Ludwig

$XXX was range. the maybe of that probably servicing and $XX is north say would million million I in book retail

Unidentified Analyst

Thank All got you. Okay, right. it.

Operator

you follow-up Piper with Nathan of Sandler. line Race have question from And the a

Nathan Race

Yes. follow-up I question. you taking appreciate the

unallocated credit to expectations reserves. doesn't quarter. about credits just also content of loss the non-accrual is sound provide terms ACL you imagine kind in and next the provisioning little the in just there's excess much quarters? a of to were where on bit going but And couple thinking have want discussion of charge-off placed I over to back that maybe Just growth, It need the some trend go to some there's hotel with for the

of terms of in quarters charge-off just expectations of over next provisioning helpful? any just the would So levels couple be

Jeff Ludwig

Yes.

think feel front. I on good charge-off we the

still still better. have through in. get this we've And provision think we on thought economic the there's pushed quarter we -- can of forecast think I the side, I losses sort what probably

So growth to potentially any we the that reserve. that could fund offset would need

to and I don't this it I about won't quarter as think the that I as think be somewhat be sit to next here maybe think first high So just -- going similar quarter. it's as quarter.

I Maybe think in I’ll just what second was quarter. to it it will say be closer the that.

Nathan Race

got it. Okay,

Jeff Ludwig

be the That be could case. zero And very very again. could much well

Nathan Race

Got you.

remains to saw second to level down in provisioning we and expect saw we down? a down XQ than lesser the to come charge-offs it's muted near come soon here coming pretty the with degree reserve charge-offs albeit just as a that probably fair maybe quarter, in So

Jeff Ludwig

Yes.

Nathan Race

appreciate again. I all the guys. Okay. Thanks, Perfect. color,

Jeff Ludwig

Yes.

Operator

to queue. showing like turn no to over call I would management closing back comments. the for I’m questions in further

Jeff Ludwig

quarter. see the for and joining talk earnings Thanks everybody call Thanks. today, next and we'll to

Operator

does conclude This call. today's

disconnect now your may You lines.

Midland States Bancorp (MSBI) 23 Jul 212021 Q2 Earnings call transcript