- Earnings call transcript Q3 2022

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Operator

Good day, and thank you for standing by. Welcome to the Q3 2022 Midland States Bancorp Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. to Rossi conference of like speaker to now Tony today, Financial would hand over the your I Profiles. Please go ahead.

Tony Rossi

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

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

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

to Midland’s download visit have copy the already, webcasts Investor not Relations page presentations you presentation. website If the please of a of done and so

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

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

Jeffrey Ludwig

of Slide X call. to the Midland highlights earnings on going and I’m to welcome everyone, morning, the start third quarter. Good the Tony. Thanks, with States

million, improvement quarter. loan in $X.XX well we per up prior execute that in to $X.XX our of generated performance. from share, and We We further financial our $XX.X continue the income demand net markets, continue in on or see capitalize the resulting in to

both of growth, our is our While importantly, positively we increased profitable Most level quarter. to on returns, prior return average and from on pre-provision million. assets as common generated the which return earnings increased equity pre-tax, our impacting $XX.X tangible

expected higher we we loan demand. to rates of level increasing built lower the teams exceptionally still at of banking enabled growth annualized loans rate quarter loan as third generate The us growth, with Although, a in productivity commercial to have the XX%. of see impacted loan total an strong

during we relationships, are higher And going in we relationships long-term third unfavorable approach. we high in an extent the teams initial the from it our With the on asset to and We the due across strong did and in future to activity, and Particularly net quarter. impact we opportunity shareholders opportunities seeing who expand add we best it’s believe opportunities sources they banking as merger or investments. excellent diverse to our we operate pass-up grow to resulting built, these additional make platform present cost if has the types add their of to with aren’t disruption businesses loans as new markets. property relationships, best the interests believe interest interest classes, to a have even long-term productive highly Illinois to short-term. relationships we’re We new utilize even company’s fund are add in to additional with making, lending commercial the we margin long-term with funds will these geographic if of our the the loan some industries, contributions strong seeing the to have growth to us borrowers, quality

increases and portfolios, coming estate quarter, with in our the During growth commercial had all portfolios. in our the third real we commercial largest of

success At the surpassed was investment little see loans $X third known development is a expand we business loan positive risk our metrics quarter. also and Outside and growth, to significant consistent made of we And the X-plus a contributing Equipment many Finance. outstandings group approximately At more of Our business. represents during to loan of significant we continue and adjusted million. This and as attractive be our yields. of the XXXX, that key business outstanding we’ve that then than Midland trends, source portfolio growing in performance. what improved driver equipment in become to portfolio provide team $XXX the leases the significant are a strong growth, and now finance this ensuing $XXX business our this reflects time, the and commercial financial total to beginning milestone a continues million, had years, by have the the re-brand of billion grown the a balances has to this

for conscious of growth We’re our expanded significant customers and in on new in relationships, rates and increase continue loan yields, seeing order continue average share, We’ve increase to deposit for business funding development opportunities. funds. this a cost increase types strong certain to our account made loan efforts in effort deposit focus provide on to and is having a impact market our an our certain although, to

prior also positive in from quarter. end XX% our We’re nonperforming the seeing declining of trends assets with quality, asset by the

to are first exploring that long-term capital in half the to that be indicated best we and our would make ratios decisions options the of shareholders. interest the During strengthen we year,

we point, Eric details growth create in earnings and that call further shareholders. returns the the quarter commercial the over the to in to clients, enabled with and At long-term continue existing stock has relationships, will improvement Given momentum performance. some and balance value our teams we expanding through adding around believe loan strong I’m our preferred provide lead This on to Eric? turn sheet we for million the continue over capitalizing to new a third have raise made development the $XXX us to built offering. decision growth, our driving the continue banking see business additional to additional going third quarter, to we to this

Eric Lemke

everyone. a again, we’ll take on Starting X, Slide morning, at Thanks, Jeff, good loan our look portfolio. and

in We of increased increased of the and rate; total annualized loans a our all estate the portfolios growth at $XXX XX% which XX%. increases commercial at prior end increased in annualized an of loans, Our million rate loans, with coming real the from commercial had which strongest quarter.

our the an at loans portfolio rate including during and to attributable partnerships, We approximately are that increasing portfolio XX% in to quarter. the the the Jeff led is The an conventional going mentioned, increase consumer portfolio runoff through portfolio new now we are months. which community the equipment by our But markets, the of next quarter, finance which in loan million within are more LendingPoint largely increase commercial in As million, quarter. than increasing our of expecting we But third during contributed growth which loans in of commercial loan we with an to increased consumer portfolio was originations third quarter the generated to GreenSky annualized portfolio banking $XX largest led to million. X other our reducing fintech portfolio a the expected. $XX contributor GreenSky the the commercial originating GreenSky fourth $XX increased the million and forward, bit approximately $XX slightly with over

deposits, increased million deposits. look deposits. Total Now and the had of our deposits prior turning from Slide interest-bearing to at all $XXX X, in We an quarter. we’ll our noninterest-bearing increase

continuing we’ve we strong X gathering are mentioned, As over the and growth seen focus balances quarters. to on and deposit past Jeff

At job banking end total overall our improvement treasury deposits XX.X% of commercial our Our new good relationships, in continue XX.X% which year. point for the of teams do up driving to mix. commercial deposit the and management a third of deposit noninterest-bearing the from at quarter, same deposits, developing last is accounted

trends Slide at net income looking walk in interest margin. through and Now X, our we’ll the

interest the average X.X% due to prior increased net income from Our primarily loan balances. quarter, higher

basis interest net the from margin Our decreased X prior quarter. points

rates the increase Those in certain overall including trends balances. criteria equipment rate to deposits, we effect our benchmark. new of originations. and In pegged increase increase increases but customers loan positive We’ve fed and in was increase in deposit yields. in points resulted interest-bearing June. month a due to As also In our accounts earning also renewed deposits saw new average accounts, and rate basis to to similar as continue and specials able are the an rates loans cost promotions increase order we sweep are see on increased our deposits asset generate loan and our XX we that deposits was increase in on insured our higher checking our money overall new with average of The cash of rate to funds of of result, from cost balances. largely or particular, certain growth of attract increasing in underwriting market our loans, strong month have which been commercial And, cost our a the is September, the seeing on We’ve the X.XX%, had are of servicing exceeded desired compromising to on the pricing. an rate financing. the without or

capital rate We the subordinated we redeem offering portion an a of has debt raised also in X.XX%. used of to stock $XX interest the of preferred that million

eliminated have redemption, higher the of With a source cost we funds.

at Slide business. trends in the to look our X, management Turning we’ll wealth

wealth assets we able of the administration quarter, under were prior administration, prior revenue relatively management assets despite our primarily to performance; by end due the from million the consistent quarter. Our market $XXX the in with keep decreased to decrease under

Now consistent in second $XX.X fee the on from income servicing on impacted noninterest in the noninterest relatively noninterest impairment mortgage Slide the negatively quarter. the of with the attributable income commercial income. an prior that million to X.X% third prior rights in X, areas We quarter, was were Most quarter. and we’ll look the had increase generating increase at quarter,

institution either in in We approximately a $XXX eliminate are at be reprice provide These moved servicing source benefit as servicing portfolio, mortgage sale commercial will of a to earnings of the will rates, MSR of volatility, selling ratios. The as portfolio part a also the portfolio. currently commercial which our could another low the deposits. or market deposits to small capital well cost million as rights of process includes

the later We’re XXXX. sale this the could expecting first to into quarter of although quarter, it push complete

Turning now noninterest to Slide X, we’ll our expense. review

had that Our due we the quarter a noninterest higher commissions; third, in full primarily second, salaries had to first, of and prior we quarter, deposit and X up compensation loan we expense incentive June. in benefits and due due acquisition to increased and general impact completed had to factors: branch activity; expenses the was greater increase was primarily the expense from

of For quarter. the in range million $XX.X $XX.X our expense near-term, we to operating the now to expect million be per

Slide at quality to look asset our XX. Turning trends. We’ll

in decline $XX note combination of of of seeing loans a a reflective was to positive end in previously decreased watch-list upgrades nonperforming reserved relationship. a portfolio from the The the charge-off Our payoffs, due and the continued we’re loans nonperforming million which trends of quarter, prior sale is the with loans. broader of a

of delinquency million And escrow consumer during loans We a approximately we million to the rate average have reserve on On for $X million points change credit begin established note losses a in low. in provision during GreenSky for. related show on of Slide quarter. quarter, should economic the $X.X any million the in previously $X total the reminder, prior in in driven XX, a portfolio. components we recorded is a were And or nonperforming that the to from quarter the available charged-off cover impact deterioration largely as The on credits. this and a largely had We credit negative the we the any Within approximately to $X.X net on loans. we exceptionally the our for portfolio, basis had the an loans that of growth $XX charged-off million quarter, that by of X of allowance which losses occur, charge-offs was sold the end remains XX losses loan the we charge-offs specific forecasts. quarter. account We

forecasts conditions. allowance total mix our portfolio Our And from was broken XX, in loans, in weakening approximately and Slide out by on in by the show for credit driven we the changes increase the economic growth $X.X million. The of by portfolio. losses ACL increased then changes

the most While back economic of overall of ratio that, I’ll to ratio turn unchanged. portfolios We to same coverage remained had And Jeff? reflect the with in Jeff. our adjustments and the forecasts. variables call over the coverage

Jeffrey Ludwig

We’ll Eric. Thanks, with outlook. right. All Slide our XX up on comments on some wrap

we invest have, sheet the continued With to stronger area positioned growth. ratios now business. we support One capital that are in the are we equipment continuing better is finance balance to

third quarter. in million to and with in leases $XXX Our equipment finance team strong continues new production, generate the loans

Our adjusted And of in and beyond, pipeline provide same we’ve to will but past, our of remains not pipeline we at growth risk yields. finance loans years and quarter, level light as production the continued smaller our started leases the equipment growth and interest in continues year. see fourth although rates in loans be expecting are in fourth the than strong, of continued the reconsider the business and strong, some increase attractive this that it of fall as out was the investments overall pipeline uncertain what Entering higher planned but economic earlier outlook. the borrowers to quarter

have well we with while in levels the to now we moderate that shareholders, from loan near-term growth quarter, as even operating combined a delivering the the we efficiencies more still expect it But continue continued believe challenging. earlier that As appears our are positioned higher year. loan environment become for will performance see to we improved result, we growth margin that interest are will fourth the net likely with and generated in financial strong generating,

We added experience on also over make several progress recently of continue the responsible We added those managing Director fintech important our our a managing franchise that new believe initiatives Banking-as-a-Service will an similar and as are become that next we to to banks. evaluating contributor to platform. value enhance to initiative they securing be years. good The and will other with Banking-as-a-Service Director banking partnerships, relationships for

fee making income it good and on a during initiative the a years deposit generation grow and steadily foundation to this in our XXXX, building gathering and We’re to come. impact positive for start expect

into financial we’re Banking-as-a-Service terms performance questions growth head for you in months ability like in and progress never value With the on are will have value we XXXX, might that believe further the generate enhance have. we of making final we As we’ll better the to please Operator, positioned any to profitable and initiatives shareholders, the our future. of be we continued create generating happy improve that, been believe both improved call. longer-term we open franchise to answer our

Operator

[Operator Instructions] McEvoy Terry Our first question from Stephens. with comes

is now line Your open.

Terry McEvoy

Good morning, guys.

Jeffrey Ludwig

morning. Good

Terry McEvoy

message question, was sale that company? about mean the stays Eric, could on $XXX are deposits? to with deposit? and the first on your what trying I just servicing Is that comments follow the Maybe your whether million you it to – What’s uncertain of still

Eric Lemke

of shopping with Well, portfolio, right mortgage to buyers. rights it that now servicing actively we’re a variety

it I to had the those if – to do if we’d we could we’d way, do think, it, we like retain like deposits.

portfolio However, those there’s a chance deposits institution. that whoever buys another move could that to

the rates, that retain go flip lose them we they as help? if So, and another some market Does we’re likely preparing they’re going possibility. institution to that to could to for actively we to deposits, or

Terry McEvoy

Yeah.

on that. And for to you Thank the margin. the then, just message I Okay. want understand

higher that Am some funds you’re of costing it understanding to sounds improvement. near-term? you new kind from impact takes the some outlook margin? you Jeff said earlier, over slide, hires, I the near-term that with thinking need the the the of about cetera, loan and fund puts could growth and how the occurs On like see kind But et if over

Jeffrey Ludwig

was seen Yeah, And done that lower in of couple probably the loan I think quarters has The offsetting balance margin. deposit growth of current gathering sensitivity – current and that in our the we’ve that’s slightly that’s right. last come the than spread sheet. in a sort at we’ve the

it moves a thinking So little, could sort forward, down we’re as of flat, it margin of could up how depending be it little sort that a on right how could now. be of be

Terry McEvoy

[ph] run ago management run wealth last question, added that weeks a recently. fast think woman the and to you couple you, for noticed somebody I will I Maybe one of

expense to two So, the in will side my Or would the question new increase how an hires you like investments do find the side? new on expenses, unlike estate continue ways to I absorb real guess, cost into those individuals complete? initiatives rate? And is the cutting and translate think growth you

Jeffrey Ludwig

X%. think, we’re I expenses the of working is need I of the we to, it increased X% But for still some very offset – that expenses think increase. mean, sort cost go line. expense think on now, I about the up cost we’re I of save Yeah, diligently to our X% But might is it way looking how

Terry McEvoy

both. you, Thank Great.

Jeffrey Ludwig

thanks, Yeah, Terry.

Eric Lemke

you. Thank

Operator

by Please stand question. next for our

from Sandler. Race comes question next Our Nathan Piper with

Your now open. line is

Nathan Race

I taking morning. doing Good for appreciate guys. Hi, hope questions. the everyone’s I great.

Jeffrey Ludwig

Yeah. Thanks.

Nathan Race

So around going the forward. back Terry’s question margin going to outlook

guys is Just just just next the curious of beta deposit pretty the legacy with clients to sense sensitivity some that relationships few expectations of the at the about with over the kind thinking of Midland? that Or to similar I’m you’re of you how deposit these Are you adding. trying are get base finding a deposit quarters? kind rate

Jeffrey Ludwig

to mean, needs closer sort the to I of commercial rate markets at. where we’re as Yeah, win be that larger to clients looking

Over running money side, X specials also market retail been sort new clients. working for money both we’ve the but of with last in, months, existing coming on the CD and

you you I have period sit in bank giving keep pay hey, Although, directors start me next thinking when a of our paying either. is you. short and don’t, of to one I XXX and start and increased heard rate, And me, got, some tens very as millions we’re his points you of time, when unrealistic. basis going getting guys just deposits a called the story not with dollars said, of morning this our depositors of rates you’re loan and that guys not here if

into of at on going to cost teens, is as rates, with our we’re the the quarter are, high doing we it the is to think, time so or think of but our fast base. beta lag maintaining they their our not which And, over beginning, going trying slowly giving what where that on up that’s now, you’re what And X well balance through I lag maybe this, is realistic months as deposits. not rates the bad. thought with X sort from is idea, I as growing first trying anymore to balance deposit interest So, base, I our funds as think deposit the in going clients

do more move to we month, as another can some forward, basis next points accelerate as get think XX we we that in December. Although, get continue

else. We’re going more giving them somewhere clients to they’re deposits, to on start have their going take to interest or

Nathan Race

around up current down early Understood. Make commentary or on But or and of we appreciate being sense. expect its maybe peak slightly as to the for year, slightly. or well. the maybe fair get it as assume path, maybe is remains the at a of some in into And we’re the flat margin that I fed kind quarter as XQ outlook additional of year kind expansion next not even parts part margin into can assuming early second we next of

Jeffrey Ludwig

sensitivity as are our to I other rates we’re think, neutral, be we year because going more beginning move next get also way. I to to to the think going

we’re so a more spot. the neutral to beginning And sheet to balance manage

we anyway. could think, potentially could of little margin be getting bit peak increase, towards we our see I but a

we We with more long-term $X think a ROA this provisioning in As us. around margin, X.XX% margin for million mean, quarter. XXX-plus a had million I

year. quarter who ROE and was ROA, to this loan But go as and slows knows continue continue to of With provisioning XX%. provisioning line to grow away then happened be sort So ROEs. provisioning to starts as able hopefully down, our We’ll growth frankly bottom improve and down. now, slows next what

Nathan Race

Yeah. definitely No, impressive. Right.

just rate a Within entered other swaps, fixed believe function a to less of some perspective, guys guys position, against ones become begins that take additional a downside, I into to you flow the from table floating off earlier to of fed sensitivity you more continuing the of this sensitivity context the some of neutral in kind moving hawkish? some protect the whenever some that year, that rate to

Jeffrey Ludwig

portfolio, doing we to portfolio loan with of we we more duration those as growth, – as move still little second do and we we’re more fund which the to more of it rate, down and on more since Yeah, haven’t we’ll of a in more Trying funding, some quarter, contemplating of any investment investment our that. funding variable a the beginning the we’re done put good flow maybe down more in the little potentially take the take haven’t cash quickly. rates

Nathan Race

could move going believe like sounds for of to just were last quarter? we Is Understood. fourth balance And quarter. deposits revert It that is some the question. to ask sheet to potential absent those expectation in both I to discussing deposit if I of with that one range high-single-digit last clarifying – demand kind off the mid- servicing the growth

Jeffrey Ludwig

– X%. – quarter on million working would I are expecting I’m sort I deposits. another retail actively deposits yeah, in deposit teams year-to-date not although it’s of think our Yeah, up $XXX growth, think But, are like I

that yearly think I as So, zone. is right we the look probably basis upper-single-digit, a on

Nathan Race

great. appreciate all for the taking Have guys Okay, great weekend. questions. a I

Jeffrey Ludwig

Yeah. Thanks, Nate.

Eric Lemke

Thanks, Nate.

Operator

our question. for Please stand by next

question Our from Damon comes next DelMonte with KBW.

Your open. line is now

Damon DelMonte

morning, good Hope guys are guys. today? doing Hey, well you

Jeffrey Ludwig

Yeah.

We are.

Damon DelMonte

we decline be to had kind in expect the Eric, impact? Good Do of some GreenSky of running on hear should modest be portfolio off? Or the to a of I to start relationship Why forecasting you. you LendingPoint kind you the off the you expect neutralize from that guys think, consumer that the outstanding? Excellent. portfolio? don’t we said originations on commentary

Eric Lemke

total question. of that we’ve we’ve at some – several had thanks your portfolio. point, like modest kind the with A for same I amount outstanding, to think, Damon, I of decline so partners that fintech we’d in have roughly communicated think,

net origination, say, portion the back the pulled side. million up a down $XX it we of the $XX And next $XX million, over we think so And quarter. that, consumer about of like anywhere $XX will will LendingPoint on a on million million GreenSky’s from so to decline so course make

Damon DelMonte

it. Got

slowing, to much for economy provision to quarter, a economy, for away you helpful. $X on you I little kind strong we then the the your you the level guys, economy into then as this offset don’t of of provisioning start the keep is see million? be feel do a that think view so loan outlook expectations? And in given mean, regards you can do loan will your of would that like kind factors $X Or peak on That’s growth. higher provision with to put growth And million levels given Okay. bit around considering overall? and need still how that the the growth

Eric Lemke

to that’s I hope tell you, the peak. got I

we So, [Technical X% the lot which loan Difficulty] quarter in provision. that growth of a drove

continues forecasting some the pull Our to recession we’re in a in XXXX, XXXX of of so there. idea cautious or coming

our when been you credit some look good. However, pretty at other of metrics or other have credit metrics

loans So with nonperforming were down.

Our watch-list right or to direction. going criticize-list is

So continues slows, as our always the loan think there. would But I card that be as out wild economy long peak. that and the growth the is

Jeffrey Ludwig

I metrics I today. Yeah, low our talked as mean, just there that about long a our capitals, time. don’t as show been Eric substandard it’s mean, that’s

I interest look not this I But so move we’re is what to going can think next feel And into it’s anybody increase tell don’t rates, I XXXX, like us just hard. impact cracks. as in to seeing rapid like is we which have mean, going actually some year.

Damon DelMonte

Yeah. that in pulling on there classes more you kind that the What economy back of the little a in in different bit asset cautious that or from? of is? you Are any lend become kind to areas on building

Jeffrey Ludwig

not resi sure, area. for another an we’re development, interested is real that Office, area probably in

on. high We’re not real

and to rents stick really but right policy, given now. credit got out to the rated our A We our can we’ve good really sort no our loan policy, category, [ph] we’re of the into that. that still every the the metrics areas but, pricing away across We’re from, is looking it’s to would sort guides for metrics, of exceptions to lend good borrowers. couple that pricing be maybe Those staying that and we’re with

Damon DelMonte

it. Got

color tax lower couple rate of the Okay. quarter a any quarters? come seems this been And little then in had to just last the lastly, what on Eric, than

Eric Lemke

good Damon, question. Yeah,

the some we forward in a rates So going we quarter, around probably state of kind rate, of course as of the sort we’re that the done. returns And $XX.X over got next benefit then our our million. everything finalized tax quarter and expecting in with basically tax picked up

little and and filed to allocations and pickup a at taxes So get as going a we then slightly. returns lowered our the the all we stack, at the looked we’re forward of just able looked our outlook bit

Damon DelMonte

Got it.

Okay. guys. the Thanks color a lot. Appreciate

Eric Lemke

Yeah. Thanks.

Operator

Please stand by question. next [Operator our Instructions] for

comes question Navas from next Our Manuel D.A. with Davidson.

now Your line open. is

Manuel Navas

in of Hey, you A in of have like increase end NIM, of wholesale kind kind it and borrowings would the But of more and happened makeup my costs? of couple at the morning. good the the quarter. the Can about discuss questions details great. tenure answered. be expected Any talking the the been kind of

Eric Lemke

FHLB We Sure. areas do there. borrowings. There’s did couple a of some additional

adjust are And then about term mostly the not moves that other so fund of fed at which with One brokered, those shorter rates. borrowings million our is well. was short-term And a the pretty brokered variable much And – couple what’s $XXX rates, similar at classified one which money a that added rates. institutional is classified relationships. And of, some frequently are as of FHLB we’ve I just market. type as call them as then

Jeff do protection both examples. mentioned pass And environment, are continue about to earlier, a thinking of from assuming adjust comes those in really that But as X we order growth. loan too. So, the those fund then, year to rate pretty those scenario we’re quickly now to and to down rates elected in will

Manuel Navas

you to types help What’s funding? the with for lines these of of capacity more

Jeffrey Ludwig

good it’s question. Yeah, a

with And lot the a of markets, in in broker we’ve borrowing look liquidity still of and So available of if we at got funding could still towards there potentially about available $XXX need end out FHLB. million a deck kind we be. the do our kind our that have talks to of we slide that

of, be funding, but target I kind it’s possibility. max the of So with that’s that type we’d to that a think, want

Eric Lemke

Yeah. over real loan deposit to that. add ratio. to But, interested going I’m Manuel, in not XXX% maybe to

governor [ph] as a in well. balance there a there’s So

We’re in now. the mid-XXs

ratio, at where might XX. it So to to more, that’s frankly, prefer not potentially that below actively run but looking over, we’re want we operate I would operate,

loans time, same the as to and sometimes have So in will started come would – in a sometimes I of the deposits we where coming in are our at ahead are tell faster. we’re same be. we it. it, will a prefer faster, at the time, all But be but here get be rate I sometimes never sometimes little deposits above targets, And loans coming to below teams

Manuel Navas

great. that’s that. appreciate I Okay,

equipment kind I’m loan of pipeline, quarter. guessing the and more the on the Moving into a the fourth growth of mix to lot finance

just has it year-to-date? but what’s you’re the like I a in CRE, CRE versus happened fallen having Can what of about makes has pipeline other product it strong So contribution. guess, off still you bit, some kind talk

Jeffrey Ludwig

Yeah, quarter our at strongest the and the so is business in on always is record And finance fourth side, that our equipment levels. quarter. backlog pipeline

So to good fourth business. a we have really expect that in quarter

As a to our – were XXX months, was the last XX we and XXX CRE to our of CRE XX I sort XX under were go to lot – today, over we’ve to desire and and capital, have we months think, of no done ago XXX.

sort And don’t above our so XXX. to I there of be internal want target is

estate of that sort sort we’re of level. commercial to So managing real

of turning what commercial to that’s the so sort banking doing got non-CRE asset And and look other attention at to is our sort we’ve side on lending. of okay, classes

big Now, CRE we’ve portfolio. got a

to there’ll a because other starting make asset be than loans, attrition teams estate. So But real other we’re still and to lot commercial things going our some that. and like CRE classes payoffs of point maybe

Manuel Navas

I appreciate.

Jeffrey Ludwig

there’s a it a but little lighter year, amount to fair beginning pipeline. the yeah, In hone of of the general, than our that in was business is pipeline

Manuel Navas

that. appreciate I

positive run of With or the tact kind bit little near-term more can see operating state? rate. to return on a Can expense, a like moving different – we we still higher steady expense leverage to the

Jeffrey Ludwig

here operating leverage, right? get goal The to is

Manuel Navas

Yeah.

Jeffrey Ludwig

a was of lot into a pretty amount – a growth of were could marketing the some quarter. I lot that incentive fair of think broad-based, – we comp, put come expenses And, back. of

mean, yeah, we’re So, leverage. I looking operating for

Manuel Navas

Okay.

So now a bit NIM? depends on little the

Jeffrey Ludwig

Yeah.

Manuel Navas

you, Thank guys.

Operator

Please standby question. for next our

question Nathan Sandler. comes with from next Piper Our Race

is line Your open.

Nathan Race

taking Thank the you for follow-up.

quarter rate versus growth into bit XQ. on just well I overall higher in saw little year get question second continues wealth a overall imagine as fee we trend income next run just I to expectations we quarter some hopefully a into equity of think like guess, helped income I year. fourth XQ. if the well? other management, the in XQ the outlook I Just But, mean, next as the which that rebounds. kind the kind over quarter income of about market and the guess, in piece and up fee obviously fourth

Eric Lemke

quarter, our Yeah, most a decrease can good I looking year if ago we revenue, pretty point, and the And market was markets, that mean, related. to I $X third a wealth at in management rebound around mean, million, get is your the think, some I it’s of number.

definitely there’s – a we’re there, think I lift making leader new there. hired some we’ve So,

advisors, there to do hire get business going make take to and that little grow going good. to them We’re of that to all and get investments producing them bit and time to some now. That’s to get a on

not low. a part more to there in current million the than quite would So quarter. of I mean, that now. in be, then, for sort did million, the us. we’d of current back And resi just it’s focal do $X item where of impact like I right statement. there impacted but the XXXX want sort in probably next real into But, a big did really – bit to income of is we’d – than more a we year be point the not line quarter, $X quarter the marketplace is mean, $XXX,XXX we the a frankly,

I think there’s that. upside some to

about So $XX at we’re million.

some think, I and we wealth that management as in there’s upside move both mortgage. to residential forward,

Nathan Race

last has income that the in elevated off kind maybe items rate of over line trended at of that kind any third kind quarters. is that figures here other higher run third of is the the few it one the here saw the going quarter? Or forward? quarter, in Yeah, there we It’s

Eric Lemke

It’s build a run try lines. that’s good in sort retail lines. longer we those year-over-year and a those not Again, to in we’re working think interchange area, that some in transformative a I teams on. of good term movement to rate, service quarter-to-quarter, continue that doing see our lot of but to we’re more job revenue we’re can charge work doing lines fee on the that’s gain of doing are

Nathan Race

that you and the guys thank all follow-up Yeah. I No, in of success the seeing you taking line the definitely color. appreciate questions, for we’ve in particular. efforts the

Eric Lemke

Yes, thanks.

Jeffrey Ludwig

Thanks, Nate.

Operator

I for the queue. now to remarks. would this At the closing questions no in back further to show turn time, I like management conference

Jeffrey Ludwig

talk morning and this we’ll joining everybody Thank for Thanks next year. Yeah. you.

Operator

call. This concludes conference you today’s Thank participating. for

disconnect. may now You

Midland States Bancorp (MSBI) 21 Oct 222022 Q3 Earnings call transcript