Earnings call transcript Q4 2022

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Operator

Good day, and thank you for standing by. Welcome to the Q4 2022 Midland States Bancorp Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there'll be a question-and-answer session. [Operator Instructions]

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

You may begin.

Tony Rossi

Thank thank you the morning, everyone us call. Good fourth for earnings Bancorp Midland you, today States XXXX for Kevin. 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

download Investor a the not of Webcasts please and Relations done website of page you've to If presentation. visit Midland's copy the so Presentations already,

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

GAAP the Additionally, GAAP The on information management non-GAAP non-GAAP measures, comparable but not the to today the release which press to to financial contains measures. as substitute and for discussed may other the of most be directly intended website, to available the as reconciliation are refer supplement, measures. quantitative well

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

Jeffrey Ludwig

Welcome on everyone. morning, Midland earnings Slide start Good the to States I'm call. to X. going

for the generated successful in we earnings record capped a level very a Our of performance year fourth quarter company. which

this more and line our past the our few this we with progress year made level goals our over of was years One in group have the to we of strong performance area. reflects believe peer bring in returns our

in X.XX% XX.X%, XXXX year, average from full XX.X% equity a X.XX%, a of tangible generated of up in return and the up assets XXXX. on we return average from on For

time our execution in realize continued on generate as while managing prudently strong profitable our represents profitability same our strong growth to and reflected leverage, growth operating the more improved Our quality. strategies credit our at

built steady our We higher of the of fourth given have with stronger, quality, seen improvement in income, moderating more to more performance. sources despite of conditions economic we in has quarter, level which franchise Specific to growth resulted our generate in have XXXX. financial consistent continued financial we strong loan the likelihood the performance weakening a diversified

starting share, or on the $XX.X impairment included We on generated per charges $XX.X rate servicing mortgage swaps we $X.XX and million $X.X income termination of net FHLB of forward which estate owned. and realized on million, rights interest gain we million real commercial took other in

to we $XX.X coming pre-provision On continue We able continue at a to loan adjusted being selective higher were a core in generate earnings in more with growth earnings pre-tax our profitability solid generating production. loan of level while basis, new million. even

Our portfolio. increased total coming with of at commercial growth a in our most annualized rate X% the loans

portfolio another has Our which surpassed billion. growth loans this now strong commercial the business to Equipment quarter, in Finance $X.X as had contributed has

Our lending our attractive underwriting Community while volume the us opportunities, generating to higher productive which be enabled we growth continues increased loan continue markets highly in conservative with to larger being seeing Bank growth to a and of are and has group solid exposure pricing.

years. seeing made we to contributions Eastern MSA Louis particular, have and our out couple we our are production our the business Illinois across the but where good increased We footprint, market, the development investments markets, Chicago includes which of are past increase St. capabilities seeing in over of

St. portfolio our increased Louis increased while XX%, year, loan portfolio full the loan For XX%. our Eastern Illinois

full We teams as are job developing an doing of banking our also markets excellent these in saw double-digit relationships. deposit growth

level higher of As past I a to indicated management. years, loan approach maintaining earnings have growth conservative risk over few a the and earlier, while we generated

quality As see asset good to continue a we result, trends.

increase slight in loans. quarter, basis a loans had we X in of the charge-offs non-performing While points fourth average were our just net

importantly, to or the trends point, we continue generally with in change loans. no see list meaningful across this watch healthy at And delinquencies portfolio

Our strong to financial franchise. the continues value of performance our enhance

per fourth X.X% the share our share X%. During quarter, while tangible per book increased book value our increased value

capital of total the And million in with the subordinated decreased our continue all debt in we payoff of due from to goals. fourth which end important financial quarter, of as the of most exception to progress the on of our capital $XX one quarter, ratios ratio, increased the prior the make

the to around details At this turn to going I'm to Eric additional performance. fourth quarter Eric? our call over point, provide some

Eric Lemke

Thanks, Jeff everyone. and again, good morning,

move this reporting that we like quarter offering the following available on, the our we stock net to raised to in note is common through first I capital Before August. preferred shareholders income would

included the third payment quarter as quarter, financials of the for portion the of the issued. was the after Our quarter dividend fourth stock as well the preferred stock fourth

forward, the be stub the Going to per will per less to shareholders available without common included net quarter. impact income share period $X.XX

Slide look moving portfolio. at X, we'll loan take on a to our Now

Our largest decline commercial the total is portfolios, real fourth typically end growth estate growth the more a offset contributor and Most business. loans this period was our the the commercial increased loan to than Equipment quarter in came to prior in which a quarter. seasonally in of the construction portfolio. as small Finance of strong $XXX the our million from commercial

our in decrease loans Jeff was small in portfolio, attributable than a in later a an with our new also call. more GreenSky LendingPoint will to had about relationship consumer GreenSky partnership We increase loan the portfolio. more through which our with which talk generated small our in increase offset

on decrease their moving largely at now rates liquidity in in we'll interest deposits. deposits. being We to look savings end Now from prior servicing capitalize small declines total in deposits and of Slide excess of in the turning a had our bearing bearing bearing non-interest period commercial to to as The deposits to higher as X, non-interest quarter, decline deposits some lower offered. due the was more accounts primarily balances FHA commercial order to well depositors due

last our we indicated call. on As

order raised selectively to on in loan our growth. deposits have funding rates We continue

We to see results add we the to pressure with in we to the we expand best is these that relationships, costs of upward our believe time the if add deposit quality continue believe to can it interest term high new and and shareholders the on lending in clients commercial the fund over loans. relationships our initial company order near even in opportunity

higher The interest offset earning Slide slightly as interest trends by margin. decline in walk in interest balance assets income the our and our interest Now we'll from average down a looking of at was income X, prior quarter margin. a net was through net net the

in increase cost interest the of saw XX net margin exceeded on prior asset yields. earning deposits decreased Our increase points quarter as from we the basis our the

the commercial on renewed average month as basis of loans X.X%, We've of our month on our without trends a to continue result, pricing on are In equipment rate been was of particular, able higher including XXX increase average in an and points December, rates loan strong September. we see on to compromising financing. loan we seeing growth, loans and the new generate rate In from our the positive originations. new

terms plan swaps balance of some move the the As to of last rate to interest we call, rate steps that. has we termination a and the into indicated interest our forward-starting sheet position more take done on sensitivity in neutral

this fourth interest is The interest goal keep quarter. in Our in of to year to stable. net margin impacted our rapid our the cost try relatively increase significantly rates funds

will moderate. allow or However, It rate stabilize and to reprice our going increases if forward. slow margin interest rate assets fixed our

at look we'll Management trends X, business. the Slide Wealth our to Turning in

assets new in prior due prior to in under administration in wealth clients. the management The increase the and $XXX Our revenue assets administration of to resulted end from by quarter, market slight compared million both performance inflows under a increased quarter. increase from our the

$XX.X the swaps. will income we look of in non-interest termination interest We non-interest forward-starting rate included gain which income. million X, Slide at from had quarter, the fourth the the $XX.X in On million

were gain, Excluding most fee with quarter. consistent this areas the generating prior relatively

the the our rights mortgage eliminate source process on of volatility. indicated selling will we are we which currently a last earnings of servicing call, in commercial As portfolio,

a the second We the potential buyer expect and during transaction of close are to with half year. working the

related We mortgage commercial servicing deposits retain to expect servicing the rights portfolio. the to

sale. will rate market completion they to upon reprice the of However,

Now review Slide our we'll X, turning non-interest to expense.

two Our non-interest due items. expense to was non-recurring primarily up from prior the quarter,

as held part MSRs sale we commercial the portfolio, of sale for current on valuation. the First, the recorded of MSR million loss reflect a to $X.X

million. quarter. And impairment of All the the with real estate second, charges relatively prior expense of $X.X consistent other areas were non-interest an we recorded other owned

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

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

commercial one prior the from million $X.X which increased attributable loans end estate non-performing is quarter, entirely to the of loan. Our real

to remains million the is begin the losses GreenSky cover any approximately we portfolio. occur, available on low that any in $XX account have portfolio, and should Within the consumer exceptionally an to rate delinquency escrow deterioration

million, the and As provision in Jeff the credit an charge-offs of a to with recorded just of forecasts. X $X extremely of changes average for mix the low portfolio loans growth loans. losses level we was on which total points loss mentioned basis the net the of of portfolio in impact loans, in We had economic earlier, negative fourth largely quarter in of related

provision in the end approximately total loss of our conditions. show in to well being from to in by XX and increase changes Slide the the The forecasts excess quarter, economic by by in portfolio ACL weakening net change in we On the in ACL million, changes XX, of basis in prior points charge-offs, the credit of the basis points. was $X.X increased driven with the ACL the increased components our and mix allowance growth fourth X the quarter for of loans, total from loans

in owner broken CRE and portfolio. construction on show finally, our commercial ACL we significant and XX, out And came land coverage portfolios. The our increases by Slide in most occupied

call turn Jeff? I'll to Jeff. that, with back over the And

Jeffrey Ludwig

on a stronger conservative year, with franchise that have a up improve. production higher that believe All recession is that outlook we right. the until continue XX and our economic loan and wrap a on and new level the conditions more we to profitability we could financial to clear approach XXXX of built, strong performance going We'll earnings It's possibility XXXX. we while Thanks, generate our for to some with Slide priorities Eric. comments challenging but make maintain of quality

growth a of Chicago and more our have is level but the economic At and Equipment difficult Louis continue we team have it higher growth result St. the a grow we our given productive we continued the this built, to exposure to that of will we provide a as believe the forecast growth to expected Finance loan point, loans greater uncertain banking total of environment, for markets commercial like business.

the with our and the deposit XX%, the Given growth, planning loan having are commercial success GreenSky to in generating now exit accelerate are ratio we from at loan we partnership.

notice program On Tuesday exit we that GreenSky in provided of week, of year. October the will this to this we

The order required to our contract that originations the notice we period under period certain balances Our minimums we includes those will in minimum the through have waive notice the contract. indicated GreenSky in program. the and lower overall loan

that and exiting have capital, believe on yield impact a while having portfolio a earnings. this liquidity will partnership our the currently We on impact on X%. positive The minimal is average relatively

pay-off within As our can be used funding loans originations cost higher in the to or or of flow securities the pay either portfolio the program profitably cash off, in sources. loan invested some

we building our growth few franchise. is talked one contributor newer of can Banking-as-a-Service the be continued the believe over quarters, an profitable the past we've long-term about of As which important initiatives platform, to our

We are in selective approach to our this adding partnerships in initiative. being very new

add we we partners ensure any our that can management. meet standards So risk high of that

will can primary deposit our that focus adding contribute partners gathering. XXXX, During be to

management, past We the to technology disciplined our on leverage few and in while maintain more have are made investments banking significant both years. we focus getting going talent expense from we over

we that this, our rate strong should we believe help growth growth profitability. can our we expense do As support which rate revenue continued below keep our

anticipate don't additions years on team are and our few our as We focus very any have in expense happy group. We banking we with commercial have the stable. we over past making strengthened currently term the the levels near relatively keeping meaningful and significantly

development some the new grow are we adding that this making enhancing improve our generates. of and and business investments base the efforts, our However, wealth we increase our platform, us income business to client which in management will fee business personnel enable believe in terms

and our retail exposure a that our real impacted given In or outlook we perform business. base, continue small we office to by of open beginning notably, to consumer we terms in have will that the of M&A further improve for estate, be increase to we loans. small believe business commercial that recession. that Most credit, a to portfolio areas wealth are well-diversified loans loan are and with the portfolio that those could At exposure build likely strategic opportunities year, most considering well subprime higher markets the indicated our last growth management limited deposit

Our growth to strengthening the franchise. performance. same In as to this earnings execution past support enabled fit disrupting our few capital our type organization's branch focus mentioned be the focused And Illinois criteria financial we that acquisition our without we exposure in the perfectly continue open strategies of June deposits the of in add on Northern to ratios low the to have we continued in us generated strong XXXX, a in will are to better our and we MSA the increase cost of Chicago have seen improvement on and calls, have opportunities.

level that generating that and expect that through growth profitability we lower are we we ratios as can year. the our of the now we level to balance With move increase of capital this higher believe year, sheet we the continue

be year the long-term challenging are with franchise in to While a that we the will organization, seeing we environment believe continue XXXX. we the operating execution the our throughout we expect enhance of value to strong

Operator, we'll happy might please any you have. to the With be call. that, questions answer open

Operator

first Davidson. from Rulis [Operator question Our Instructions] with comes D.A. Jeff

is line Your open.

Jeff Rulis

morning. Thanks the Thanks. taking Good questions. for

Jeffrey Ludwig

Yeah. Good morning.

Jeff Rulis

even me uncertain the of QX a on said, growth growth being just the still GreenSky and Could check about of but respect any mean and rate. a standpoint you as remind growing loan little growth would guarded, guarded, then level sort balance in from I a other of high the thoughts to you portfolio? talk yet little that a words, indicative in that Wanted impact on growth side. you what on

Jeffrey Ludwig

Yeah.

during come guide year, to I loan GreenSky $XXX So, the that originations receptive between call for depending to on $XXX this, of balances at million We GreenSky -- sort and million GreenSky GreenSky. very we down We've didn't our reduce what from to period. wide some I'll origination, think a notice could we high think that. think rails we provide the get level, this they're asked we this anywhere

will We're doesn't to the how of be that goes, if not like, of the would If higher end exactly to, could end on range we it that go. on sure lower it range. and it like it that be

from a view, loan of of be total sort that will that's headwind. So point a

portfolio we bit. so And from little a there, think we can grow the

of grow So the sort commercial help business bit. little business and offset that and a the equipment will

Jeff Rulis

layered run MSR push, sale? a fee Thanks. management income the puts Great. how that. the sale, $XX the kind in expected on with question, in kind of income the of wealth Thank that of rate, guess, a of jumping of growth given the kind given and you year, to kind we for item, outlook, And of latter million I fee just over MSR takes line of should the think about I similar guess, basis, your part of kind core maybe that

Jeffrey Ludwig

Yeah.

that's I about think right.

you're I think it looking it will how we that's -- think at go.

can we management, -- we revenue going leave -- end that of year. think more it wealth is towards the I to the -- won't the end think of until grow

this better that last and little so whatever we there, probably offset we think year. can in year bit do a And did lose we we growth should wealth than

Jeff Rulis

item. that a quarterly got, it. in million. that Eric, down a the quarterly to, think comes And I $X.X on period the basis? housekeeping mentioned fair Appreciate of stub kind on last preferred Is QX, you I

Eric Lemke

Yeah. That's fair.

Jeff Rulis

Okay.

Eric Lemke

expecting. That's we're what

Jeff Rulis

it. Appreciate right. Thank you. All

Operator

question. for moment next One our

from DelMonte Damon next with question comes KBW. Our

open. is line Your

Damon DelMonte

today. are Hey. you Good – guys. both doing morning, well Hope

regarding more the provide question the little did. was could and Eric, puts just margins first hoping how for around outlook understand you bit Obviously, kind of my takes I this responded quarter up. have color shaping margin. way you for a things the So see it

the kind you sooner bottoming Or than next that? it kind of reverse So about it think wondering could of how over or so? quarter you think just do

Eric Lemke

a keep XX rest I rates, we're think of growth. then But costs month and a of at of to this looking into we this bit we then continue at month margin basis and pressure after in if how some the particular, may, the some sort fixed deposit that on of that we Fed it stable the little quarter. of see points our kind past on month, think near-term give think about a we up portfolios the to can in or from less catch about, kind we Damon, of our to deposit or brought that's these relatively two sort margin just of of, fund loan I is, relationships from the rate talked that

portfolio rates. XX% at general, look We've over equipment the really seen we quarter but rate solid that you loans, in as our If good had attrition turns really at are portfolio. fixed fourth quickly. Those in much as finance a portfolio fairly

So each we some pick month. with see that up rate

kind or I that, the for quarter. basis we're how kind play minus So looking the plus a next few think conditions stable, of out. economic of then we'll see beyond And points

Damon DelMonte

Got Fair it. enough.

Okay. loss environment. us for provision about regards on loan Thanks. the then the you with more outlook. That's outlook a helpful. commentary little a to give recessionary guidance Can And cautious

in than previous had came it three quarters. lower quarter This

like So are we what XXXX should just wondering first an expect to that? average go what maybe if to thoughts or of three quarters saw the your we of back on during

Jeffrey Ludwig

box the you that on know, our predict. was around helps one Because which as over year. our lowest with time, help up quality quarter one We've pricing as asset around should one. box credit to statement a loan told the provision. the you provision probably right, little But of been which, then that Damon, this internally with losses, working hardest underwriting. really take We've and is bit, hard mentioned, is I I'll tightened that income the

the what but we're expecting not I little we in than provision quarter, dramatically probably a current more had think year. the more over

provision things around we recession, the it's we for year if are much don't than if environment worst like really into turn think think stays be better. real this, kind and like this I recession a well. could changes then don't sort I folks as lots of be about, Now our the what a and different mild deep saw talking of with But that of go should

Damon DelMonte

it. Got

all That’s helpful. you. That’s Okay. had. that I Thank

Jeffrey Ludwig

Yeah.

Operator

One moment question. for next our

comes Piper next Nathan Sandler. Our from Race with question

open. is line Your

Nathan Race

are Hope Good Yeah. Hi, doing well. guys. you morning.

Jeffrey Ludwig

Good morning.

Nathan Race

Just that the zoom the balance maybe about just And how does in more kind yield to sheet the on of I quarter, I'm half of neutral terms play Eric, your appreciate just are want kind that XQ additional guys of from position. trying get forward? in to an trying I perspective to you of kind kind guys also out deposit asset executed you that of in, upward expansion you're And the with guess dynamics. inning swaps going thinking to termination of thinking outlook, back earlier what of how understand, context, on pressure terms within margin and of costs? kind in I earning the the out comments guess about

Jeffrey Ludwig

then Yeah. follow some that, of touch on up. Eric I'll can and

funding GreenSky fact want off, the there's view neutral statements now. they're swaps, with They we and not go of starting, these through would going sort to as On are that may we year, this our interest as we're we and the sort so move into XXXX. we not rate need play into right of where the have to more gone that roll be impacting forward financial

was to the and sort around rate the value we those just too that good and XXXs got like up. of the XXXs, pass made So the into are there decisions when five-year

made those, decision of we off the forward all swaps. starting of move between to So the

I this we deposit was, the the the of get On needed way think to year viewed ahead deposit we from costs. side, beginning very the

and run sheet, to to be, proactive begin the in higher we some our front the let the began a starting of to on loan-to-deposit give to of specials We side retail were very our so can't commercial just off roll year afford in first customers rate have this to clients one; in deposits quarter balance ratio. earlier cycle. get We

I don't the maybe to game the analogy, So we're in I do we're innings. would baseball say, others. deeper know, later the we than want If in

now We can I meeting now deposits pretty But depending the couple us going the we goes teams ability talking competition, the if things. our market losing much XX meet But But did lag some it's dynamic involved how doing needs week. we next the lots I around without Eric, help increase. think to about to are meetings, anything on here, year interest is I else? expense and into that ‘XX in little other -- they pretty deposits, have I'm what from every a more of Fed at with of for mean, this every -- we where right sort is different more week, situation. the early of think to point. as get we do fluid a

Eric Lemke

No.

the think leveraging and earlier it call, focused been really technology on I I in Jeff we've the retail to technology applies our say how thing team. other and talked is, would about

our continue. and you past sales look the increased by think just that year we If short -- technology, focusing X% that can the retail over on by of culture deposits and we at

in hoping of other we're back pull area that books that increase those which put so to in to well. we've to And allow XXXX, funding as on on continue the us some will

Nathan Race

balance recently. the back Got I'd this expecting lagging of that of would be the the repricing fair curve wholesale the that given maybe earlier? asset terms as of where growth discussed the supportive the been it. by currently. in imagine dynamics on a scenario scenario couple of added of sheet a margin earning depending we Is you of in expansion some can half borrowings loan of Under implied unwind just kind cuts times maybe rates that as some the have some overnight year expansion to some Fed forward that

Eric Lemke

later to us additional help. with with the happens, the floats scenario funds, benefit we've some year Yeah. in definitely added think funding Fed the some there'd be would seeing I Nate, cut Fed of that if that

Nathan Race

going Okay. then credit discussion. Great. just the to And back

are criticized obviously terms talked maybe in think we've on normalized well kind guys about the classified non-performers seeing this on fair a maybe are based think point that as think improvement kind Is as of year just just how what the some quarter based given basis you for levels year, in trends XX I credit in scenario charge-off range to of metrics the historically. high expectation too in you kind that of the in much past of that's do portfolio guys this just or an have improved of recently?

Jeffrey Ludwig

what But said charge-offs. here then hard quality around metrics Yeah. I I that's We think working so I which impact to to too to points down going hard is predict. on this our we're basis year. is at I group, get in it's think mean personally, again, that's I depending to earlier, do credit goes, high. Yeah, the this -- economy real closer hard -- where high. that's XX But came peer

that We saw trend. quarter. some the current of a is not in One quarter

we're as move then forward, our our minimize company. and can impacts the bottom really which provision profitability charge-offs we the we So hoping line of impacts

and of years. couple So big that's has the been for focus last a here

Eric Lemke

remixing down. the One that as over that along the of loan see just provisions portfolio by is, our we'll year, thing, ACL Nate, I'd deck, the of too look in page thing if because at comes one as portfolio, GreenSky tag our to next slide you some

now about loans. at in points credit of enhancements our right I past, basis The XX As points. XX ACL is is XX mean, basis total to about GreenSky basis of the only talked we've points

areas, which is So number we more loan disclosed, that at the of adjusted XXX go our see going other as quarter. ACL we that into remix and down, to pays end you're that the to

be just loan our those some there'll to and that So of provisions changes. portfolio some because related allowance, remixing in see we'll

Nathan Race

Okay.

So of seen maybe scenario, I'd rises low that historically what kind yeah, charge-offs a from we've loans steadily ACL the of or to similar imagine as again, guys? are this kind year, maybe of under you assuming percentage

Eric Lemke

where That's yes. it, Yeah. we see

Nathan Race

Thank Perfect. appreciate step Okay. the I color guys. you. all I’ll back.

Eric Lemke

Nate. Thanks,

Operator

our next One moment for question.

from Tamayo Our Raymond Daniel next James. comes question with

Your line open. is

Unidentified Participant

Tim morning. could Hey. Good Danny on plans is for hoping expand actually on on you kind This the partnerships. the if guys morning, this guys. was [indiscernible], I BaaS of

an us some partnerships are those on then coming how deposits non-interest-bearing. could that are be and giving of the talks the interest-bearing, going update of nature Just of in,

color Just any helpful. be there would

Eric Lemke

Yeah.

year sort to technology this I'll of say, on hard management pretty of key worked lots foundation, us compliance this laying both and the the sort governance side meetings. of the is sort we've The right. here, So do the, risk of side for

is good. of haven't this at to a looked do partners amount fair at of And to of slow and them So we've sort point yet. -- got one the we're going

look going buy. like to you We or of like you're sales, it's it's to got So to right? You M&A. a look got that -- at lot at one banks before buy the

first partnership that's partner, the right important well get really next comes partner and the make us for sure right to with going the really it's before So on.

that's partner sort two, So bring where on going the this sure and will of I year or can think a be we well. really make

involved In solely that deposit point there's some rate end this customer. imagine driven. deposits are focused at It that rate We be you can this here. the to are and partnerships environment, on might

that these, now would is, These are position I or of that but mostly targeting where half accounts, I partner -- non-interest but you like share at And we fee of some say there's deposit from think bearing Fed fintech not be there lot a will negotiated arrangement then is that being some if on placement will, fee our we're funds. margin than less number. is it will

it cheaper than be wholesale So today. would funds on brought materially of if those we today, some

Unidentified Participant

the or going trending to could remind up No, around sitting that go we us And helpful. up below could little ticked that's just comfortable bit, you're it where towards? just with very just Thank you Could that if XXX%. you. see ratio loan-to-deposit you here, just a

Jeffrey Ludwig

about the is I Yeah. But as to we XX%. cycles banking closer that's we like and at they to ideally, And There's in all I are loans. than coming don't times rate times there's on as high time. it probably There's deposits. in mean the think would talk -- come about meetings like in management be to same I deposits we faster would mean, be. where our time. unfortunately, coming all loans faster the

And side. coming the right now, have faster than in been loans deposit

us I and sort deposit really move that and as down. focused ratio some, year. going that's loan to that about are -- to year deposit gathering the of do continue earlier this to slow the talked into as -- and help think we're move we deposits going We on So will sort loans into on, of

The -- unwinding higher going go talked income and of very sort we funding the of of balance also unwind portfolio non-core flows off minimal this or help, cash those I to that the to of some either investment sheet as frankly, at impact cost the as will cash flow, statement. GreenSky that about, into take sort is

Unidentified Participant

Now one I just a additional then the XXXX item us little here. Tax around on for from Any And jumped where more rate be few out helpful. color shake appreciate the would quarters. color could housecleaning over of kind that there. bit past

Eric Lemke

Good question. Yes.

fairly our a percentage a income. grown little going revenue like relatively stable percentage in I around total XXXX, a into tax dropped where tax XXXX. say, was we've as the The exempt our think revenues bit it's or portfolio from income, that that going it to rate of significantly be in total jumps as of fourth [indiscernible] quarter

going the good think a probably forward. fourth I quarter is So measure

Unidentified Participant

had. That’s that. all I Appreciate Great.

Operator

next our for moment question. One

next question Inc. with from comes McEvoy Our Stephens Terry

Your open. line is

Unidentified Participant

good. couple is I (ph) a have on for Terry. just of Rode questions Brandon morning. Good, here. Good This

if expand I mentioned new in area just think X, selective across on specific and it's the whole more being broadly it Slide or CRE on portfolio? in Can a like is loan you're you production. you that

Jeffrey Ludwig

It's broad.

I the our was broad, down CRE think it's quarter, would although slightly. say, I in

selective being looking space. more broadly So ago. are to CRE months I we say, more eye months than we would maybe were in a it's the six eight critical even deals But Yeah. mostly with at

Unidentified Participant

you. Thank Okay.

or quarter. relative grow to? equipment be $X portfolio loans to this willing large there reached one, you those portfolio size would little a Another the the Is over whole billion about finance how to a

Eric Lemke

or now. Yeah. XX% -- It's Yeah. XX% It's roughly right roughly

the it that and of be I'd XX between want I to about to XX, that is would lower probably see XX don't somewhere that's range. end it like think sort it. on but would we want I be range to where where of be

Unidentified Participant

comment small loan fourth down your a growth, can Do that of or stable was holding that lower through that, XXXX in please? you interest kind And XXXX. NIM you. see the expand on Thank in Maybe Okay. took trending earlier step your income with quarter. Net as you well? stable is

Eric Lemke

Yeah.

The focused real we're is rate on think margin pays the what Dollars I bills. doesn't. dollars.

provide it's grow to But pressure. a think that's -- little flat we can how will dollars. So be really, we well a higher the growth, even we a grow going that's loan fixed little And portfolio GreenSky and we pressure. loan if over move. of don't then think repricing I our of these rate at rates, help. a I time There'll can loans the have lot

need Fed -- as to we're the rate rates And I if we deeper our forward. much as raise the in don't down, means rates if -- game, said that if going the deposit slows earlier, we're

those the reprice, could we dollars as So assets go think up.

Unidentified Participant

right. time. appreciate All questions your are had, so the Understood. I I Those

Eric Lemke

you. Thank Yeah.

Operator

further at over for I'm call showing any this closing questions management time. I'd back turn And any like remarks. not the to to

Jeffrey Ludwig

you. Thank Yeah.

determined call we the doesn't and want before practice for have today, call holding calls. of decided we mention have the these I required end for justify quarterly the benefit to that After holding that of we preparing resources the them. and much our discontinue amount of earnings time to So consideration,

provide a and and relations active on program everybody us a to release potential expand with with We good disclosures investor both where our we will will for earnings in dialogue today. joining appropriate, continue And and current to Have and information have regular shareholders. discussed investor analysts an I'd day. that, to our thank typically like And was these that calls. presentation maintain

Operator

Ladies and does presentation. today's gentlemen, this conclude

a You have and may day. disconnect now wonderful

Midland States Bancorp (MSBI) 27 Jan 222022 Q4 Earnings call transcript