Midland States Bancorp, Inc.

Good day and thank you for standing by. Welcome to the Q2 2022 Midland States Bancorp, Inc. 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. To ask a question during that session, you will need to press star 1 1 on your phone. Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your speaker today, Mr. Tony Rossi of Financial Profiles. Mr. Rossi, please go ahead.

Thank you, Chris. Good morning, everyone, and thank you for joining us today for the Midland States Bancorp Second Quarter 2022 Earnings Call. Joining us from Midland's management team are Jeff Ludwig, President and Chief Executive Officer, and Eric Lemke, Chief Financial Officer. We will be using a slide presentation as part of our discussion this morning. If you have not done so already, please visit the webcast and presentations page of Midland's Investor Relations website to download a copy of the presentation. Before we begin, I'd like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial condition of Midland States Bancorp that involve risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the company's website. The company disclaims any obligation to update any forward-looking statements made during the call. Additionally, management may refer to non-GAAP measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today, as well as the reconciliation of the GAAP to non-GAAP measures. With that, I'd like to turn the call over to Jeff. Jeff?

Good morning, everyone. Welcome to the Midland State's Earnings Call. I'm going to start on slide three with the highlights of the second quarter. Despite an increasingly challenging operating environment, we continue to generate improvement in our financial performance as a result of the strategic initiatives we have implemented over the past few years to strengthen our commercial and retail banking teams, increase our focus on higher growth markets, and improve operational efficiencies. our strong execution on these strategies produced another strong quarter of very strong loan growth, additional expansion in our net interest margin, and greater operating leverage. This resulted in a stronger quarter with net income of $21.9 million, or 97 cents per share, pre-tax, pre-provision earnings of 35.9 million, and increases in our ROA, ROE, and ROTCE relative to the prior quarter as we continue to generate a higher level of performance. The most significant driver of our improved performance is the higher level of productivity we are seeing from our commercial banking teams. Our teams are doing an outstanding job of developing new commercial relationships and our strong loan production resulted in 18% annualized growth in total loans. Our commercial banking teams are focused on relationship lending within our markets across a variety of loan types. And as a result, total loans within our community banking markets were up $192 million. We continue to see a higher level of growth in St. Louis as a result of our increased focus on this market. Total loans in the St. Louis market were up 11% from the prior quarter and have increased 23% over the past six months. Our St. Louis team is also doing a very good job of developing more commercial deposit relationships, which has resulted in our deposits in the St. Louis market increasing 19% over the past six months. The strong loan growth we are seeing is helping us to drive positive trends in a number of key metrics. Our net interest margin increased 15 basis points in the second quarter, on top of the 25 basis point increase in the first quarter. as the strong growth in loans resulted in a favorable shift in earning assets, while we also benefited from higher rates on new loan originations. The higher revenue we are seeing from the loan growth and margin expansion is also helping us to realize more operating leverage as we effectively manage our expense levels. This resulted in an improvement in our efficiency ratio to 53.1% from 55.7% in the prior quarter. In addition to our strong organic growth, we also completed our branch purchase transaction with FNVC Bank and Trust late in the second quarter. We are very pleased to be able to execute on this transaction that perfectly fits our acquisition criteria at the current time. It's low risk and easily digestible, so it won't distract the organization and disrupt the strong execution we are seeing on our growth and efficiency improvement strategies. It's immediately accretive to earnings and provides a meaningful amount of low-cost deposits that we can use to fund our strong loan growth. And from a strategic perspective, the addition of a branch in Mokena provides another physical presence in the greater Chicagoland area that will support the increased business development efforts we have in this higher growth market. It's the ideal type of small tuck-in deal that nicely complements the strong organic growth that we are generating without presenting any execution or integration risk. At this point, I'm going to turn the call over to Eric to provide some additional details around our second quarter performance. Eric.