KBRA Assigns Ratings to Midland States Bancorp, Inc.

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns a senior unsecured debt rating of BBB, subordinated debt rating of BBB-, and short-term debt rating of K3 for Effingham, Illinois based Midland States Bancorp, Inc. (NASAQ: MSBI) (“the company”). In addition, KBRA assigns deposit and senior unsecured debt ratings of BBB+, a subordinated debt rating of BBB, and short-term deposit and debt ratings of K2 for the subsidiary bank, Midland States Bank. The Outlook for all long-term ratings is Stable.

The ratings are supported by a relatively diverse loan book with limited CRE and C&D exposure compared to most KBRA rated banks coupled with prudent risk management evidenced by modest historical gross loss rates. Additionally, losses within the consumer portfolio have been limited. The ratings are also strengthened by the company’s solid fee income base – generating around 30% of operating revenue. Moreover, fee-based income is relatively diverse amongst sources and includes wealth management, commercial FHA, and interchange fee revenue as well as service charges. The ratings are further underpinned by MSBI’s low cost deposit base (0.84% total cost of deposits as of 2Q19), which has helped stabilize NIM in recent periods. MSBI’s level of NPAs is higher-than-average, though not viewed by KBRA as a constraint to ratings. A significant portion of NPAs are PCI loans, and NCOs are in-line with many peers. The company’s slightly below-average capital ratios constrain the ratings, though KBRA recognizes MSBI’s ability to generate capital internally and anticipates that MSBI’s TCE ratio will generally remain above 8% going forward.

To view the rating report, click here.

The ratings are based on KBRA’s Global Bank and Bank Holding Company Rating Methodology published on February 19, 2016

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical Contacts:

Thomas Curley, Associate

(301) 969-3245

tcurley@kbra.com

Joe Scott, Managing Director

(646) 731-2438

jscott@kbra.com