• Midland States Bancorp, Inc. Announces 2023 First Quarter Results

    Source: Nasdaq GlobeNewswire / 27 Apr 2023 16:30:01   America/New_York

    First Quarter 2023 Highlights:

    • Net income available to common shareholders of $19.5 million, or $0.86 per diluted share
    • Total loan growth of $47.8 million, or 3.0% annualized from prior quarter
    • Total deposits increased $60.5 million, or 3.8% annualized from prior quarter, with uninsured deposits of 21%
    • Tangible book value per share of $21.87, an increase of 4.4% from prior quarter

    EFFINGHAM, Ill., April 27, 2023 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income available to common shareholders of $19.5 million, or $0.86 per diluted share, for the first quarter of 2023 compared to $29.7 million, or $1.30 per diluted share, for the fourth quarter of 2022. This also compares to net income available to common shareholders of $20.7 million, or $0.92 per diluted share, for the first quarter of 2022.

    Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “The strength of the franchise we have built has enabled us to effectively manage through the recent troubles in the banking industry and continue delivering strong financial performance. Due to the strong relationships we have with our clients, our deposit base has been exceptionally stable, and we have not needed to take any extraordinary measures to prevent deposit outflows or increase our level of liquidity beyond the usual prudent level that we maintain.

    “While becoming more selective in our new loan production given the uncertain economic conditions, we still grew our total loans at a 3% annualized rate in the first quarter, largely driven by growth in our commercial loan portfolio, which offset a decline in consumer loans as we see the planned reduction in loan balances in our GreenSky portfolio. We delivered another quarter of strong financial performance that further increased our capital ratios and tangible book value per share.

    “We will continue to prioritize prudent risk management and be conservative in our new loan production to build capital and liquidity. We expect to see continued reductions in our consumer portfolio that will be used to add to our security portfolio and pay off higher cost funding sources, with the net impact likely being earnings neutral, but capital accretive. We have a strong balance sheet with healthy asset quality, and we believe we can capitalize on the current environment to add new commercial and retail deposit relationships. Our focus on continuing to grow and strengthen our core deposit base will help us to generate long-term profitable growth and continue enhancing the value of our franchise,” said Mr. Ludwig.

    Balance Sheet Highlights

    Total assets were $7.93 billion at March 31, 2023, compared to $7.86 billion at December 31, 2022, and $7.34 billion at March 31, 2022. At March 31, 2023, portfolio loans were $6.35 billion, compared to $6.31 billion as of December 31, 2022, and $5.54 billion as of March 31, 2022. During the first quarter of 2023, the Company experienced another quarter of growth of $47.8 million, consisting of growth in commercial loan and lease balances of $84.1 million and commercial real estate loans of $15.0 million. The Company’s consumer loan balances declined $61.1 million, primarily due to a decrease in loans originated through the program with GreenSky.

    Loans

      As of
      March 31, December 31, March 31,
    (in thousands) 2023 2022 2022
    Loan Portfolio      
    Commercial loans $937,920 $872,794 $825,554
    Equipment finance loans  632,205  616,751  528,572
    Equipment finance leases  510,029  491,744  429,000
    Commercial FHA warehouse lines  10,275  25,029  83,999
    Total commercial loans and leases  2,090,429  2,006,318  1,867,125
    Commercial real estate  2,448,158  2,433,159  2,114,041
    Construction and land development  326,836  320,882  188,668
    Residential real estate  369,910  366,094  329,331
    Consumer  1,118,938  1,180,014  1,040,796
    Total loans $6,354,271 $6,306,467 $5,539,961

    Loan Quality

    Credit quality remained steady during the first quarter of 2023. Loans 30-89 days past due totaled $30.9 million as of March 31, 2023, compared to $32.4 million as of December 31, 2022, and $29.0 million as of March 31, 2022. Non-performing loans were $50.7 million at March 31, 2023, compared to $49.4 million as of December 31, 2022, and $52.9 million as of March 31, 2022. Non-performing loans as a percentage of portfolio loans was 0.80% at March 31, 2023 compared with 0.78% at December 31, 2022, and 0.95% at March 31, 2022. Non-performing assets were 0.74% of total assets at the end of the first quarter of 2023, compared to 0.74% at December 31, 2022 and 0.90% at March 31, 2022.

      As of and for the Quarter Ended
      March 31, December 31, March 31,
    (dollars in thousands, except per share data)  2023   2022   2022 
    Asset Quality      
    Loans 30-89 days past due $30,895  $32,372  $29,044 
    Nonperforming loans  50,713   49,423   52,900 
    Nonperforming assets  58,806   57,824   66,164 
    Substandard loans  99,819   101,044   120,837 
    Net charge-offs  2,119   538   2,256 
    Loans 30-89 days past due to total loans  0.49%  0.51%  0.52%
    Nonperforming loans to total loans  0.80%  0.78%  0.95%
    Nonperforming assets to total assets  0.74%  0.74%  0.90%
    Allowance for credit losses to total loans  0.98%  0.97%  0.96%
    Allowance for credit losses to nonperforming loans  122.39%  123.53%  100.07%
    Net charge-offs to average loans  0.14%  0.03%  0.17%

    The Company’s allowance for credit losses totaled $62.1 million at March 31, 2023, compared to $61.1 million at December 31, 2022, and $52.9 million at March 31, 2022. The allowance as a percentage of portfolio loans was 0.98% at March 31, 2023, compared to 0.97% at December 31, 2022, and 0.96% at March 31, 2022.

    Deposits

    Total deposits were $6.43 billion at March 31, 2023, compared with $6.36 billion at December 31, 2022, and $6.06 billion at March 31, 2022. Interest rate promotions offered during the first quarter of 2023 on money market and time deposit products resulted in increases in balances of $79.7 million and $117.3 million, respectively, at March 31, 2023, compared to December 31, 2022.

      As of
      March 31, December 31, March 31,
    (in thousands) 2023 2022 2022
    Deposit Portfolio      
    Noninterest-bearing demand $1,215,758 $1,362,158 $1,393,825
    Interest-bearing:      
    Checking  2,502,827  2,494,073  2,350,225
    Money market  1,263,813  1,184,101  964,352
    Savings  636,832  661,932  710,955
    Time  766,884  649,552  619,386
    Brokered time  39,087  12,836  18,796
    Total deposits $6,425,201 $6,364,652 $6,057,539

    The Company estimates that uninsured deposits(1) totaled $1.32 billion, or 21% of total deposits, at March 31, 2023 compared to $1.55 billion, or 24%, at December 31, 2022.

    (1) Uninsured deposits include the Call Report estimate of uninsured deposits less affiliate deposits, estimated insured portion of servicing deposits, additional structured FDIC coverage and collateralized deposits.

    Results of Operations Highlights

    During the first quarter of 2023, net interest income, on a tax-equivalent basis, totaled $60.7 million, a decrease of $3.1 million, or 4.8%, compared to $63.8 million for the fourth quarter of 2022, and an increase of $3.6 million, or 6.2%, compared to the first quarter of 2022 net interest income of $57.2 million.

    Net Interest Income and Margin

    The tax equivalent net interest margin for the first quarter of 2023 was 3.39%, compared with 3.50% in both the fourth and first quarters of 2022. The decline in the net interest margin during the first quarter of 2023 was largely attributable to increased market interest rates resulting in the cost of funding liabilities increasing at a faster rate than the yields on earning assets.

      For the Quarter Ended
      March 31, December 31, March 31,
    (dollars in thousands)  2023   2022   2022 
    Interest-earning assets Average Balance Interest & Fees Yield/Rate Average Balance Interest & Fees Yield/Rate Average Balance Interest & Fees Yield/Rate
    Cash and cash equivalents $85,123 $980 4.67% $220,938 $2,143 3.85% $384,231 $171 0.18%
    Investment securities  809,848  5,995 3.00%  736,579  4,824 2.62%  894,634  4,962 2.22%
    Loans  6,320,402  87,997 5.65%  6,240,277  82,810 5.26%  5,274,051  57,280 4.40%
    Loans held for sale  1,506  16 4.41%  3,883  47 4.86%  31,256  220 2.86%
    Nonmarketable equity securities  47,819  795 6.75%  43,618  677 6.16%  36,378  484 5.40%
    Total interest-earning assets $7,264,698 $95,783 5.35% $7,245,295 $90,501 4.96% $6,620,550 $63,117 3.87%
                       
    Interest-Bearing Liabilities                  
    Interest-bearing deposits $5,053,941 $26,405 2.12% $5,053,158 $19,841 1.56% $4,507,642 $2,161 0.19%
    Short-term borrowings  38,655  25 0.26%  47,391  31 0.26%  70,043  23 0.14%
    FHLB advances & other borrowings  540,278  6,006 4.51%  460,598  4,264 3.67%  311,282  1,212 1.58%
    Subordinated debt  99,812  1,370 5.57%  107,374  1,463 5.45%  139,139  2,011 5.78%
    Trust preferred debentures  50,047  1,229 9.96%  49,902  1,066 8.47%  49,451  514 4.21%
    Total interest-bearing liabilities $5,782,733 $35,035 2.46% $5,718,423 $26,665 1.85% $5,077,557 $5,921 0.47%
                       
    Net Interest Margin   $60,748 3.39%   $63,836 3.50%   $57,196 3.50%
                       
    Cost of Deposits     1.70%     1.23%     0.15%

    Average interest-earning assets for the first quarter of 2023 were $7.26 billion, compared to $7.25 billion for the fourth quarter of 2022, and $6.62 billion for the first quarter of 2022. Average loans were $6.32 billion for the first quarter of 2023, compared to $6.24 billion for the fourth quarter of 2022 and $5.27 billion for the first quarter of 2022. The average balance of PPP loans for the first quarter of 2022 was $36.2 million.

    Average investment securities for the first quarter of 2023 were $809.8 million, compared to $736.6 million for the fourth quarter of 2022, and $894.6 million for the first quarter of 2022. The Company took advantage of certain market conditions during the quarter to reposition out of lower yielding tax-exempt securities in favor of other structures and to purchase additional investments, increasing average investment securities by $73.3 million. These changes should result in improved overall margin, liquidity, and capital allocations. These transactions resulted in losses of $0.6 million in the current quarter, with expected paybacks to occur within the calendar year.

    Average interest-bearing deposits were $5.05 billion for the first quarter of 2023, compared to $5.05 billion for the fourth quarter of 2022, and $4.51 billion for the first quarter of 2022. Cost of interest-bearing deposits was 2.12% in the first quarter of 2023, which represents a 56 basis point increase from the fourth quarter of 2022. A competitive market driven by rising interest rates was a contributing factor to the increase in deposit costs.

    Noninterest Income

    Noninterest income was $15.8 million for the first quarter of 2023, compared to $33.8 million for the fourth quarter of 2022, and $15.6 million for the first quarter of 2022. Noninterest income for the first quarter of 2023 was negatively impacted by $0.6 million of losses on the sales of investment securities, while the fourth quarter of 2022 was positively impacted by a $17.5 million gain on the termination of forward starting interest rate swaps, and the first quarter of 2022 was negatively impacted by $0.4 million of impairment on commercial servicing rights. Excluding these transactions, noninterest income for the first quarter of 2023, the fourth quarter of 2022 and the first quarter of 2022 was $16.4 million, $16.3 million, and $16.0 million, respectively.

      For the Quarter Ended
      March 31, December 31, March 31,
    (in thousands)  2023  2022  2022 
    Noninterest income      
    Wealth management revenue $6,411  $6,227 $7,139 
    Residential mortgage banking revenue  405   316  599 
    Service charges on deposit accounts  2,568   2,511  2,068 
    Interchange revenue  3,412   3,478  3,280 
    Loss on sales of investment securities, net  (648)  —  — 
    Gain on termination of hedged interest rate swaps  —   17,531  — 
    Impairment on commercial mortgage servicing rights  —   —  (394)
    Company-owned life insurance  876   796  1,019 
    Other income  2,755   2,980  1,902 
    Total noninterest income $15,779  $33,839 $15,613 

    Noninterest Expense

    Noninterest expense was $44.5 million in the first quarter of 2023, compared to $49.9 million in the fourth quarter of 2022, and $40.9 million in the first quarter of 2022. Noninterest expense for the fourth quarter of 2022 included a $3.3 million charge on commercial FHA loan servicing rights held for sale and $3.3 million of impairment charges on two OREO properties. Noninterest expense, excluding these adjustments, was $44.5 million in the first quarter of 2023, compared to $43.2 million in the fourth quarter of 2022, and $40.9 million in the first quarter of 2022. As a result, the efficiency ratio was 57.64% for the quarter ended March 31, 2023, compared to 58.26% for the quarter ended December 31, 2022, and 55.73% for the quarter ended March 31, 2022.

      For the Quarter Ended
      March 31, December 31, March 31,
    (in thousands) 2023 2022 2022
    Noninterest expense      
    Salaries and employee benefits $24,243 $22,901 $21,870
    Occupancy and equipment  4,443  3,748  3,755
    Data processing  6,311  6,302  5,873
    Professional  1,760  1,726  1,972
    Amortization of intangible assets  1,291  1,333  1,398
    Other real estate owned  —  3,779  —
    Loss on mortgage servicing rights held for sale  —  3,250  —
    FDIC insurance  1,329  703  830
    Other expense  5,105  6,201  5,186
    Total noninterest expense $44,482 $49,943 $40,884

    Noteworthy components of noninterest expense are as follows:

    • Salaries and employee benefits expenses were $24.2 million in the first quarter of 2023, compared to $22.9 million in the fourth quarter of 2022, and $21.9 million in the first quarter of 2022. Employees numbered 931 at March 31, 2023, compared to 935 at December 31, 2022, and 920 at March 31, 2022. Increased payroll taxes and medical insurance of $0.6 million and $0.5 million, respectively, contributed to increased expense in the first quarter of 2023 compared to the fourth quarter of 2022. Annual salary increases and the modest increase in staffing levels contributed to increased salaries and benefits expenses from the first quarter of 2022, along with a $0.7 million increase in medical insurance.
    • Occupancy and equipment increased $0.7 million in the first quarter of 2023 compared to the fourth quarter of 2022, primarily due to seasonal related expenses, including snow removal and utilities expenses.
    • FDIC insurance expense was $1.3 million in the first quarter of 2023, compared to $0.7 million in the fourth quarter of 2022, and $0.8 million in the first quarter of 2022. The increase is primarily related to the FDIC’s 2 basis point increase to the initial base deposit insurance assessment rate schedules effective January 1, 2023.

    Income Tax Expense

    Income tax expense was $6.9 million for the first quarter of 2023, as compared to $11.0 million for the fourth quarter of 2022 and $6.6 million for the first quarter of 2022. The resulting effective tax rates were 24.0%, 25.1% and 24.2% respectively.

    Capital

    At March 31, 2023, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

     As of March 31, 2023
     Midland States Bank Midland States Bancorp, Inc. Minimum Regulatory Requirements (2)
    Total capital to risk-weighted assets11.59% 12.46% 10.50%
    Tier 1 capital to risk-weighted assets10.76% 10.25% 8.50%
    Tier 1 leverage ratio10.02% 9.54% 4.00%
    Common equity Tier 1 capital10.76% 7.84% 7.00%
    Tangible common equity to tangible assets (1)N/A 6.24% N/A

    (1) A non-GAAP financial measure. Refer to page 13 for a reconciliation to the comparable GAAP financial measure.
    (2) Includes the capital conservation buffer of 2.5%.

    Since the beginning of 2022, the impact of rising interest rates on the Company’s investment portfolio has resulted in an $83.0 million decline in accumulated other comprehensive income, which has negatively impacted tangible book value per share by $3.76, and the tangible common equity to tangible assets ratio by 108 basis points.

    Stock Repurchase Program

    On December 6, 2022, the Company’s board of directors authorized a new share repurchase program, pursuant to which the Company is authorized to repurchase up to $25.0 million of common stock through December 31, 2023. The previous repurchase plan terminated on December 31, 2022. During the first quarter of 2023, the Company repurchased 124,266 shares of its common stock at a weighted average price of $22.54 under its stock repurchase program. As of March 31, 2023, the Company had $22.2 million remaining under the current stock repurchase authorization.

    About Midland States Bancorp, Inc.

    Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of March 31, 2023, the Company had total assets of approximately $7.93 billion, and its Wealth Management Group had assets under administration of approximately $3.50 billion. The Company provides a full range of commercial and consumer banking products and services and business equipment financing, merchant credit card services, trust and investment management, insurance and financial planning services. For additional information, visit https://www.midlandsb.com/ or https://www.linkedin.com/company/midland-states-bank.

    Non-GAAP Financial Measures

    Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP.

    These non-GAAP financial measures include “Adjusted Earnings,” “Adjusted Earnings Available to Common Shareholders,” “Adjusted Diluted Earnings Per Common Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Adjusted Pre-Tax, Pre-Provision Earnings,” “Adjusted Pre-Tax, Pre-Provision Return on Average Assets,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share,” “Tangible Book Value Per Share excluding Accumulated Other Comprehensive Income,” and “Return on Average Tangible Common Equity.” The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.

    Forward-Looking Statements

    Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company’s plans, objectives, future performance, goals and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, the impact of inflation, continuing effects of the recent failures of Silicon Valley Bank and Signature Bank, including anticipated effects on FDIC premiums, increased deposit volatility and potential regulatory developments; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; developments and uncertainty related to the future use and availability of some reference rates, such as the London Inter-Bank Offered Rate, as well as other alternative reference rates, and the adoption of a substitute; changes to U.S. tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

    CONTACTS:
    Jeffrey G. Ludwig, President and CEO, at jludwig@midlandsb.com or (217) 342-7321
    Eric T. Lemke, Chief Financial Officer, at elemke@midlandsb.com or (217) 342-7321
    Douglas J. Tucker, SVP and Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321

    MIDLAND STATES BANCORP, INC.
    CONSOLIDATED FINANCIAL SUMMARY (unaudited)
           
      As of and for the Quarter Ended
      March 31, December 31, March 31,
    (dollars in thousands, except per share data)  2023   2022   2022 
    Earnings Summary      
    Net interest income $60,504  $63,550  $56,827 
    Provision for credit losses  3,135   3,544   4,167 
    Noninterest income  15,779   33,839   15,613 
    Noninterest expense  44,482   49,943   40,884 
    Income before income taxes  28,666   43,902   27,389 
    Income taxes  6,894   11,030   6,640 
    Net income  21,772   32,872   20,749 
    Preferred dividends  2,228   3,169   — 
    Net income available to common shareholders $19,544  $29,703  $20,749 
           
    Diluted earnings per common share $0.86  $1.30  $0.92 
    Weighted average common shares outstanding - diluted  22,501,970   22,503,611   22,350,307 
    Return on average assets  1.12%  1.66%  1.16%
    Return on average shareholders' equity  11.51%  17.41%  12.80%
    Return on average tangible common equity (1)  16.70%  25.89%  17.84%
    Net interest margin  3.39%  3.50%  3.50%
    Efficiency ratio (1)  57.64%  58.26%  55.73%
           
    Adjusted Earnings Performance Summary (1)      
    Adjusted earnings available to common shareholders $20,017  $19,278  $20,815 
    Adjusted diluted earnings per common share $0.88  $0.85  $0.92 
    Adjusted return on average assets  1.15%  1.13%  1.16%
    Adjusted return on average shareholders' equity  11.76%  11.89%  12.84%
    Adjusted return on average tangible common equity  17.11%  16.80%  17.89%
    Adjusted pre-tax, pre-provision earnings $32,449  $33,165  $32,041 
    Adjusted pre-tax, pre-provision return on average assets  1.67%  1.68%  1.79%
           
    Wealth Management      
    Trust assets under administration $3,502,635  $3,505,372  $3,934,140 
           
    Market Data      
    Book value per share at period end $30.08  $29.17  $29.26 
    Tangible book value per share at period end (1) $21.87  $20.94  $20.87 
    Tangible book value per share excluding accumulated other comprehensive income at period end (1) $25.39  $24.72  $22.14 
    Market price at period end $21.42  $26.62  $28.86 
    Common shares outstanding at period end  22,111,454   22,214,913   22,044,626 
           
    Capital      
    Total capital to risk-weighted assets  12.46%  12.38%  11.74%
    Tier 1 capital to risk-weighted assets  10.25%  10.21%  8.82%
    Tier 1 common capital to risk-weighted assets  7.84%  7.77%  7.80%
    Tier 1 leverage ratio  9.54%  9.43%  7.96%
    Tangible common equity to tangible assets (1)  6.24%  6.06%  6.43%

    (1) Non-GAAP financial measures. Refer to pages 11 - 13 for a reconciliation to the comparable GAAP financial measures.

     
    MIDLAND STATES BANCORP, INC.
    CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
           
      As of
      March 31, December 31, March 31,
    (in thousands)  2023   2022   2022 
    Assets      
    Cash and cash equivalents $138,310  $160,631  $332,264 
    Investment securities  821,005   776,860   858,246 
    Loans  6,354,271   6,306,467   5,539,961 
    Allowance for credit losses on loans  (62,067)  (61,051)  (52,938)
    Total loans, net  6,292,204   6,245,416   5,487,023 
    Loans held for sale  2,747   1,286   8,931 
    Premises and equipment, net  80,582   78,293   77,857 
    Other real estate owned  6,729   6,729   11,537 
    Loan servicing rights, at lower of cost or fair value  1,117   1,205   27,484 
    Commercial FHA mortgage loan servicing rights held for sale  20,745   20,745   — 
    Goodwill  161,904   161,904   161,904 
    Other intangible assets, net  19,575   20,866   22,976 
    Company-owned life insurance  151,319   150,443   148,060 
    Other assets  233,937   231,123   202,433 
    Total assets $7,930,174  $7,855,501  $7,338,715 
           
    Liabilities and Shareholders' Equity      
    Noninterest-bearing demand deposits $1,215,758  $1,362,158  $1,393,825 
    Interest-bearing deposits  5,209,443   5,002,494   4,663,714 
    Total deposits  6,425,201   6,364,652   6,057,539 
    Short-term borrowings  31,173   42,311   60,352 
    FHLB advances and other borrowings  482,000   460,000   310,171 
    Subordinated debt  99,849   99,772   139,184 
    Trust preferred debentures  50,135   49,975   49,524 
    Other liabilities  66,173   80,217   76,959 
    Total liabilities  7,154,531   7,096,927   6,693,729 
    Total shareholders’ equity  775,643   758,574   644,986 
    Total liabilities and shareholders’ equity $7,930,174  $7,855,501  $7,338,715 


     
    MIDLAND STATES BANCORP, INC.
    CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
           
      For the Quarter Ended
      March 31, December 31, March 31,
    (in thousands, except per share data)  2023   2022  2022 
    Net interest income:      
    Interest income $95,539  $90,215 $62,748 
    Interest expense  35,035   26,665  5,921 
    Net interest income  60,504   63,550  56,827 
    Provision for credit losses:      
    Provision for credit losses on loans  3,135   2,950  4,132 
    Provision for credit losses on unfunded commitments  —   594  256 
    Provision for other credit losses  —   —  (221)
    Total provision for credit losses  3,135   3,544  4,167 
    Net interest income after provision for credit losses  57,369   60,006  52,660 
    Noninterest income:      
    Wealth management revenue  6,411   6,227  7,139 
    Residential mortgage banking revenue  405   316  599 
    Service charges on deposit accounts  2,568   2,511  2,068 
    Interchange revenue  3,412   3,478  3,280 
    Loss on sales of investment securities, net  (648)  —  — 
    Gain on termination of hedged interest rate swaps  —   17,531  — 
    Impairment on commercial mortgage servicing rights  —   —  (394)
    Company-owned life insurance  876   796  1,019 
    Other income  2,755   2,980  1,902 
    Total noninterest income  15,779   33,839  15,613 
    Noninterest expense:      
    Salaries and employee benefits  24,243   22,901  21,870 
    Occupancy and equipment  4,443   3,748  3,755 
    Data processing  6,311   6,302  5,873 
    Professional  1,760   1,726  1,972 
    Amortization of intangible assets  1,291   1,333  1,398 
    Other real estate owned  —   3,779  — 
    Loss on mortgage servicing rights held for sale  —   3,250  — 
    FDIC insurance  1,329   703  830 
    Other expense  5,105   6,201  5,186 
    Total noninterest expense  44,482   49,943  40,884 
    Income before income taxes  28,666   43,902  27,389 
    Income taxes  6,894   11,030  6,640 
    Net income  21,772   32,872  20,749 
    Preferred stock dividends  2,228   3,169  — 
    Net income available to common shareholders $19,544  $29,703 $20,749 
           
    Basic earnings per common share $0.86  $1.31 $0.92 
    Diluted earnings per common share $0.86  $1.30 $0.92 


     
    MIDLAND STATES BANCORP, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
           
    Adjusted Earnings Reconciliation
           
      For the Quarter Ended
      March 31, December 31, March 31,
    (dollars in thousands, except per share data)  2023   2022   2022 
    Income before income taxes - GAAP $28,666  $43,902  $27,389 
    Adjustments to noninterest income:      
    Loss on sales of investment securities, net  648   —   — 
    (Gain) on termination of hedged interest rate swaps  —   (17,531)  — 
    Total adjustments to noninterest income  648   (17,531)  — 
    Adjustments to noninterest expense:      
    (Loss) on mortgage servicing rights held for sale  —   (3,250)  — 
    Integration and acquisition expenses  —   —   (91)
    Total adjustments to noninterest expense  —   (3,250)  (91)
    Adjusted earnings pre tax  29,314   29,621   27,480 
    Adjusted earnings tax  7,069   7,174   6,665 
    Adjusted earnings - non-GAAP  22,245   22,447   20,815 
    Preferred stock dividends  2,228   3,169   — 
    Adjusted earnings available to common shareholders $20,017  $19,278  $20,815 
    Adjusted diluted earnings per common share $0.88  $0.85  $0.92 
    Adjusted return on average assets  1.15%  1.13%  1.16%
    Adjusted return on average shareholders' equity  11.76%  11.89%  12.84%
    Adjusted return on average tangible common equity  17.11%  16.80%  17.89%
           
           
    Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
           
      For the Quarter Ended
      March 31, December 31, March 31,
    (dollars in thousands)  2023   2022   2022 
    Adjusted earnings pre tax - non-GAAP $29,314  $29,621  $27,480 
    Provision for credit losses  3,135   3,544   4,167 
    Impairment on commercial mortgage servicing rights  —   —   394 
    Adjusted pre-tax, pre-provision earnings - non-GAAP $32,449  $33,165  $32,041 
    Adjusted pre-tax, pre-provision return on average assets  1.67%  1.68%  1.79%


    MIDLAND STATES BANCORP, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
           
    Efficiency Ratio Reconciliation
           
      For the Quarter Ended
      March 31, December 31, March 31,
    (dollars in thousands)  2023   2022   2022 
    Noninterest expense - GAAP $44,482  $49,943  $40,884 
    Loss on mortgage servicing rights held for sale  —   (3,250)  — 
    Integration and acquisition expenses  —   —   (91)
    Adjusted noninterest expense $44,482  $46,693  $40,793 
           
    Net interest income - GAAP $60,504  $63,550  $56,827 
    Effect of tax-exempt income  244   286   369 
    Adjusted net interest income  60,748   63,836   57,196 
           
    Noninterest income - GAAP  15,779   33,839   15,613 
    Impairment on commercial mortgage servicing rights  —   —   394 
    Loss on sales of investment securities, net  648   —   — 
    (Gain) on termination of hedged interest rate swaps  —   (17,531)  — 
    Adjusted noninterest income  16,427   16,308   16,007 
           
    Adjusted total revenue $77,175  $80,144  $73,203 
           
    Efficiency ratio  57.64%  58.26%  55.73%
           
    Return on Average Tangible Common Equity (ROATCE)
           
      For the Quarter Ended
      March 31, December 31, March 31,
    (dollars in thousands)  2023   2022   2022 
    Net income $21,772  $32,872  $20,749 
           
    Average total shareholders' equity—GAAP $767,186  $749,183  $657,327 
    Adjustments:      
    Preferred Stock  (110,548)  (110,548)  — 
    Goodwill  (161,904)  (161,904)  (161,904)
    Other intangible assets, net  (20,184)  (22,859)  (23,638)
    Average tangible common equity $474,550  $453,872  $471,785 
    ROATCE  16.70%  25.89%  17.84%


    MIDLAND STATES BANCORP, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
           
    Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share
           
      As of
      March 31, December 31, March 31,
    (dollars in thousands, except per share data)  2023   2022   2022 
    Shareholders' Equity to Tangible Common Equity    
    Total shareholders' equity—GAAP $775,643  $758,574  $644,986 
    Adjustments:      
    Preferred Stock  (110,548)  (110,548)  — 
    Goodwill  (161,904)  (161,904)  (161,904)
    Other intangible assets, net  (19,575)  (20,866)  (22,976)
    Tangible common equity $483,616  $465,256  $460,106 
           
    Less: Accumulated other comprehensive income (AOCI)  (77,797)  (83,797)  (28,035)
    Tangible common equity excluding AOCI  561,413   549,053   488,141 
           
    Total Assets to Tangible Assets:      
    Total assets—GAAP $7,930,174  $7,855,501  $7,338,715 
    Adjustments:      
    Goodwill  (161,904)  (161,904)  (161,904)
    Other intangible assets, net  (19,575)  (20,866)  (22,976)
    Tangible assets $7,748,695  $7,672,731  $7,153,835 
           
    Common Shares Outstanding  22,111,454   22,214,913   22,044,626 
           
    Tangible Common Equity to Tangible Assets  6.24%  6.06%  6.43%
    Tangible Book Value Per Share $21.87  $20.94  $20.87 
    Tangible Book Value Per Share excluding AOCI $25.39  $24.72  $22.14 


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