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

    Source: Nasdaq GlobeNewswire / 27 Jul 2023 15:16:25   America/Chicago

    Second Quarter 2023 Highlights:

    • Net income available to common shareholders of $19.3 million, or $0.86 per diluted share
    • Efficiency ratio improved to 55.0% from prior quarter
    • Total loan growth of $13.1 million, or 0.8% annualized
    • Total deposit growth of $1.3 million or 0.1% annualized
    • Common equity tier 1 capital ratio improved to 8.03%
    • Tangible book value per share of $22.24, an increase of 1.7% from prior quarter

    EFFINGHAM, Ill., July 27, 2023 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income available to common shareholders of $19.3 million, or $0.86 per diluted share, for the second quarter of 2023, compared to $19.5 million, or $0.86 per diluted share, for the first quarter of 2023. This also compares to net income available to common shareholders of $21.9 million, or $0.97 per diluted share, for the second quarter of 2022.

    Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We executed well in the second quarter and continued to deliver strong financial performance while prioritizing prudent risk management given the challenging operating environment, which resulted in an 8% increase in our pre-tax, pre-provision income compared to the prior quarter. Due to our strong financial performance and prudent balance sheet management, we saw an increase in our capital ratios and tangible book value per share, while also taking advantage of the opportunity to repurchase our common stock at below tangible book value and redeeming some of our higher cost subordinated debt.

    “We continue to have success in developing full banking relationships with high quality businesses, which resulted in continued growth in our commercial loan portfolio. As planned, we are funding the new commercial loans and additional securities purchases with the runoff in our GreenSky portfolio, which is contributing to our strong financial performance and increase in capital ratios.

    “While economic conditions remain uncertain, we will continue to prioritize prudent risk management and be conservative in our new loan production to build capital and liquidity. We continue to see good opportunities to add core deposit relationships in our markets with both retail and commercial customers, and during the second half of the year, we expect to begin seeing a contribution to deposit gathering from our Banking-as-a-Service initiative, which we believe will further strengthen our deposit base, support profitable growth in the future, and create additional franchise value,” said Mr. Ludwig.

    Balance Sheet Highlights

    Total assets were $8.03 billion at June 30, 2023, compared to $7.93 billion at March 31, 2023, and $7.44 billion at June 30, 2022. At June 30, 2023, portfolio loans were $6.37 billion, compared to $6.35 billion as of March 31, 2023, and $5.80 billion as of June 30, 2022.

    Loans

    During the second quarter of 2023, outstanding loans increased at a slower rate as the Company originated loans in a more selective and deliberate approach to balance liquidity and funding costs. Commercial loan and lease balances and construction and land development loans increased $18.0 million and $39.8 million, respectively, offsetting the decline in consumer loan balances due to a decrease in loans originated through GreenSky.

     As of
     June 30, March 31, December 31, September 30, June 30,
    (in thousands)2023 2023 2022 2022 2022
    Loan Portfolio         
    Commercial loans$962,756 $937,920 $872,794 $907,651 $821,119
    Equipment finance loans 614,633  632,205  616,751  577,323  546,267
    Equipment finance leases 500,485  510,029  491,744  457,611  439,202
    Commercial FHA warehouse lines 30,522  10,275  25,029  51,309  23,872
    Total commercial loans and leases 2,108,396  2,090,429  2,006,318  1,993,894  1,830,460
    Commercial real estate 2,443,995  2,448,158  2,433,159  2,466,303  2,335,655
    Construction and land development 366,631  326,836  320,882  225,549  203,955
    Residential real estate 371,486  369,910  366,094  356,225  340,103
    Consumer 1,076,836  1,118,938  1,180,014  1,156,480  1,085,371
    Total loans$6,367,344 $6,354,271 $6,306,467 $6,198,451 $5,795,544
     

    Loan Quality

    Credit quality metrics declined during the second quarter of 2023. Loans 30-89 days past due totaled $44.2 million as of June 30, 2023, compared to $30.9 million as of March 31, 2023, and $16.2 million as of June 30, 2022. The increase in delinquencies during the most recent quarter was due to a single commercial loan, which has since been brought current, and an increase in delinquencies in equipment finance loans and leases.

    Non-performing loans were $54.8 million at June 30, 2023, compared to $50.7 million as of March 31, 2023, and $56.9 million as of June 30, 2022. The increase at June 30, 2023 was related to one commercial real estate loan moving to non-performing at the end of the quarter. Non-performing loans as a percentage of portfolio loans was 0.86% at June 30, 2023, compared with 0.80% at March 31, 2023, and 0.98% at June 30, 2022.

    Non-performing assets were 0.72% of total assets at the end of the second quarter of 2023, compared to 0.74% at March 31, 2023 and 0.93% at June 30, 2022. Two other real estate owned (“OREO”) properties were sold during the second quarter of 2023 at a gain of $0.8 million resulting in the decrease in non-performing assets.

     As of and for the Three Months Ended
    (in thousands)
    		June 30, March 31, December 31, September 30, June 30,
    2023
    		 2023 2022 2022 2022
    Asset Quality         
    Loans 30-89 days past due$44,161  $30,895  $32,372  $28,275  $16,212 
    Nonperforming loans 54,844   50,713   49,423   46,882   56,883 
    Nonperforming assets 57,688   58,806   57,824   59,524   69,344 
    Substandard loans 130,707   99,819   101,044   98,517   114,820 
    Net charge-offs 2,996   2,119   538   3,233   2,781 
    Loans 30-89 days past due to total loans 0.69%  0.49%  0.51%  0.46%  0.28%
    Nonperforming loans to total loans 0.86%  0.80%  0.78%  0.76%  0.98%
    Nonperforming assets to total assets 0.72%  0.74%  0.74%  0.76%  0.93%
    Allowance for credit losses to total loans 1.02%  0.98%  0.97%  0.95%  0.95%
    Allowance for credit losses to nonperforming loans 118.43%  122.39%  123.53%  125.08%  96.51%
    Net charge-offs to average loans 0.19%  0.14%  0.03%  0.21%  0.20%
     

    The Company’s allowance for credit losses totaled $65.0 million at June 30, 2023, compared to $62.1 million at March 31, 2023, and $54.9 million at June 30, 2022. The allowance as a percentage of portfolio loans was 1.02% at June 30, 2023, compared to 0.98% at March 31, 2023, and 0.95% at June 30, 2022.

    Deposits

    Total deposits were $6.43 billion at both June 30, 2023 and March 31, 2023, compared with $6.18 billion at June 30, 2022. The deposit mix continues to shift from noninterest-bearing deposits to interest-bearing deposits due to the continued rate increases announced by the Federal Reserve. Interest rate promotions offered during the second quarter of 2023 on time deposit products contributed to an increase in balances of $73.9 million at June 30, 2023, compared to March 31, 2023.

     As of
     June 30, March 31, December 31, September 30, June 30,
    (in thousands)2023 2023 2022 2022 2022
    Deposit Portfolio         
    Noninterest-bearing demand$1,162,909 $1,215,758 $1,362,158 $1,362,481 $1,403,386
    Interest-bearing:         
    Checking 2,499,693  2,502,827  2,494,073  2,568,195  2,377,760
    Money market 1,226,470  1,263,813  1,184,101  1,125,333  1,027,547
    Savings 624,005  636,832  661,932  704,245  740,364
    Time 840,734  766,884  649,552  620,960  620,363
    Brokered time 72,737  39,087  12,836  14,038  15,018
    Total deposits$6,426,548 $6,425,201 $6,364,652 $6,395,252 $6,184,438
     

    The Company estimates that uninsured deposits(1) totaled $1.21 billion, or 19% of total deposits, at June 30, 2023 compared to $1.32 billion, or 21%, at March 31, 2023.   

    (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

    Net Interest Income and Margin

    During the second quarter of 2023, net interest income, on a tax-equivalent basis, totaled $59.0 million, a decrease of $1.7 million, or 2.8%, compared to $60.7 million for the first quarter of 2023. The tax-equivalent net interest margin for the second quarter of 2023 was 3.23%, compared with 3.39% in the first quarter of 2023. Net interest income and related margin, on a tax-equivalent basis, was $61.7 million and 3.65%, respectively, in the second quarter of 2022. The decline in the net interest income and margin 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.

    Average interest-earning assets for the second quarter of 2023 were $7.33 billion, compared to $7.26 billion for the first quarter of 2023. The yield increased 16 basis points to 5.51% compared to the first quarter of 2023. Interest-earning assets averaged $6.77 billion for the second quarter of 2022.

    Average loans were $6.36 billion for the second quarter of 2023, compared to $6.32 billion for the first quarter of 2023 and $5.68 billion for the second quarter of 2022. The yield on loans was 5.80% and 5.65% for the second and first quarters of 2023, respectively.

     For the Three Months Ended
     June 30, March 31, June 30,
    (dollars in thousands)2023
    		 2023
    		 2022
    Interest-earning assetsAverage
    Balance    		 Interest &
    Fees    		 Yield/
    Rate    		 Average
    Balance    		 Interest &
    Fees    		 Yield/
    Rate    		 Average
    Balance    		 Interest &
    Fees    		 Yield/
    Rate
    Cash and cash equivalents$67,377 $852 5.07% $85,123 $980 4.67% $226,517 $468 0.83%
    Investment securities 861,409  7,286 3.39%  809,848  5,995 3.00%  818,927  4,931 2.41%
    Loans 6,356,012  91,890 5.80%  6,320,402  87,997 5.65%  5,677,791  63,594 4.49%
    Loans held for sale 4,067  59 5.79%  1,506  16 4.41%  9,865  77 3.15%
    Nonmarketable equity securities 45,028  599 5.33%  47,819  795 6.75%  36,338  487 5.38%
    Total interest-earning assets$7,333,893 $100,686 5.51% $7,264,698 $95,783 5.35% $6,769,438 $69,557 4.12%
    Noninterest-earning assets 612,238      610,811      615,348    
    Total assets$7,946,131     $7,875,509     $7,384,786    
                      
    Interest-Bearing Liabilities                 
    Interest-bearing deposits$5,259,188 $33,617 2.56% $5,053,941 $26,405 2.12% $4,718,759 $3,810 0.32%
    Short-term borrowings 22,018  14 0.26%  38,655  25 0.26%  59,301  22 0.15%
    FHLB advances & other borrowings 471,989  5,396 4.59%  540,278  6,006 4.51%  307,611  1,435 1.87%
    Subordinated debt 97,278  1,335 5.51%  99,812  1,370 5.57%  139,232  2,011 5.78%
    Trust preferred debentures 50,218  1,289 10.29%  50,047  1,229 9.96%  49,602  624 5.05%
    Total interest-bearing liabilities$5,900,691 $41,651 2.83% $5,782,733 $35,035 2.46% $5,274,505 $7,902 0.60%
    Noninterest-bearing deposits 1,187,584      1,250,899      1,401,268    
    Other noninterest-bearing liabilities 81,065      74,691      66,009    
    Shareholders’ equity 776,791      767,186      643,004    
    Total liabilities and shareholder’s equity$7,946,131     $7,875,509     $7,384,786    
                      
    Net Interest Margin  $59,035 3.23%   $60,748 3.39%   $61,655 3.65%
                      
    Cost of Deposits    2.09%     1.70%     0.25%


    (1)Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.2 million, $0.2 million and $0.3 million for the three months ended June 30, 2023, March 31, 2023 and 2022, respectively.
      

    Investment securities averaged $861.4 million for the second quarter of 2023, compared to $809.8 million for the first quarter of 2023. The Company purchased additional investments and repositioned out of lower-yielding securities in favor of higher-yielding instruments resulting in increased average balances of $51.6 million and a higher yield. These changes are expected to improve overall margin, liquidity, and capital allocations. The Company incurred net losses on sales of $0.9 million in the second quarter of 2023. Investment securities averaged $818.9 million for the second quarter of 2022.

    Average interest-bearing deposits were $5.26 billion for the second quarter of 2023, compared to $5.05 billion for the first quarter of 2023, and $4.72 billion for the second quarter of 2022. Cost of interest-bearing deposits was 2.56% in the second quarter of 2023, which represents a 44 basis point increase from the first quarter of 2023. A competitive market driven by rising interest rates was a contributing factor to the increase in deposit costs.

    The Company redeemed $6.6 million of subordinated debt during the second quarter of 2023. The debentures were redeemed at a discount, resulting in a gain of $0.7 million.

    During the six months ended June 30, 2023, net interest income, on a tax-equivalent basis, increased to $119.8 million, with a tax-equivalent net interest margin of 3.31%, compared to net interest income, on a tax-equivalent basis, of $118.9 million, and a tax-equivalent net interest margin of 3.58% for the six months ended June 30, 2022.

     For the Six Months Ended
     June 30, June 30,
    (dollars in thousands)2023
    		 2022
    Interest-earning assetsAverage
    Balance    		 Interest &
    Fees    		 Yield/
    Rate    		 Average
    Balance    		 Interest &
    Fees    		 Yield/
    Rate
    Cash and cash equivalents$76,201 $1,832 4.85% $304,938 $639 0.42%
    Investment securities 835,771  13,281 3.18%  856,571  9,894 2.31%
    Loans 6,338,305  179,887 5.72%  5,477,037  120,873 4.45%
    Loans held for sale 2,794  75 5.42%  20,501  297 2.93%
    Nonmarketable equity securities 46,416  1,394 6.05%  36,358  971 5.39%
    Total interest-earning assets$7,299,487 $196,469 5.43% $6,695,405 $132,674 4.00%
    Noninterest-earning assets 611,528      623,224    
    Total assets$7,911,015     $7,318,629    
                
    Interest-Bearing Liabilities           
    Interest-bearing deposits$5,157,148 $60,022 2.35% $4,613,751 $5,971 0.26%
    Short-term borrowings 30,291  39 0.26%  64,642  45 0.14%
    FHLB advances & other borrowings 505,945  11,402 4.54%  309,436  2,647 1.72%
    Subordinated debt 98,538  2,705 5.54%  139,186  4,022 5.78%
    Trust preferred debentures 50,133  2,518 10.13%  49,527  1,138 4.64%
    Total interest-bearing liabilities$5,842,055 $76,686 2.65% $5,176,542 $13,823 0.54%
    Noninterest-bearing deposits 1,219,050      1,418,083    
    Other noninterest-bearing liabilities 77,895      73,878    
    Shareholders’ equity 772,015      650,126    
    Total liabilities and shareholder’s equity$7,911,015     $7,318,629    
                
    Net Interest Margin  $119,783 3.31%   $118,851 3.58%
                
    Cost of Deposits    1.90%     0.20%


    (1)Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.4 million and $0.7 million for the six months ended June 30, 2023 and 2022, respectively.
      

    The yield on earning assets increased 143 basis points to 5.43% for the six months ended June 30, 2023 compared to the same period one year prior. However, the cost of interest bearing liabilities increased at a faster rate during this period, increasing 211 basis points to 2.65% for the six months ended June 30, 2023.

    Noninterest Income

    Noninterest income was $18.8 million for the second quarter of 2023, compared to $15.8 million for the first quarter of 2023. Noninterest income for the second quarter of 2023 included an $0.8 million gain on the sale of OREO and a $0.7 million gain on the repurchase of subordinated debt, partially offset by $0.9 million of losses on the sale of investment securities. The first quarter of 2023 was negatively impacted by $0.6 million of losses on the sale of investment securities. Excluding these transactions, noninterest income for the second quarter of 2023 and the first quarter of 2023 was $18.2 million and $16.4 million, respectively. Noninterest income for the second quarter of 2022 was $14.6 million and included $0.9 million impairment charge on commercial servicing rights and a $0.1 million loss on the sale of investment securities. Excluding these transactions, noninterest income for the second quarter of 2022 was $15.6 million.

     For the Three Months Ended For the Six Months Ended
     June 30, March 31, June 30, June 30, June 30,
    (in thousands)2023
    		 2023
    		 2022
    		 2023
    		 2022
    Noninterest income         
    Wealth management revenue$6,269  $6,411  $6,143  $12,680  $13,282 
    Residential mortgage banking revenue 540   405   384   945   983 
    Service charges on deposit accounts 2,677   2,568   2,304   5,245   4,372 
    Interchange revenue 3,696   3,412   3,590   7,108   6,870 
    Loss on sales of investment securities, net (869)  (648)  (101)  (1,517)  (101)
    Gain on repurchase of subordinated debt, net 676   —   —   676   — 
    Gain (loss) on sales of other real estate owned, net 819   —   (162)  819   (121)
    Impairment on commercial mortgage servicing rights —   —   (869)  —   (1,263)
    Company-owned life insurance 891   876   840   1,767   1,859 
    Other income 4,054   2,755   2,484   6,809   4,345 
    Total noninterest income$18,753  $15,779  $14,613  $34,532  $30,226 
     

    Noninterest Expense

    Noninterest expense was $42.9 million in the second quarter of 2023, compared to $44.5 million in the first quarter of 2023, and $41.3 million in the second quarter of 2022. The efficiency ratio was 55.01% for the quarter ended June 30, 2023, compared to 57.64% for the quarter ended March 31, 2023, and 53.10% for the quarter ended June 30, 2022.

     For the Three Months Ended For the Six Months Ended
     June 30, March 31, June 30, June 30, June 30,
    (in thousands)2023 2023 2022 2023 2022
    Noninterest expense         
    Salaries and employee benefits$22,857 $24,243 $22,645 $47,100 $44,515
    Occupancy and equipment 3,879  4,443  3,489  8,322  7,244
    Data processing 6,544  6,311  6,082  12,855  11,955
    Professional 1,663  1,760  1,516  3,423  3,488
    Amortization of intangible assets 1,208  1,291  1,318  2,499  2,716
    FDIC insurance 1,196  1,329  826  2,525  1,656
    Other expense 5,547  5,105  5,463  10,652  10,649
    Total noninterest expense$42,894 $44,482 $41,339 $87,376 $82,223
     

    Noteworthy components of noninterest expense are as follows:

    • Salaries and employee benefits expenses were $22.9 million in the second quarter of 2023, compared to $24.2 million in the first quarter of 2023, and $22.6 million in the second quarter of 2022. Employees numbered 915 at June 30, 2023, compared to 931 at March 31, 2023, and 932 at June 30, 2022. Annual salary increases, effective in the second quarter of 2023, were offset by decreased commissions and incentive compensation expense.
    • Occupancy and equipment expense decreased $0.6 million in the second quarter of 2023 compared to the first quarter of 2023, primarily due to elevated seasonal related expenses incurred in the first quarter, including snow removal and utilities expenses.
    • Increases in FDIC insurance expense on a year to date basis 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 $7.2 million for the second quarter of 2023, as compared to $6.9 million for the first quarter of 2023 and $7.3 million for the second quarter of 2022. The resulting effective tax rates were 25.1%, 24.0% and 25.0% respectively.

    Capital

    At June 30, 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 June 30, 2023
     Midland States Bank Midland States Bancorp, Inc. Minimum Regulatory Requirements (2)
    Total capital to risk-weighted assets11.89% 12.65% 10.50%
    Tier 1 capital to risk-weighted assets11.01% 10.47% 8.50%
    Tier 1 leverage ratio10.07% 9.57% 4.00%
    Common equity Tier 1 capital11.01% 8.03% 7.00%
    Tangible common equity to tangible assets (1)N/A 6.19% 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%.
      

    The impact of rising interest rates on the Company’s investment portfolio and cash flow hedges has resulted in an $84.7 million accumulated other comprehensive loss at June 30, 2023, which impacts tangible book value by $3.87.

    Stock Repurchase Program

    As previously disclosed, 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. During the second quarter of 2023, the Company repurchased 308,543 shares of its common stock at a weighted average price of $19.78 under its stock repurchase program. As of June 30, 2023, the Company had $16.1 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 June 30, 2023, the Company had total assets of approximately $8.03 billion, and its Wealth Management Group had assets under administration of approximately $3.59 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 Three Months Ended    		 As of and
    for the Six Months Ended
     June 30, March 31, June 30, June 30, June 30,
    (dollars in thousands, except per share data)2023 2023 2022 2023 2022
    Earnings Summary         
    Net interest income$58,840  $60,504  $61,334  $119,344  $118,161 
    Provision for credit losses 5,879   3,135   5,441   9,014   9,608 
    Noninterest income 18,753   15,779   14,613   34,532   30,226 
    Noninterest expense 42,894   44,482   41,339   87,376   82,223 
    Income before income taxes 28,820   28,666   29,167   57,486   56,556 
    Income taxes 7,245   6,894   7,284   14,139   13,924 
    Net income 21,575   21,772   21,883   43,347   42,632 
    Preferred dividends 2,228   2,228   —   4,456   — 
    Net income available to common shareholders$19,347  $19,544  $21,883  $38,891  $42,632 
              
    Diluted earnings per common share$0.86  $0.86  $0.97  $1.72  $1.89 
    Weighted average common shares outstanding - diluted 22,205,079   22,501,970   22,360,819   22,348,981   22,355,936 
    Return on average assets 1.09%  1.12%  1.19%  1.10%  1.17%
    Return on average shareholders' equity 11.14%  11.51%  13.65%  11.32%  13.22%
    Return on average tangible common equity(1) 15.99%  16.70%  19.14%  16.34%  18.48%
    Net interest margin 3.23%  3.39%  3.65%  3.31%  3.58%
    Efficiency ratio(1) 55.01%  57.64%  53.10%  56.32%  54.38%
              
    Adjusted Earnings Performance Summary(1)         
    Adjusted earnings available to common shareholders$19,487  $20,017  $22,191  $39,505  $43,006 
    Adjusted diluted earnings per common share$0.87  $0.88  $0.98  $1.75  $1.90 
    Adjusted return on average assets 1.10%  1.15%  1.21%  1.12%  1.18%
    Adjusted return on average shareholders' equity 11.21%  11.76%  13.84%  11.48%  13.34%
    Adjusted return on average tangible common equity 16.10%  17.11%  19.41%  16.60%  18.65%
    Adjusted pre-tax, pre-provision earnings$34,892  $32,449  $35,902  $67,341  $67,943 
    Adjusted pre-tax, pre-provision return on average assets 1.76%  1.67%  1.95%  1.72%  1.87%
              
    Market Data         
    Book value per share at period end$30.49  $30.08  $28.84     
    Tangible book value per share at period end(1)$22.24  $21.87  $20.43     
    Tangible book value per share excluding accumulated other comprehensive income at period end(1)$26.11  $25.39  $22.84     
    Market price at period end$19.91  $21.42  $24.04     
    Common shares outstanding at period end 21,854,800   22,111,454   22,060,255     
              
    Capital         
    Total capital to risk-weighted assets 12.65%  12.46%  11.44%    
    Tier 1 capital to risk-weighted assets 10.47%  10.25%  8.63%    
    Tier 1 common capital to risk-weighted assets 8.03%  7.84%  7.66%    
    Tier 1 leverage ratio 9.57%  9.54%  7.98%    
    Tangible common equity to tangible assets(1) 6.19%  6.24%  6.22%    
              
    Wealth Management         
    Trust assets under administration$3,594,727  $3,502,635  $3,503,227     


    (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
     June 30, March 31, December 31, September 30, June 30,
    (in thousands)2023
    		 2023
    		 2022
    		 2022
    		 2022
    Assets         
    Cash and cash equivalents$160,695  $138,310  $160,631  $313,188  $270,117 
    Investment securities 887,003   821,005   776,860   690,504   769,278 
    Loans 6,367,344   6,354,271   6,306,467   6,198,451   5,795,544 
    Allowance for credit losses on loans (64,950)  (62,067)  (61,051)  (58,639)  (54,898)
    Total loans, net 6,302,394   6,292,204   6,245,416   6,139,812   5,740,646 
    Loans held for sale 5,632   2,747   1,286   4,338   5,298 
    Premises and equipment, net 81,006   80,582   78,293   77,519   77,668 
    Other real estate owned 202   6,729   6,729   11,141   11,131 
    Loan servicing rights, at lower of cost or fair value 21,611   1,117   1,205   1,297   25,879 
    Commercial FHA mortgage loan servicing rights held for sale —   20,745   20,745   23,995   — 
    Goodwill 161,904   161,904   161,904   161,904   161,904 
    Other intangible assets, net 18,367   19,575   20,866   22,198   23,559 
    Company-owned life insurance 152,210   151,319   150,443   149,648   148,900 
    Other assets 243,697   233,937   231,123   226,333   201,432 
    Total assets$8,034,721  $7,930,174  $7,855,501  $7,821,877  $7,435,812 
              
    Liabilities and Shareholders' Equity         
    Noninterest-bearing demand deposits$1,162,909  $1,215,758  $1,362,158  $1,362,481  $1,403,386 
    Interest-bearing deposits 5,263,639   5,209,443   5,002,494   5,032,771   4,781,052 
    Total deposits 6,426,548   6,425,201   6,364,652   6,395,252   6,184,438 
    Short-term borrowings 21,783   31,173   42,311   58,518   67,689 
    FHLB advances and other borrowings 575,000   482,000   460,000   360,000   285,000 
    Subordinated debt 93,404   99,849   99,772   139,370   139,277 
    Trust preferred debentures 50,296   50,135   49,975   49,824   49,674 
    Other liabilities 90,869   66,173   80,217   79,634   73,546 
    Total liabilities 7,257,900   7,154,531   7,096,927   7,082,598   6,799,624 
    Total shareholders’ equity 776,821   775,643   758,574   739,279   636,188 
    Total liabilities and shareholders’ equity$8,034,721  $7,930,174  $7,855,501  $7,821,877  $7,435,812 


    MIDLAND STATES BANCORP, INC.
    CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
              
     For the Three Months Ended For the Six Months Ended
     June 30, March 31, June 30, June 30, June 30,
    (in thousands, except per share data)2023
    		 2023
    		 2022
    		 2023
    		 2022
    Net interest income:         
    Interest income$100,491  $95,539  $69,236  $196,030  $131,984 
    Interest expense 41,651   35,035   7,902   76,686   13,823 
    Net interest income 58,840   60,504   61,334   119,344   118,161 
    Provision for credit losses:         
    Provision for credit losses on loans 5,879   3,135   4,741   9,014   8,873 
    Provision for credit losses on unfunded commitments —   —   700   —   956 
    Provision for other credit losses —   —   —   —   (221)
    Total provision for credit losses 5,879   3,135   5,441   9,014   9,608 
    Net interest income after provision for credit losses 52,961   57,369   55,893   110,330   108,553 
    Noninterest income:         
    Wealth management revenue 6,269   6,411   6,143   12,680   13,282 
    Residential mortgage banking revenue 540   405   384   945   983 
    Service charges on deposit accounts 2,677   2,568   2,304   5,245   4,372 
    Interchange revenue 3,696   3,412   3,590   7,108   6,870 
    Loss on sales of investment securities, net (869)  (648)  (101)  (1,517)  (101)
    Gain on repurchase of subordinated debt, net 676   —   —   676   — 
    Gain (loss) on sales of other real estate owned, net 819   —   (162)  819   (121)
    Impairment on commercial mortgage servicing rights —   —   (869)  —   (1,263)
    Company-owned life insurance 891   876   840   1,767   1,859 
    Other income 4,054   2,755   2,484   6,809   4,345 
    Total noninterest income 18,753   15,779   14,613   34,532   30,226 
    Noninterest expense:         
    Salaries and employee benefits 22,857   24,243   22,645   47,100   44,515 
    Occupancy and equipment 3,879   4,443   3,489   8,322   7,244 
    Data processing 6,544   6,311   6,082   12,855   11,955 
    Professional 1,663   1,760   1,516   3,423   3,488 
    Amortization of intangible assets 1,208   1,291   1,318   2,499   2,716 
    FDIC insurance 1,196   1,329   826   2,525   1,656 
    Other expense 5,547   5,105   5,463   10,652   10,649 
    Total noninterest expense 42,894   44,482   41,339   87,376   82,223 
    Income before income taxes 28,820   28,666   29,167   57,486   56,556 
    Income taxes 7,245   6,894   7,284   14,139   13,924 
    Net income 21,575   21,772   21,883   43,347   42,632 
    Preferred stock dividends 2,228   2,228   —   4,456   — 
    Net income available to common shareholders$19,347  $19,544  $21,883  $38,891  $42,632 
              
    Basic earnings per common share$0.86  $0.86  $0.97  $1.72  $1.89 
    Diluted earnings per common share$0.86  $0.86  $0.97  $1.72  $1.89 


    MIDLAND STATES BANCORP, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
              
    Adjusted Earnings Reconciliation
              
     For the Three Months Ended For the Six Months Ended
     June 30, March 31, June 30, June 30, June 30,
    (dollars in thousands, except per share data)2023 2023 2022 2023 2022
    Income before income taxes - GAAP$28,820  $28,666  $29,167  $57,486  $56,556 
    Adjustments to noninterest income:         
    Loss on sales of investment securities, net 869   648   101   1,517   101 
    (Gain) on repurchase of subordinated debt (676)  —   —   (676)  — 
    Total adjustments to noninterest income 193   648   101   841   101 
    Adjustments to noninterest expense:         
    Integration and acquisition expenses —   —   (324)  —   (415)
    Total adjustments to noninterest expense —   —   (324)  —   (415)
    Adjusted earnings pre tax - non-GAAP 29,013   29,314   29,592   58,327   57,072 
    Adjusted earnings tax 7,297   7,069   7,401   14,366   14,066 
    Adjusted earnings - non-GAAP 21,716   22,245   22,191   43,961   43,006 
    Preferred stock dividends 2,228   2,228   —   4,456   — 
    Adjusted earnings available to common shareholders$19,487  $20,017  $22,191  $39,505  $43,006 
    Adjusted diluted earnings per common share$0.87  $0.88  $0.98  $1.75  $1.90 
    Adjusted return on average assets 1.10%  1.15%  1.21%  1.12%  1.18%
    Adjusted return on average shareholders' equity 11.21%  11.76%  13.84%  11.48%  13.34%
    Adjusted return on average tangible common equity 16.10%  17.11%  19.41%  16.60%  18.65%
              
              
    Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
              
     For the Three Months Ended For the Six Months Ended
     June 30, March 31, June 30, June 30, June 30,
    (dollars in thousands)2023
    		 2023
    		 2022
    		 2023
    		 2022
    Adjusted earnings pre tax - non-GAAP$29,013  $29,314  $29,592  $58,327  $57,072 
    Provision for credit losses 5,879   3,135   5,441   9,014   9,608 
    Impairment on commercial mortgage servicing rights —   —   869   —   1,263 
    Adjusted pre-tax, pre-provision earnings - non-GAAP$34,892  $32,449  $35,902  $67,341  $67,943 
    Adjusted pre-tax, pre-provision return on average assets 1.76%  1.67%  1.95%  1.72%  1.87%


    MIDLAND STATES BANCORP, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
              
    Efficiency Ratio Reconciliation
              
     For the Three Months Ended For the Six Months Ended
     June 30, March 31, June 30, June 30, June 30,
    (dollars in thousands)2023 2023 2022 2023 2022
    Noninterest expense - GAAP$42,894  $44,482  $41,339  $87,376  $82,223 
    Integration and acquisition expenses —   —   (324)  —   (415)
    Adjusted noninterest expense$42,894  $44,482  $41,015  $87,376  $81,808 
              
    Net interest income - GAAP$58,840  $60,504  $61,334  $119,344  $118,161 
    Effect of tax-exempt income 195   244   321   439   690 
    Adjusted net interest income 59,035   60,748   61,655   119,783   118,851 
              
    Noninterest income - GAAP 18,753   15,779   14,613   34,532   30,226 
    Impairment on commercial mortgage servicing rights —   —   869   —   1,263 
    Loss on sales of investment securities, net 869   648   101   1,517   101 
    (Gain) on repurchase of subordinated debt (676)  —   —   (676)  — 
    Adjusted noninterest income 18,946   16,427   15,583   35,373   31,590 
              
    Adjusted total revenue$77,980  $77,175  $77,238  $155,156  $150,441 
              
    Efficiency ratio 55.01%  57.64%  53.10%  56.32%  54.38%
              
    Return on Average Tangible Common Equity (ROATCE)
              
     For the Three Months Ended For the Six Months Ended
     June 30, March 31, June 30, June 30, June 30,
    (dollars in thousands)2023 2023 2022 2023 2022
    Net income available to common shareholders$19,347  $19,544  $21,883  $38,891  $42,632 
              
    Average total shareholders' equity—GAAP$776,791  $767,186  $643,004  $772,015  $650,126 
    Adjustments:         
    Preferred Stock (110,548)  (110,548)  —   (110,548)  — 
    Goodwill (161,904)  (161,904)  (161,904)  (161,904)  (161,904)
    Other intangible assets, net (18,937)  (20,184)  (22,570)  (19,557)  (23,101)
    Average tangible common equity$485,402  $474,550  $458,530  $480,006  $465,121 
    ROATCE 15.99%  16.70%  19.14%  16.34%  18.48%


    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
     June 30, March 31, December 31, September 30, June 30,
    (dollars in thousands, except per share data)2023 2023 2022 2022 2022
    Shareholders' Equity to Tangible Common Equity        
    Total shareholders' equity—GAAP$776,821  $775,643  $758,574  $739,279  $636,188 
    Adjustments:         
    Preferred Stock (110,548)  (110,548)  (110,548)  (110,548)  — 
    Goodwill (161,904)  (161,904)  (161,904)  (161,904)  (161,904)
    Other intangible assets, net (18,367)  (19,575)  (20,866)  (22,198)  (23,559)
    Tangible common equity$486,002  $483,616  $465,256  $444,629  $450,725 
              
    Less: Accumulated other comprehensive income (AOCI) (84,719)  (77,797)  (83,797)  (78,383)  (53,097)
    Tangible common equity excluding AOCI 570,721   561,413   549,053   523,012   503,822 
              
    Total Assets to Tangible Assets:         
    Total assets—GAAP$8,034,721  $7,930,174  $7,855,501  $7,821,877  $7,435,812 
    Adjustments:         
    Goodwill (161,904)  (161,904)  (161,904)  (161,904)  (161,904)
    Other intangible assets, net (18,367)  (19,575)  (20,866)  (22,198)  (23,559)
    Tangible assets$7,854,450  $7,748,695  $7,672,731  $7,637,775  $7,250,349 
              
    Common Shares Outstanding 21,854,800   22,111,454   22,214,913   22,074,740   22,060,255 
              
    Tangible Common Equity to Tangible Assets 6.19%  6.24%  6.06%  5.82%  6.22%
    Tangible Book Value Per Share$22.24  $21.87  $20.94  $20.14  $20.43 
    Tangible Book Value Per Share excluding AOCI$26.11  $25.39  $24.72  $23.69  $22.84 

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