Midland States Bancorp, Inc. Announces 2022 Fourth Quarter Results

Summary

• Net income available to common shareholders of $29.7 million, or $1.30 per diluted share
• $17.5 million gain on the termination of forward starting interest rate swaps, $3.3 million loss on commercial mortgage servicing rights held for sale and $3.5 million impairment on other real estate owned
• Total loans increased 7.0% annualized from prior quarter
• Tangible book value per share increased 4.0% from end of prior quarter
• Tangible common equity to tangible assets increased 24 basis points from end of prior quarter
  

EFFINGHAM, Ill., Jan. 26, 2023 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income available to common shareholders of $29.7 million, or $1.30 per diluted share, for the fourth quarter of 2022 compared to $23.5 million, or $1.04, respectively, for the third quarter of 2022. This also compares to net income available to common shareholders of $23.1 million, or $1.02 per diluted share, for the fourth quarter of 2021.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “Our fourth quarter performance completed a very successful year in which we generated a record level of earnings. For the full year, we generated return on assets of 1.31%, up from 1.18% in 2021, and return on tangible common equity of 20.8%, up from 17.9% in 2021. In the fourth quarter, our solid financial performance resulted in significant growth in both book value and tangible book value per share, as well as increases in most of our capital ratios.

“As we begin 2023, we are maintaining our conservative approach to new loan production and expect a relatively low level of loan growth until economic conditions improve. Even with a lower level of loan growth, we believe that we are well positioned to continue generating strong financial performance as we get additional leverage from the investments in talent and technology that we have made over the past few years. While we expect the macro environment to be challenging, particularly in the first half of the year, we believe that we will deliver strong results for our shareholders as we continue executing on our long-term strategies to enhance the value of the Midland franchise,” said Mr. Ludwig.

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2022 was $63.6 million, a decrease of $0.5 million, or 0.7%, from $64.0 million for the third quarter of 2022, which was primarily due to increased deposit costs. Accretion income associated with purchased loan portfolios totaled $0.3 million for the fourth quarter of 2022, compared to $0.5 million for the third quarter of 2022.

Relative to the fourth quarter of 2021, net interest income increased 17.0%, from $54.3 million. The increase was primarily attributable to higher average balances of interest-earning assets, a more favorable asset mix, and higher yields on interest-earning assets. Paycheck Protection Program (“PPP”) loan fees recognized as loan interest income totaled $1.5 million during the fourth quarter of 2021. Accretion income associated with purchased loan portfolios for the fourth quarter of 2021 was $0.8 million.

Net interest margin for the fourth quarter of 2022 was 3.50%, compared to 3.63% for the third quarter of 2022 as an increase in the cost of deposits more than offset the increase in the average yield on earning assets. The contribution of PPP loan fees to net interest margin was 1 basis point during the third quarter of 2022, while the fourth quarter of 2022 had no PPP loan fee impact. Additionally, the contribution of acquired loan discount accretion to net interest margin was 2 basis points during the fourth quarter of 2022 and 3 basis points during the third quarter of 2022.

Relative to the fourth quarter of 2021, net interest margin increased from 3.25%. This increase was primarily attributable to higher yields on interest-earning assets and a more favorable mix of interest-earning assets. PPP loan fees recognized as loan interest income contributed 9 basis points to net interest margin and acquired loan discount accretion contributed 4 basis points to net interest margin during the fourth quarter of 2021.

Noninterest Income

Noninterest income for the fourth quarter of 2022 was $33.8 million and was positively impacted by a $17.5 million gain on the termination of forward starting interest rate swaps. Excluding this transaction, noninterest income for the fourth quarter of 2022 was $16.3 million compared to $15.8 million for the third quarter of 2022.

Noninterest income for the fourth quarter of 2021 was $22.5 million and was positively impacted by $3.9 million in unrealized income on equity investments, a $1.8 million gain on the termination of an FHLB interest rate swap, and a $1.0 million gain on company-owned life insurance. Impairment on commercial mortgage servicing rights negatively impacted noninterest income by $2.1 million in the fourth quarter of 2021. Excluding these transactions, noninterest income decreased from the fourth quarter of 2021 to the fourth quarter of 2022, primarily due to declines in wealth management and residential mortgage banking revenue.

Wealth management revenue was $6.2 million for both the third and fourth quarters of 2022. Compared to the fourth quarter of 2021, wealth management revenue decreased 13.2%, primarily due to a decline in assets under administration resulting from market performance.

Noninterest Expense

Noninterest expense for the fourth quarter of 2022 was $49.9 million, an increase of 14.8% from $43.5 million in the third quarter of 2022. The increase was primarily due to a $3.3 million loss on commercial mortgage servicing rights held for sale and OREO impairment charges of $3.5 million recognized in the fourth quarter of 2022.

Relative to the fourth quarter of 2021, noninterest expense increased 9.1% from $45.8 million. Noninterest expense for the fourth quarter of 2021 included $4.9 million FHLB advance prepayment fees and $0.2 million in integration and acquisition expenses. Excluding these adjustments, noninterest expense for the fourth quarter of 2022 increased $2.4 million, primarily due to a modest increase in staffing levels and increases across most expense items consistent with the growth of the Company including the full quarter impact of the branch purchase completed in June 2022.

Loan Portfolio

Total loans outstanding were $6.31 billion at December 31, 2022, compared with $6.20 billion at September 30, 2022, and $5.22 billion at December 31, 2021. The growth in total loans from September 30, 2022 was primarily attributable to higher balances of consumer and construction and land development loans.

Equipment finance balances increased from $1.03 billion at September 30, 2022 to $1.11 billion at December 31, 2022.

Compared to loan balances at December 31, 2021, the Company experienced growth in all loan portfolios with the exception of commercial FHA warehouse lines and PPP loans.

Deposits

Total deposits were $6.36 billion at December 31, 2022, compared with $6.40 billion at September 30, 2022, and $6.11 billion at December 31, 2021. The decrease in total deposits from the end of the prior quarter was primarily attributable to a decline in noninterest-bearing demand partially offset by a small increase in interest-bearing deposits.

Asset Quality

Nonperforming loans totaled $49.4 million, or 0.78% of total loans, at December 31, 2022 compared with $46.9 million, or 0.76% of total loans, at September 30, 2022. At December 31, 2021, nonperforming loans totaled $42.6 million, or 0.81% of total loans.

Net charge-offs for the fourth quarter of 2022 were $0.5 million, or 0.03% of average loans on an annualized basis, compared to net charge-offs of $3.2 million, or 0.21% of average loans on an annualized basis, for the third quarter of 2022, and $4.6 million, or 0.37% of average loans on an annualized basis, for the fourth quarter of 2021.

The Company recorded a provision for credit losses of $3.5 million for the fourth quarter of 2022. Provision for credit losses on loans totaled $3.0 million for the fourth quarter of 2022, which was primarily related to the growth in total loans and negative economic forecasts. Provision for credit losses on unfunded commitments of $0.6 million was also recorded during the quarter.

The Company’s allowance for credit losses on loans was 0.97% of total loans and 123.53% of nonperforming loans at December 31, 2022, compared with 0.95% of total loans and 125.08% of nonperforming loans at September 30, 2022.

Capital

At December 31, 2022, 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 December 31, 2022
	Midland States Bank		Midland States Bancorp, Inc.		Minimum Regulatory Requirements(2)
Total capital to risk-weighted assets	11.51%		12.38%		10.50%
Tier 1 capital to risk-weighted assets	10.71%		10.21%		8.50%
Tier 1 leverage ratio	9.90%		9.43%		4.00%
Common equity Tier 1 capital	10.71%		7.77%		7.00%
Tangible common equity to tangible assets(1)	N/A		6.06%		N/A

(1) A non-GAAP financial measure. Refer to page 15 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 $89.0 million decline in accumulated other comprehensive income, which has negatively impacted tangible book value per share by $4.02, and the tangible common equity to tangible assets ratio by 117 basis points.

On August 24, 2022, the Company issued and sold 4,600,000 depositary shares, each representing a 1/40th ownership interest in a share of the Company's 7.75% fixed-rate reset non-cumulative perpetual preferred stock, Series A, par value $2.00 per share (the "Series A preferred stock"), with a liquidation preference of $25 per depositary share (equivalent to $1,000 per share of Series A Preferred Stock). The Series A preferred stock qualifies as Tier 1 capital for purposes of regulatory capital calculations. The gross proceeds were $115.0 million while net proceeds from the issuance of the Series A preferred stock, after deducting $4.5 million of offering costs, including the underwriting discount and other expenses, were $110.5 million. The Company declared and paid $3.2 million of preferred dividends during the fourth quarter of 2022.

Stock Repurchase Program

During the fourth quarter of 2022, the Company did not repurchase any shares under its 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.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, January 27, 2023, to discuss its financial results.

Telephone Access: https://register.vevent.com/register/BIc01dcecf8df0417783e5b208a72ec906

A slide presentation relating to the fourth quarter 2022 financial results will be accessible prior to the scheduled conference call. This earnings release should be read together with the slide presentation. The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website at investors.midlandsb.com under the “News and Events” tab.

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 December 31, 2022, the Company had total assets of approximately $7.86 billion, and its Wealth Management Group had assets under administration of approximately $3.60 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” 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, the effects of the Coronavirus Disease 2019 pandemic and its potential effects on the economic environment; 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)
		For the Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
(dollars in thousands, except per share data)			2022				2022				2022				2022				2021
Earnings Summary
Net interest income		$	63,550			$	64,024			$	61,334			$	56,827			$	54,301
Provision for credit losses			3,544				6,974				5,441				4,167				467
Noninterest income			33,839				15,826				14,613				15,613				22,523
Noninterest expense			49,943				43,496				41,339				40,884				45,757
Income before income taxes			43,902				29,380				29,167				27,389				30,600
Income taxes			11,030				5,859				7,284				6,640				7,493
Net income			32,872				23,521				21,883				20,749				23,107
Preferred dividends			3,169				—				—				—				—
Net income available to common shareholders		$	29,703			$	23,521			$	21,883			$	20,749			$	23,107
Diluted earnings per common share		$	1.30			$	1.04			$	0.97			$	0.92			$	1.02
Weighted average common shares outstanding - diluted			22,503,611				22,390,438				22,360,819				22,350,307				22,350,771
Return on average assets			1.66	%			1.22	%			1.19	%			1.16	%			1.26	%
Return on average shareholders' equity			17.41	%			13.31	%			13.65	%			12.80	%			14.04	%
Return on average tangible common equity(1)			25.89	%			20.20	%			19.14	%			17.84	%			19.69	%
Net interest margin			3.50	%			3.63	%			3.65	%			3.50	%			3.25	%
Efficiency ratio(1)			58.26	%			54.26	%			53.10	%			55.73	%			52.61	%
Adjusted Earnings Performance Summary(1)
Adjusted earnings available to common shareholders		$	19,278			$	23,568			$	22,191			$	20,815			$	25,416
Adjusted diluted earnings per common share		$	0.85			$	1.04			$	0.98			$	0.92			$	1.12
Adjusted return on average assets			1.13	%			1.22	%			1.21	%			1.16	%			1.39	%
Adjusted return on average shareholders' equity			11.89	%			13.34	%			13.84	%			12.84	%			15.44	%
Adjusted return on average tangible common equity			16.80	%			20.24	%			19.41	%			17.89	%			21.65	%
Adjusted pre-tax, pre-provision earnings		$	33,165			$	36,415			$	35,902			$	32,041			$	36,324
Adjusted pre-tax, pre-provision return on average assets			1.68	%			1.89	%			1.95	%			1.79	%			1.98	%

(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures.

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		For the Quarter Ended
		December 31,			September 30,				June 30,				March 31,				December 31,
(in thousands, except per share data)			2022			2022				2022				2022				2021
Net interest income:
Interest income		$	90,215		$	79,556			$	69,236			$	62,748			$	60,427
Interest expense			26,665			15,532				7,902				5,921				6,126
Net interest income			63,550			64,024				61,334				56,827				54,301
Provision for credit losses:
Provision for credit losses on loans			2,950			6,974				4,741				4,132				—
Provision for credit losses on unfunded commitments			594			—				700				256				388
Provision for other credit losses			—			—				—				(221	)			79
Total provision for credit losses			3,544			6,974				5,441				4,167				467
Net interest income after provision for credit losses			60,006			57,050				55,893				52,660				53,834
Noninterest income:
Wealth management revenue			6,227			6,199				6,143				7,139				7,176
Residential mortgage banking revenue			316			210				384				599				1,103
Service charges on deposit accounts			2,511			2,597				2,304				2,068				2,338
Interchange revenue			3,478			3,531				3,590				3,280				3,677
(Loss) gain on sales of investment securities, net			—			(129	)			(101	)			—				—
Gain on termination of hedged interest rate swaps			17,531			—				—				—				1,845
Impairment on commercial mortgage servicing rights			—			—				(869	)			(394	)			(2,072	)
Company-owned life insurance			796			929				840				1,019				1,904
Other income			2,980			2,489				2,322				1,902				6,552
Total noninterest income			33,839			15,826				14,613				15,613				22,523
Noninterest expense:
Salaries and employee benefits			22,901			22,889				22,645				21,870				22,109
Occupancy and equipment			3,748			3,850				3,489				3,755				3,429
Data processing			6,302			6,093				6,082				5,873				5,819
Professional			1,726			1,693				1,516				1,972				1,499
Amortization of intangible assets			1,333			1,361				1,318				1,398				1,425
Other real estate owned			3,779			582				309				518				243
Loss on mortgage servicing rights held for sale			3,250			—				—				—				—
FHLB advances prepayment fees			—			—				—				—				4,859
Other expense			6,904			7,028				5,980				5,498				6,374
Total noninterest expense			49,943			43,496				41,339				40,884				45,757
Income before income taxes			43,902			29,380				29,167				27,389				30,600
Income taxes			11,030			5,859				7,284				6,640				7,493
Net income			32,872			23,521				21,883				20,749				23,107
Preferred stock dividends			3,169			—				—				—				—
Net income available to common shareholders		$	29,703		$	23,521			$	21,883			$	20,749			$	23,107
Basic earnings per common share		$	1.31		$	1.04			$	0.97			$	0.92			$	1.03
Diluted earnings per common share		$	1.30		$	1.04			$	0.97			$	0.92			$	1.02

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of
		December 31,				September 30,				June 30,				March 31,				December 31,
(in thousands)			2022				2022				2022				2022				2021
Assets
Cash and cash equivalents		$	150,321			$	313,188			$	270,117			$	332,264			$	680,371
Investment securities			776,860				690,504				769,278				858,246				916,132
Loans			6,306,467				6,198,451				5,795,544				5,539,961				5,224,801
Allowance for credit losses on loans			(61,051	)			(58,639	)			(54,898	)			(52,938	)			(51,062	)
Total loans, net			6,245,416				6,139,812				5,740,646				5,487,023				5,173,739
Loans held for sale			1,286				4,338				5,298				8,931				32,045
Premises and equipment, net			78,293				77,519				77,668				77,857				79,220
Other real estate owned			6,729				11,141				11,131				11,537				12,059
Loan servicing rights, at lower of cost or fair value			1,205				1,297				25,879				27,484				28,865
Commercial FHA mortgage loan servicing rights held for sale			20,745				23,995				—				—				—
Goodwill			161,904				161,904				161,904				161,904				161,904
Other intangible assets, net			20,866				22,198				23,559				22,976				24,374
Company-owned life insurance			150,443				149,648				148,900				148,060				148,378
Other assets			241,433				226,333				201,432				202,433				186,718
Total assets		$	7,855,501			$	7,821,877			$	7,435,812			$	7,338,715			$	7,443,805
Liabilities and Shareholders' Equity
Noninterest-bearing demand deposits		$	1,935,773			$	2,025,237			$	1,972,261			$	1,965,032			$	2,245,701
Interest-bearing deposits			4,428,879				4,370,015				4,212,177				4,092,507				3,864,947
Total deposits			6,364,652				6,395,252				6,184,438				6,057,539				6,110,648
Short-term borrowings			42,311				58,518				67,689				60,352				76,803
FHLB advances and other borrowings			460,000				360,000				285,000				310,171				310,171
Subordinated debt			99,772				139,370				139,277				139,184				139,091
Trust preferred debentures			49,975				49,824				49,674				49,524				49,374
Other liabilities			80,217				79,634				73,546				76,959				93,881
Total liabilities			7,096,927				7,082,598				6,799,624				6,693,729				6,779,968
Total shareholders’ equity			758,574				739,279				636,188				644,986				663,837
Total liabilities and shareholders’ equity		$	7,855,501			$	7,821,877			$	7,435,812			$	7,338,715			$	7,443,805

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of
		December 31,			September 30,			June 30,			March 31,			December 31,
(in thousands)			2022			2022			2022			2022			2021
Loan Portfolio
Equipment finance loans		$	616,751		$	577,323		$	546,267		$	528,572		$	521,973
Equipment finance leases			491,744			457,611			439,202			429,000			423,280
Commercial FHA warehouse lines			25,029			51,309			23,872			83,999			91,927
SBA PPP loans			1,916			2,810			6,409			22,862			52,477
Other commercial loans			870,878			904,841			814,710			802,692			783,811
Total commercial loans and leases			2,006,318			1,993,894			1,830,460			1,867,125			1,873,468
Commercial real estate			2,433,159			2,466,303			2,335,655			2,114,041			1,816,828
Construction and land development			320,882			225,549			203,955			188,668			193,749
Residential real estate			366,094			356,225			340,103			329,331			338,151
Consumer			1,180,014			1,156,480			1,085,371			1,040,796			1,002,605
Total loans		$	6,306,467		$	6,198,451		$	5,795,544		$	5,539,961		$	5,224,801
Deposit Portfolio
Noninterest-bearing demand		$	1,935,773		$	2,025,237		$	1,972,261		$	1,965,032		$	2,245,701
Interest-bearing:
Checking			1,920,458			1,905,439			1,808,885			1,779,018			1,663,021
Money market			1,184,101			1,125,333			1,027,547			964,352			869,067
Savings			661,932			704,245			740,364			710,955			679,115
Time			649,552			620,960			620,363			619,386			630,583
Brokered time			12,836			14,038			15,018			18,796			23,161
Total deposits		$	6,364,652		$	6,395,252		$	6,184,438		$	6,057,539		$	6,110,648

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		For the Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
(dollars in thousands)			2022				2022				2022				2022				2021
Average Balance Sheets
Cash and cash equivalents		$	220,938			$	195,657			$	226,517			$	384,231			$	685,655
Investment securities			736,579				749,022				818,927				894,634				915,707
Loans			6,240,277				6,040,358				5,677,791				5,274,051				4,995,794
Loans held for sale			3,883				6,044				9,865				31,256				34,272
Nonmarketable equity securities			43,618				37,765				36,338				36,378				39,203
Total interest-earning assets			7,245,295				7,028,846				6,769,438				6,620,550				6,670,631
Non-earning assets			609,866				618,138				615,348				631,187				605,060
Total assets		$	7,855,161			$	7,646,984			$	7,384,786			$	7,251,737			$	7,275,691
Interest-bearing deposits		$	4,452,801			$	4,325,098			$	4,152,764			$	3,953,249			$	3,913,475
Short-term borrowings			47,391				58,271				59,301				70,044				66,677
FHLB advances and other borrowings			460,598				340,163				307,611				311,282				319,954
Subordinated debt			107,374				139,324				139,232				139,139				139,046
Trust preferred debentures			49,902				49,751				49,602				49,451				49,307
Total interest-bearing liabilities			5,118,066				4,912,607				4,708,510				4,523,165				4,488,459
Noninterest-bearing deposits			1,936,977				1,969,873				1,967,263				1,989,413				2,049,802
Other noninterest-bearing liabilities			50,935				63,638				66,009				81,832				84,538
Shareholders' equity			749,183				700,866				643,004				657,327				652,892
Total liabilities and shareholders' equity		$	7,855,161			$	7,646,984			$	7,384,786			$	7,251,737			$	7,275,691
Yields
Earning Assets
Cash and cash equivalents			3.85	%			2.28	%			0.83	%			0.18	%			0.16	%
Investment securities			2.62	%			2.44	%			2.41	%			2.22	%			2.12	%
Loans			5.26	%			4.83	%			4.49	%			4.40	%			4.36	%
Loans held for sale			4.86	%			3.87	%			3.15	%			2.86	%			3.53	%
Nonmarketable equity securities			6.16	%			5.78	%			5.38	%			5.40	%			5.07	%
Total interest-earning assets			4.96	%			4.51	%			4.12	%			3.87	%			3.62	%
Interest-Bearing Liabilities
Interest-bearing deposits			1.77	%			0.94	%			0.37	%			0.22	%			0.22	%
Short-term borrowings			0.26	%			0.19	%			0.15	%			0.14	%			0.12	%
FHLB advances and other borrowings			3.67	%			2.83	%			1.87	%			1.58	%			1.75	%
Subordinated debt			5.45	%			5.77	%			5.78	%			5.78	%			5.78	%
Trust preferred debentures			8.47	%			6.54	%			5.05	%			4.21	%			3.90	%
Total interest-bearing liabilities			2.07	%			1.25	%			0.67	%			0.53	%			0.54	%
Cost of Deposits			1.23	%			0.65	%			0.25	%			0.15	%			0.15	%
Net Interest Margin			3.50	%			3.63	%			3.65	%			3.50	%			3.25	%

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of and for the Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
(dollars in thousands, except per share data)			2022				2022				2022				2022				2021
Asset Quality
Loans 30-89 days past due		$	32,372			$	28,275			$	16,212			$	29,044			$	17,514
Nonperforming loans			49,423				46,882				56,883				52,900				42,580
Nonperforming assets			57,824				59,524				69,344				66,164				57,068
Net charge-offs			538				3,233				2,781				2,256				4,613
Loans 30-89 days past due to total loans			0.51	%			0.46	%			0.28	%			0.52	%			0.34	%
Nonperforming loans to total loans			0.78	%			0.76	%			0.98	%			0.95	%			0.81	%
Nonperforming assets to total assets			0.74	%			0.76	%			0.93	%			0.90	%			0.77	%
Allowance for credit losses to total loans			0.97	%			0.95	%			0.95	%			0.96	%			0.98	%
Allowance for credit losses to nonperforming loans			123.53	%			125.08	%			96.51	%			100.07	%			119.92	%
Net charge-offs to average loans			0.03	%			0.21	%			0.20	%			0.17	%			0.37	%
Wealth Management
Trust assets under administration		$	3,505,372			$	3,355,019			$	3,503,227			$	3,934,140			$	4,100,179
Market Data
Book value per share at period end		$	29.17			$	28.48			$	28.84			$	29.26			$	30.11
Tangible book value per share at period end(1)		$	20.94			$	20.14			$	20.43			$	20.87			$	21.66
Market price at period end		$	26.62			$	23.57			$	24.04			$	28.86			$	24.79
Common shares outstanding at period end			22,214,913				22,074,740				22,060,255				22,044,626				22,050,537
Capital
Total capital to risk-weighted assets			12.38	%			12.79	%			11.44	%			11.74	%			12.19	%
Tier 1 capital to risk-weighted assets			10.21	%			10.05	%			8.63	%			8.82	%			9.16	%
Tier 1 common capital to risk-weighted assets			7.77	%			7.56	%			7.66	%			7.80	%			8.08	%
Tier 1 leverage ratio			9.43	%			9.40	%			7.98	%			7.96	%			7.75	%
Tangible common equity to tangible assets(1)			6.06	%			5.82	%			6.22	%			6.43	%			6.58	%

(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures.

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
Adjusted Earnings Reconciliation
		For The Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
(dollars in thousands, except per share data)			2022				2022				2022				2022				2021
Income before income taxes - GAAP		$	43,902			$	29,380			$	29,167			$	27,389			$	30,600
Adjustments to noninterest income:
Loss on sales of investment securities, net			—				129				101				—				—
(Gain) on termination of hedged interest rate swaps			(17,531	)			—				—				—				(1,845	)
Total adjustments to noninterest income			(17,531	)			129				101				—				(1,845	)
Adjustments to noninterest expense:
(Loss) on mortgage servicing rights held for sale			(3,250	)			—				—				—				—
FHLB advances prepayment fees			—				—				—				—				(4,859	)
Integration and acquisition expenses			—				68				(324	)			(91	)			(171	)
Total adjustments to noninterest expense			(3,250	)			68				(324	)			(91	)			(5,030	)
Adjusted earnings pre tax			29,621				29,441				29,592				27,480				33,785
Adjusted earnings tax			7,174				5,873				7,401				6,665				8,369
Adjusted earnings - non-GAAP			22,447				23,568				22,191				20,815				25,416
Preferred stock dividends			3,169				—				—				—				—
Adjusted earnings available to common shareholders		$	19,278			$	23,568			$	22,191			$	20,815			$	25,416
Adjusted diluted earnings per common share		$	0.85			$	1.04			$	0.98			$	0.92			$	1.12
Adjusted return on average assets			1.13	%			1.22	%			1.21	%			1.16	%			1.39	%
Adjusted return on average shareholders' equity			11.89	%			13.34	%			13.84	%			12.84	%			15.44	%
Adjusted return on average tangible common equity			16.80	%			20.24	%			19.41	%			17.89	%			21.65	%
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
		For the Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
(dollars in thousands)			2022				2022				2022				2022				2021
Adjusted earnings pre tax - non-GAAP		$	29,621			$	29,441			$	29,592			$	27,480			$	33,785
Provision for credit losses			3,544				6,974				5,441				4,167				467
Impairment on commercial mortgage servicing rights			—				—				869				394				2,072
Adjusted pre-tax, pre-provision earnings - non-GAAP		$	33,165			$	36,415			$	35,902			$	32,041			$	36,324
Adjusted pre-tax, pre-provision return on average assets			1.68	%			1.89	%			1.95	%			1.79	%			1.98	%

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
Efficiency Ratio Reconciliation
		For the Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
			2022				2022				2022				2022				2021
(dollars in thousands)
Noninterest expense - GAAP		$	49,943			$	43,496			$	41,339			$	40,884			$	45,757
Loss on mortgage servicing rights held for sale			(3,250	)			—				—				—				—
FHLB advances prepayment fees			—				—				—				—				(4,859	)
Integration and acquisition expenses			—				68				(324	)			(91	)			(171	)
Adjusted noninterest expense		$	46,693			$	43,564			$	41,015			$	40,793			$	40,727
Net interest income - GAAP		$	63,550			$	64,024			$	61,334			$	56,827			$	54,301
Effect of tax-exempt income			286				307				321				369				372
Adjusted net interest income			63,836				64,331				61,655				57,196				54,673
Noninterest income - GAAP			33,839				15,826				14,613				15,613				22,523
Impairment on commercial mortgage servicing rights			—				—				869				394				2,072
Loss on sales of investment securities, net			—				129				101				—				—
(Gain) on termination of hedged interest rate swaps			(17,531	)			—				—				—				(1,845	)
Adjusted noninterest income			16,308				15,955				15,583				16,007				22,750
Adjusted total revenue		$	80,144			$	80,286			$	77,238			$	73,203			$	77,423
Efficiency ratio			58.26	%			54.26	%			53.10	%			55.73	%			52.61	%

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
		December 31,				September 30,				June 30,				March 31,				December 31,
(dollars in thousands, except per share data)			2022				2022				2022				2022				2021
Shareholders' Equity to Tangible Common Equity
Total shareholders' equity—GAAP		$	758,574			$	739,279			$	636,188			$	644,986			$	663,837
Adjustments:
Preferred Stock			(110,548	)			(110,548	)			—				—				—
Goodwill			(161,904	)			(161,904	)			(161,904	)			(161,904	)			(161,904	)
Other intangible assets, net			(20,866	)			(22,198	)			(23,559	)			(22,976	)			(24,374	)
Tangible common equity		$	465,256			$	444,629			$	450,725			$	460,106			$	477,558
Total Assets to Tangible Assets:
Total assets—GAAP		$	7,855,501			$	7,821,877			$	7,435,812			$	7,338,715			$	7,443,805
Adjustments:
Goodwill			(161,904	)			(161,904	)			(161,904	)			(161,904	)			(161,904	)
Other intangible assets, net			(20,866	)			(22,198	)			(23,559	)			(22,976	)			(24,374	)
Tangible assets		$	7,672,731			$	7,637,775			$	7,250,349			$	7,153,835			$	7,257,527
Common Shares Outstanding			22,214,913				22,074,740				22,060,255				22,044,626				22,050,537
Tangible Common Equity to Tangible Assets			6.06	%			5.82	%			6.22	%			6.43	%			6.58	%
Tangible Book Value Per Share		$	20.94			$	20.14			$	20.43			$	20.87			$	21.66
Return on Average Tangible Common Equity (ROATCE)
		For the Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
(dollars in thousands)			2022				2022				2022				2022				2021
Net income		$	32,872			$	23,521			$	21,883			$	20,749			$	23,107
Average total shareholders' equity—GAAP		$	749,183			$	700,866			$	643,004			$	657,327			$	652,892
Adjustments:
Preferred Stock			(110,548	)			(54,072	)			—				—				—
Goodwill			(161,904	)			(161,904	)			(161,904	)			(161,904	)			(161,904	)
Other intangible assets, net			(22,859	)			(22,589	)			(22,570	)			(23,638	)			(25,311	)
Average tangible common equity		$	453,872			$	462,301			$	458,530			$	471,785			$	465,677
ROATCE			25.89	%			20.20	%			19.14	%			17.84	%			19.69	%